Lodsys ended its months-long silence on Monday with the proclamation that the U.S. International Trade Commission upheld the validity of its in-app purchase patent. The company gained notoriety in 2011 when it targeted iOS and Android app developers with patent infringement lawsuits over their use of in-app purchase systems -- a feature that Apple claimed it already licensed on their behalf.
Lodsys says ITC backs its in-app purchase patent claim
The patent holding company said in a blog post,
As a part of the Inter-Parties Reexamination requested by Google, the USPTO recently issued an Office Action confirming Claim 24 of US Patent 7,222,078. This claim is particularly relevant regarding in-app purchases and free-to-paid application upgrades.
Lodsys went on to say that many app developers chose to pay licensing fees. "As of October 8, 2012, there are greater than 150 companies which obtained the rights to use the Lodsys Group patent portfolio, and more than 4 out of 5 of these companies have entered into licenses outside of the litigation process," the company said.
In other words, developers most likely wanted to avoid legal expenses and saw the licensing fees as a less expensive alternative.
Lodsys first threatened legal action against iOS and Android app developers earlier in 2011 over claims that they needed to pay licensing fees if they wanted to offer in-app purchases. Apple's legal team stepped in sent a letter to Lodsys stating that since it had already paid licensing fees to use the company's in-app purchase patent, and since it was providing the mechanism to make the feature available, that developers didn't need to pay additional licensing fees.
"Apple is undisputedly licensed to these patent and the Apple App Makers are protected by that license. There is no basis for Lodsys' infringement allegations against Apple's App Makers," the iPhone and iPad maker said in its letter.
That wasn't good enough for Lodsys, so the company followed through with its threat and filed patent infringement lawsuits against several developers claiming Apple's licensing deal "does NOT enable them to provide 'pixie dust' to bless another (3rd party) business applications."
Apple moved to intervene on behalf of app developers, telling the court "Apple has an interest in property that is at the center of this dispute, namely, its license to the patents in suit and its business with the developers, which depends on their use of products and services that Apple is expressly licensed under the patents in suit to offer them."
While Apple worked to get its legal team in on the patent battle, Lodsys argued the Cupertino company's involvement was only economic and that there weren't any valid legal reasons why it should be allowed in the court room. The court disagreed and let Apple step into the fight on behalf of developers.
Lodsys filed its lawsuits in U.S. Federal Court the Eastern District of Texas -- which is a popular venue for companies tagged as patent trolls.
With the new ITC ruling in its arsenal, Lodsys will likely push harder on developers to pay licensing fees instead of going to court. With Apple on their side, however, app developers have a strong legal team on their side and may want to wait and see how the drama plays out in the court room.