After more than a week of investigations and careful deliberations, Apple has sent Lodsys a strongly worded legal response, defending the developers that Lodsys has been threatening with lawsuits over in-app purchases.
Two weeks ago, Lodsys sent letters out to developers using the in-app technology, accusing them of patent infringement and threatening lawsuits if payment wasn’t delivered to Lodsys. Since then, developers have been biting their nails, losing hair, and stressing out over their future livelihoods, while awaiting news from Cupertino. Finally, amid growing concern over a lack of a response, Apple has stepped up to battle with Lodsys and save helpless developers everywhere. In a letter sent to Lodsys on Monday, Apple contends that the legal actions threatened by Lodsys have no basis, and that developers, or App Makers as Apple deems them are protected by Apple’s license with Lodsys.
According to Apple, its existing license for the patents dealing with in-app purchases automatically apply to iOS app makers as subclause in that license: “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.”
Apple goes on to say that patent infringement isn’t even actually happening, because developers are using Apple software and hardware to create the apps that Lodsys claims need licensing. The functions covered in the patents are created with Apple’s technology, rather than developers’ and therefore, use Apple’s licensing. It is Apple’s opinion that developers are fully able to use the patents in question without fear of legal repercussions.
Lodsys is likely not going to pack up and drop the issue in the face of Apple’s letter, but there’s good news here – Apple is prepared to defend their licenses and the developers in question. Developers can now rest a little easier knowing that Apple is taking a stand and will do what’s necessary to protect them from litigation. It’s your move now, Lodsys, and I think we’re all eagerly awaiting what will happen next now that Apple has officially entered the arena.
Here’s the full text of the letter if you want to check it out:
BY EMAIL AND FIRST-CLASS MAIL
May 23, 2011
Chief Executive Officer
[Address information removed]
Dear Mr. Small:
I write to you on behalf of Apple Inc. (“Apple”) regarding your recent notice letters to application developers (“App Makers”) alleging infringement of certain patents through the App Makers’ use of Apple products and services for the marketing, sale, and delivery of applications (or “Apps”). Apple is undisputedly licensed to these patents and the Apple App Makers are protected by that license. There is no basis for Lodsys’ infringement allegations against Apple’s App Makers. Apple intends to share this letter and the information set out herein with its App Makers and is fully prepared to defend Apple’s license rights.
Because I believe that your letters are based on a fundamental misapprehension regarding Apple’s license and the way Apple’s products work, I expect that the additional information set out below will be sufficient for you to withdraw your outstanding threats to the App Makers and cease and desist from any further threats to Apple’s customers and partners.
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.” Seehttp://www.lodsys.com/blog.html (emphasis in original). 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.
Second, while we are not privy to all of Lodsys’s infringement contentions because you have chosen to send letters to Apple’s App Makers rather than to Apple itself, our understanding based on the letters we have reviewed is that Lodsys’s infringement allegations against Apple’s App Makers rest on Apple products and services covered by the license. These Apple products and services are offered by Apple to the App Makers to enable them to interact with the users of Apple products—such as the iPad, iPhone, iPod touch and the Apple iOS operating system—through the use or Apple’s App Store, Apple Software Development Kits, and Apple Application Program Interfaces (“APIs”) and Apple servers and other hardware.
The illustrative infringement theory articulated by Lodsys in the letters we have reviewed under Claim 1 of U.S. Patent No. 7,222,078 is based on App Makers’ use of such licensed Apple products and services. Claim 1 claims a user interface that allows two-way local interaction with the user and elicits user feedback. Under your reading of the claim as set out in your letters, the allegedly infringing acts require the use of Apple APIs to provide two-way communication, the transmission of an Apple ID and other services to permit access for the user to the App store, and the use of Apple’s hardware, iOS, and servers.
Claim 1 also claims a memory that stores the results of the user interaction and a communication element to carry those results to a central location. Once again, Apple provides, under the infringement theories set out in your letters, the physical memory in which user feedback is stored and, just as importantly, the APIs that allow transmission of that user feedback to and from the App Store, over an Apple server, using Apple hardware and software. Indeed, in the notice letters to App Makers that we have been privy to, Lodsys itself relies on screenshots of the App Store to purportedly meet this claim element.
Finally, claim 1 claims a component that manages the results from different users and collects those results at the central location. As above, in the notice letters we have seen, Lodsys uses screenshots that expressly identify the App Store as the entity that purportedly collects and manages the results of these user interactions at a central location.
Thus, the technology that is targeted in your notice letters is technology that Apple is expressly licensed under the Lodsys patents to offer to Apple’s App Makers. These licensed products and services enable Apple’s App Makers to communicate with end users through the use of Apple’s own licensed hardware, software, APIs, memory, servers, and interfaces, including Apple’s App Store. Because Apple is licensed under Lodsys’ patents to offer such technology to its App Makers, the App Makers are entitled to use this technology free from any infringement claims by Lodsys.
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. As the Supreme Court has made clear, “[t]he authorized sale of an article that substantially embodies a patent exhausts the patent holder’s rights and prevents the patent holder from invoking patent law to control postsale use of the article.”Quanta Computer, Inc. v. LG Elecs., Inc., 553 U.S. 617 (2008).
Therefore, Apple requests that Lodsys immediately withdraw all notice letters sent to Apple App Makers and cease its false assertions that the App Makers’ use of licensed Apple products and services in any way constitute infringement of any Lodsys patent.
Very truly yours,
Senior Vice President & General Counsel