Patent Trolls Hunger for Small Fries at the App Store

Aaron Thalwitzer

Patent-holding firm. Patent troll. One and the same? Sometimes.

Lodsys, one of the aforementioned firms, has threatened suit against independent iPhone app developers – but hasn’t threatened Apple itself, yet. Finding a ‘deep pocket’ defendant is usually a top goal in litigation, but Lodsys is taking the opposite approach, going after small companies who lack the resources to vigorously defend themselves, as, say, Apple might.

According to Ars Technica, several developers have been “threatened” including, “James Thomson, creator of the scientific calculator app PCalc; Dave Castelnuovo, creator of the best-selling game Pocket God; and Matt Braun, developer of the popular iPhone kids game MASH.” That list could grow, since many apps use the allegedly-infringing software.

Mr. Thompson, either a litigation novice or just lackadaisical about the whole thing, tweeted “Just got hit by very worrying threat of patent infringement lawsuit for using in-app purchase in PCalc Lite. Legal docs arrived via fedex,” after getting served. Note to all readers: don’t tweet about litigation in which you are involved. Ever.

Lodsys is a mid-level bully, not tough enough for the real tough guys, but just big enough to threaten the little guys.

Lodsys claims that the app developers infringed on their patent related to an “upgrade” button with which users may upgrade from a free to a paid version of an app, or to buy stuff from within an app.

Still, Apple provides the pay from within an app technology, not iOS developers – they just use the tech.

It’s not really much of a strategy in the long term. Apple is probably an indispensable party to the litigation, and if the litigation goes anywhere, the developers will certainly move to dismiss the complaint for Lodsys failing to include them in the case.

If the judge and/or jury agrees, Apple will be joined and the puny developers can hide behind Apple’s high AC rating. It’s notable that Lodsys has taken the extraordinary step of locating itself in the Eastern District of Texas. No, seriously, the most plaintiff-friendly court is officially an economic engine for the region in which it sits.

Apparently the demand letter asks the developers to negotiate for a license to use the “upgrade” patent or get sued.

“Patent trolling,” generally means using patents just to sue others for damages or use fees. Such trolling is perfectly legal, but I don’t think it’s what the patent system was intended to accomplish.

The developers, some of whom probably can’t afford the thousands in legal fees just to respond to a federal lawsuit, may settle for at least a nuisance sum just to avoid being bankrupted by the case.

Apple has not responded, but I bet that they intervene. Lodsys’ behavior would deter app developers from creating more and better apps, and Apple has an interest in keeping its app inventory open and growing. And as noted by Ars Tehcnia, “Apple takes 30 percent of each in-app sale”. It will be interesting to see where this goes, if anywhere.