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Lodsys offers to settle patent dispute with fortunate developer

In May 2011, a largely unknown patent-holding firm named Lodsys began threatening iOS developers with lawsuits if they didn't agree to license Lodsys' patent portfolio, which allegedly covered technology encompassing in-app purchases.

The case made headlines not only because Lodsys targeted many small developers who lacked the resources to adequately defend themselves, but also because of the patented technology involved. The ability for developers to implement in-app purchases comes from Apple and is an integral part of the iOS ecosystem. In other words, if Lodsys' claims were valid, they could theoretically shake down an endless number of iOS developers.

The warning letters sent out by Lodsys indicated that the company wanted 0.575 percent of all revenue earned during the period a developer made use of in-app purchasing.

Shortly thereafter, Apple filed a motion to intervene in the Lodsys proceedings against iOS developers. Apple argued that all iOS developers are de facto licensees to Lodsys' patents due to Apple's own licensing agreement with Lodsys. Indeed, it's worth noting that companies like Apple, Google and Microsoft all had licensing deals with Lodsys that were in place prior to Lodsys' patent suit rampage.

In a letter sent to Lodsys CEO Mark Small, Apple explained:

First, Apple is licensed to all four of the patents in the Lodsys portfolio. As Lodsys itself advertises on its website, "Apple is licensed for its nameplate products and services." ... Under its license, Apple is entitled to offer these licensed products and services to its customers and business partners, who, in turn, have the right to use them.

Lodsys, however, refused to back down and it wasn't long before the patent holding company began targeting Android developers as well. By the end of May 2012, Lodsys had filed lawsuits against seven smaller-scale iOS developers. By the end of July, Lodsys upped the ante by going after big-name developers like Rovio and EA. Soon thereafter, suits against other big development companies like Gameloft were filed.

Over the past few months, however, we haven't heard much of anything about Lodsys-related lawsuits or proceedings.

Earlier today, however, developer Todd Moore wrote that he received an unexpected letter from Lodsys wherein they offered to drop their suit against him.

I did not have to pay any money to Lodsys or sign a license agreement. I also did not sign a confidentially agreement so I'm free to talk about this matter.

So what did I have to agree to?

  1. Never to sue Lodsys over its patents (I otherwise would have the right to ask a court to rule their patents invalid if I wanted)
  2. Dismiss all motions with prejudice (we had filed a motion to dismiss that also sought to recover my attorneys fees, costs and expenses)
  3. Make a donation to a mutually agreeable charity

Well, that's certainly great news given that no one likes to see patent trolls try and scam a quick payday from hardworking developers, especially given the costs typically associated with legal battles.

To that end, Moore writes that he was being defended on a pro bono basis by attorneys who together spent upwards of 280 hours on the case. At an hourly rate that would otherwise vary between US$500 and $750 an hour, it's easy to see why Lodsys initially set its sights on smaller developers. Moore writes that if he hadn't been graced with pro bono representation, he would have had to pay $190,000 in legal fees.

MacRumors proffers an interesting theory:

It remains unclear whether Lodsys' move to dismiss the case against Moore and TMSOFT is part of a strategy shift for the firm or if it simply realized that it was not worth pursuing a protracted fight against a small developer receiving free legal representation.

So it remains to be seen if Moore is the exception or if other iOS developers will receive similar letters from Lodsys. We can only hope that it's the latter.



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Developer iOS

In May 2011, a largely unknown patent-holding firm named Lodsys began threatening iOS developers with lawsuits if they didn't agree to...