By Andrew Goldberg
Lodsys, the litigious patent-holding company that filed suit in the Eastern District of Texas last week alleging that several independent developers of software applications used on mobile devices infringe its patents on in-app purchasing, is now on the defensive and facing a patent infringement suit of its own.
ForeSee Results, a Michigan-based company that designs online customer-satisfaction surveys used by many businesses, brought an action Tuesday in the U.S. District Court for the Northern District of Illinois seeking a declaratory judgment that its product does not infringe Lodsys's patents.
In its complaint, the company contends that Lodsys’s patents are invalid and argues that the patent-holding company, which has threatened to sue ForeSee customers including Best Buy and Adidas over their use of ForeSee's surveys, should be enjoined from pursuing such legal action [Download Foresee Results Complaint].
Although ForeSee's lawsuit is not directly related to mobile device apps, it does implicate two of the same patents at issue in Lodsys's suits against Apple iOS app developers. As a result, a decision by the Illinois district court to invalidate Lodsys' patents could potentially throw a wrench into the holding company’s strategy of hauling app developers into court in Texas.
For its effort, ForeSee has tapped the kind of legal firepower that small app developers most likely can't afford in their fight with Lodsys. The survey company is being represented by lawyers at McDermott, Will & Emery. For its East Texas suits, Lodsys, which is based in Marshall, Texas, is being represented by the Seattle-based firm of Kelley, Donion, Gill, Huck & Goldfarb and The Davis Firm in Longview, Texas.
Among those presumably rooting for ForeSee to prevail in Illinois are the seven iOS app developers--including the makers of such iPhone apps as Twitterific and QuickOffice and the games Mega Poker Online Texas Hold ’Em and Hearts and Daggers--that have already been sued by Lodsys in East Texas [Download Lodsys v. App Developers]. That dispute hinges on the functionality that enables users to make purchases from within an app.
Lodsys claims it's litigating in Texas against the little guys in lieu of going after Apple directly because the tech giant already licensed the patent at issue as part of a mass licensing deal it struck with Intellectual Ventures, the patent-holding company that owned the patents in question prior to Lodsys. App developers, according to Lodsys, are not covered by that licensing agreement.
In a blog post on its website about Apple, Lodsys wrote: “The scope of their current licenses does NOT enable them to provide ‘pixie dust’ to bless another (3rd party) business application," adding, "From Lodsys’ perspective, it is seeking to be paid value for rights it holds and which are being used by others.” Specifically, the company is demanding .575% of all U.S. revenue from any app that uses its patents.
But Apple general counsel Bruce Sewell disputes Lodsys' contention, arguing in a letter, sent two weeks after Lodsys's notice to developers, that "there is no basis for Lodsys' infringement allegations against Apple 's App Makers."
"I believe that your letters are based on a fundamental misapprehension regarding Apple's license and the way Apple's products work," wrote Sewell. "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."
For anxious app developers, of course, Apple's letter is only a start. Indeed, as the Electronic Frontier Foundation put it, "Even careful developers who hire lawyers to do full-scale patent searches on potential apps surely would not expect to investigate the technology that Apple provides. Instead, they would expect (with good reason) that Apple wouldn't provide technologies in its App Store that open its developers up to liability – and/or would at least agree to defend them when a troll like Lodsys comes along."
For the developers' sake, it's worth wondering whether there's an app for indemnification.
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