On Thursday, July 21, 2011, attorneys for Lodsys LLC, a company rapidly becoming a reviled patent troll, filed an amended complaint in the United States Federal District Court for the Eastern District of Texas. (*) As a result of this amended complaint some big names in the gaming world have been brought into the ongoing patent litigation battles being waged by Lodsys. Lodsys had already sued a number of Apple App developers and others such as Best Buy and the New York Times, see here and here. More specifically, as a result of the filing of this latest complaint Lodsys has brought patent infringement charges against Atari Interactive, Inc. and Electronic Arts, Inc. (NASDAQ:ERTS), among others. But in the mind of the general public the highest profile defendant to date will almost certainly be Rovio Mobile Ltd., the maker of the extraordinarily popular game Angry Birds, which is available for iPhone, iPad and Android, among other platforms.
The amended complaint filed by Lodsys levels nearly identical charges against all the defendants, asserting patent infringement of U.S. Patent No. 7,620,565 and U.S. Patent No. 7,222,078. Illustrative of the charges leveled by Lodsys are the two paragraphs relating to the alleged infringement associated with Angry Birds. Paragraph 23 states:
Defendant Rovio has infringed and continues to infringe, directly, indirectly, literally, under the doctrine of equivalents, contributorily, and/or through the inducement of others, one or more of the claims of the ‘565 patent. Rovio makes, sells, uses, imports, and/or offers to sell infringing applications, including but not limited to Angry Birds for iPhone and Angry Birds for Android, which infringe at least claim 27 of the ‘565 patent under 35 U.S.C. § 271.
Paragraph 36 states:
Defendant Rovio has infringed and continues to infringe, directly, indirectly, literally, under the doctrine of equivalents, contributorily, and/or through the inducement of others, one or more of the claims of the ‘078 patent. Rovio makes, sells, uses, imports, and/or offers to sell infringing applications, including but not limited to Angry Birds for iPhone and Angry Birds for Android, which infringe at least claims 1 and 24 of the ‘078 patent under 35 U.S.C. § 271.
While there is not much to go by with such sparse allegations, by patent infringement standards these allegations are extremely detailed, which speaks volumes about what plaintiffs are allowed to get away with relative to asserting a claim of patent infringement. At least Rovio is told which claims most likely are the claims that are being infringed. Sadly, however, it is frequently (if not typically) enough to start a patent infringement lawsuit with vague assertions, which is why being a patent troll has become such big business in the United States. All you need is a patent, an attorney who will take your case on contingency (**) and a few hundred bucks to file a lawsuit and you too could sue someone for some unspecified activities that together constitute some unspecified type of patent infringement on one or more unspecified patent claims.
Lodsys first appeared on the scene several months ago when it started chasing Apple App Developers and demanding that they take a license to the Lodsys patent portfolio, and then later going after Google Developers who provide Apps for the Android operating system.
Upon learning that Lodsys was chasing its App Developers, Apple entered the fray with a shot across the bow. In a letter from Apple’s Senior Vice President & General Counsel, Bruce Sewell, Lodsys was told in no uncertain terms: “There is no basis for Lodsys’ infringement allegations against Apple’s App Makers. Apple… is fully prepared to defend Apple’s license rights.” According to the letter sent to Mark Small, Lodsys’ Chief Executive Officer, Apple is a licensee of each of the four patents in the Lodsys patent portfolio and the terms of the license allow Apple to grant sub-licenses to Apple App developers. According to Sewell’s letter, “Lodsys’s infringement allegations against Apple’s App Makers rest on Apple products and services covered by the license.”
Based on the limited information available to date, it does seem like there is a generous double-dip approach to what Lodsys appears to be doing at least with respect to Apple App Developers. After all, when Lodsys and Apple entered into a patent licensing deal what did Lodsys think was going to happen? While not impossible, based on what I know about the quality of legal work done on behalf of Apple I find it difficult to believe they would have taken a license that they didn’t have reason to believe would cover their App Developers. After all, Apple facilitates App Development for their various platforms by sharing the technical information necessary to make sure the Apps work properly.
Notwithstanding, Lodsys is becoming a real pain in the neck for App Developers and for those who rely on App Developers. According to The Guardian, “App developers are withdrawing their products for sale from the US versions of Apple’s App Store and Google’s Android Market for fear of being sued by companies which own software patents…”
But why is Lodsys going after App Developers? On their blog Lodsys explains why they are going after Application developers and websites rather than operating system vendors and device manufacturers:
The economic gains provided by the Lodsys inventions (increase in revenue through additional sales, or decrease in costs to service the customer) are being enjoyed by the business that provides the product or service that interacts with the user. Since Lodsys patent rights are of value to that overall solution, it is only fair to get paid by the party that is accountable for the entire solution and which captures the value…
Who knows why they are really going after App developers, but the fact that they are low hanging fruit — easy targets, sitting ducks even — no doubt played a part. It is becoming an increasingly popular troll strategy to sue exceptionally small companies and individuals. When faced with a small payment demanded to license patents versus the large cost of fighting many, if not most, small companies and individuals will simply fold and make the extortion-like payment even when the fully believe (or know for certain) they do not infringe the asserted patents. While that might be a part of the Lodsys strategy it seems that perhaps they are trying to be the biggest pain they can possibly be, thereby forcing the operating system vendors and device manufacturers to enter into an expensive blanket license that covers App Developers.
Of course, Apple believes they have already acquired a blanket license that covers their App Developers. In the aforementioned Apple letter Sewell further explained:
Through its threatened infringement claims against users of Apple’s licensed technology, Lodsys is invoking patent law to control the post-sale use of these licensed products and methods. Because Lodsys’s threats are based on the purchase or use of Apple products and services licensed under the Agreement, and because those Apple products and services, under the reading articulated in your letters, entirely or substantially embody each of Lodsys’s patents, Lodsys’s threatened claims are barred by the doctrines of patent exhaustion and first sale.
Meanwhile, the industry is not sitting still. Article One Partners, who has made a name for itself as the premiere crowd sourcing, prior art locating company in the world, has three different studies aimed squarely at the four Lodsys patents. See Help Article One Save the Angry Birds! The Article One network is extensive, geographically diverse, well educated and tech savvy. They have over 1 million researchers worldwide signed up on their platform, approximately 10,000 researchers have actually submitted prior art references to a study and more than $1.4 million in reward money has been paid out to those finding useful prior art. So if you are a fan of Angry Birds or you just hate the assertion of patents that shouldn’t have been granted in the first place, sign up to be an Article One researcher. You might just help save Angry Birds, or find great prior art for one of their other studies, which could put some extra money in your pocket.
In any event, this patent battle looks like it will be a long one. To use a baseball analogy we are only in the first inning, and the top of the first at that, so stay tuned!
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(*) Tip of the hat to FOSS Patents for being the first to notice the Lodsys lawsuit against Angry Birds maker Rovio.
(**) I do not know whether Lodsys’ attorneys are working on a contingency basis, but that does seem to be an increasingly popular model for patent trolls to use.