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[UPDATE on July 2] Apple's response has now been leaked. Apple's general counsel says that Spotify's "in-app purchase feature had been removed and replaced with an account sign-up feature clearly intended to circumvent Apple's in-app purchase rules." Thereafter, on June 10, Spotify submitted another version, which in Apple's opinion was part of a "continued attempt to get around [Apple's] guidelines" and "to circumvent in-app purchase rules." [/UPDATE]

I wish to clarify upfront that I've never done any work for Apple or Spotify. A more elaborate disclosure can be found at the end of this post. The perspective from which I am writing this post is that of an app developer who happens to have fought hard for fair, reasonable and non-discriminatory (FRAND) behavior by companies wielding monopoly power. And one of the two iOS apps I'll launch later this year will come with two different types of subscription offerings, which users can even use in combination. So I do have a strong interest in this, but for now I can't see any wrongdoing on Apple's part.

Spotify's general counsel Horacio Gutierrez--who used to be Microsoft's second-highest-ranking in-house lawyer--has reportedly sent a letter to his counterpart at Apple alleging violation of U.S. and EU antitrust laws as Apple has so far rejected an update to Spotify's iOS app. More generally, Spotify complains about a "troubling pattern of behavior by Apple to exclude and diminish the competitiveness of Spotify on iOS and as a rival to Apple Music," referring to "previous anticompetitive conduct aimed at Spotify."

Spotify still has about twice as many subscribers as Apple Music, but the latter still casts a dark shadow over the impending IPO of the former.

Few people could claim to know the U.S. and EU antitrust game better than Mr. Gutierrez, who among other things also was in charge of Microsoft's EU activities. At this stage, Spotify's obvious objective is to instigate formal antitrust investigations of Apple's conduct in the U.S., the EU (Spotify is a Swedish company), and potentially in Asia, where the scope of an ongoing investigation (in South Korea) is unclear. Getting antitrust authorities to investigate a company like Apple requires a mix of demonstrating a genuine competition issue, broadbased support for a formal or informal complaint, and some publicity. Leaking letters is common in this situation.

Apple avoided antitrust scrutiny a few years ago, and I'm convinced that its recent modification of subscription terms--reducing its App Store cut from 30% to 15% after the first year of a subscription--was not a voluntary act of generosity but motivated exclusively by Apple's desire to avert formal investigations. The reduction was announced shortly before last month's developer conference (WWDC) and first reported by Jim "The Beard" Dalrymple on LoopInsight.com (The Loop) and by Lauren Goode on TheVerge.

It's worth noting that Google, which could face similar complaints at some point, matched Apple's move and even went beyond: Google reduces its share of subscription revenue to 15% from the first day, not just starting with the second year. The Loop's Dave Mark wrote he was "[s]till trying to wrap [his] head around the logic of waiting 12 months before the 85/15 split locks in." Rightfully so, but it does make sense against the background of Spotify's antitrust initiative: since Spotify has been around for years, it can no longer complain about the 30% cut--by which it's no longer affected--being too high, but Apple has kept a nice bargaining chip. If that's what it takes to provide a face-saving exit to antitrust authorities, now or later, Apple can hand them a victory by letting the 85-15 split apply to new apps.

So the key question to think about in light of Spotify's letter is this: does Apple have to do more to avoid formal antitrust scrutiny? That question must be looked at from multiple angles:

1. Are antitrust enforcers likely inclined for political reasons to do Spotify the favor it's asking for?

   I think Apple faces a pretty significant political risk, for various reasons including (but not limited to) its enormous success, its controversial tax minimization strategies, its lack of cooperation in the San Bernardino context, and the fact that Spotify as well as some of the leading game app makers (Supercell, King.com) are based in Europe (though King now belongs to Activision Blizzard and roughly 85% of Supercell's shares are being acquired by China's Tencent).

2. Does Spotify have a genuine, meritorious antitrust case at this juncture?

   I don't think so. If one focused strictly on the facts, leaving aside political considerations and everything else, then antitrust authorities should either require Apple to expand the 85-15 split or move on.

   If Apple had not made the 15% change and were then undercutting Spotify simply by leveraging the 30% cut, that would be an issue, but the 30% no longer applies to Spotify's long-term users, so Spotify's average percentage will be far below 30%. If Apple were abusing the app review process by raising unfounded objections (of a technical, editorial or commercial nature) for the sake of having a pretext to withhold approval, I'd be on Spotify's side without hesitation. But I don't see that being the case here. Much to the contrary, I think Spotify's current behavior is abusive and the opposite of consumer-friendly.

   Essentially, Spotify wants to charge people more if they subscribe via the App Store than if they do so via Spotify's website. Apple doesn't appear to prohibit external subscriptions, and it doesn't even appear to dictate the prices of external subscriptions. But it's against Spotify charging iOS users more than Web users and promoting that fact aggressively. I understand Apple's position.

   Consumers can benefit indirectly from competition between music delivery services, but Spotify's fight for its right to set higher prices on the App Store is self-interested and, at least in the short term, bad for consumers.

3. If someone wanted to set up a third-party App Store competitor and if Apple then prevented that third party from doing so, there could be some interesting issues, but there is no indication of Spotify or anyone else trying to do that at this stage.

Having outlined my overall position on this, I'd now like to talk about my own perspective and interests.

Just like any other app developer, I'd obviously like Apple to lower its App Store fee from 30% to 15%, for all transactions, all apps, and from Day One. However, I'm probably much more relaxed about the 70-30 split than most other people because I've been in the consumer software industry for a long time and I still remember the cost of getting your software distributed to end users 10, 20 or 30 years ago. Compared to today's environment, it was a nightmare:

• We had to grant a discount on the order of 30% (maybe 20% or 25%, but no less than that) to any reseller who simply presented a certificate of registration of his business.

• Large retail chains received discounts between 40% and 50%. Every year they came back to us and told us they needed more. And several times a year they demanded cooperative advertising allowances, which were (not in whole, but in no small part) a rip-off we hated.

• Distributors/wholesalers/importers got discounts of about 60%. So instead of Apple's 70-30 or 85-15 split, it was practically a 40-60 split--almost the reverse ratio--unless you decided to hire your own sales force.

• Even the guys with the 60% discount didn't really give us access to a global market. Many of them served only customers in one country, or maybe in a small set of countries such as the German-speaking countries. So you also had to maintain customer relationships with a large number of distributors if you wanted to sell a product around the globe. With Apple or Google, it's a one-stop solution now.

There are obvious reasons for which digital software distribution must be more favorable to software publishers than physical distribution. No warehouses, no trucks, no risk of goods being damaged. Still, access to consumers is access to consumers. Apple provides it, and I can live with those terms, though 85-15 is not only more desirable but also more reasonable from my point of view. Spotify's problem is all about the fact that Apple is competing with it, and that competition from the likes of Apple, Google and Amazon is going to be the primary concern on investors' part when Spotify goes public. As Jordan Crook noted on Techcrunch, "Spotify can only afford to hold siege against Apple for so long."

I'll probably comment on this again, maybe even repeatedly. Having been at the center of baseless conspiracy theories more than once, I'll now make some rather elaborate and forthright disclosures.

I've never done any work for Apple or Spotify. I'm long AAPL. I know the author of Spotify's letter, Horacio Gutierrez, back from his years at Microsoft, but haven't talked to him in a couple of years. What I can say is that Spotify got one of the very, very best corporate lawyers in IT, and probably the best fit one could have imagined for Spotify given Horacio's knowledge of IP licensing, litigation, policy, and antitrust. He and Apple's general counsel will be well-matched combatants. I disagreed with Horacio on the desirability of software patents, I agreed with him on FRAND, and for now I'm unconvinced of his allegations against Apple. I'm not saying they're totally baseless, but I don't think there is a strong case now for formal antitrust investigations. I obviously reverse the right to adjust my opinion if new facts are put on the table at some point.

As loyal readers of this blog know, I have supported Apple on FRAND licensing of standard-essential patents, I have supported it in other contexts, but I oppose attempts to extract unreasonable leverage from "dead patents walking" and share numerous organizations' and individuals' concerns over an unapportioned disgorgement of infringer's profits when design patents cover only minor visual aspects of highly multifaceted and multifunctional products.

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I haven't blogged in a while about Lodsys and the demand letters it sent to (and lawsuits it filed against) app developers, but it was a topic I covered extensively in 2011, and many app developers have been following my writings since. I just wanted to draw the attention of app developers to an online survey started by the Application Developers Alliance on its DevsBuild.It site: the Lodsys Victim Survey.

If you got contacted and/or sued by Lodsys, please do go there and fill out the form. The App Developers Alliance is trying to find out about the scope and scale of Lodsys's trolling activities, and their effort can shed some more light on it. Some major mobile platform companies are among the Alliance's members.

I became a member of the App Developers Alliance yesterday because I find some of their services and activities useful from my perspective as an app developer (my project is in its infancy; it's a game and I'll say more about it closer to its launch). I made clear on Google+ that my membership is apolitical in the sense that I don't endorse anyone's political positions or amicus curiae briefs unless and until I explicitly do so. It's really the DevsBuild.It platform and the Alliance's conferences that persuaded me to join.

As far as Lodsys is concerned, my disdain for its trolling ways is long-standing and well-documented, which is why I gladly support this particular research effort.

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The most important smartphone IP ruling in the months ahead is going to be the opinion of the United States Court of Appeals for the Federal Circuit in the Oracle v. Google Android-Java copyright appeal. The appellate hearing took place on December 4, 2013, making March and April the most likely months for the issuance of the appellate decision.

The second-most interesting smartphone IP decision in the near term will also be handed down by the Federal Circuit. That ruling will relate to the Apple-Motorola "Posner case", involving FRAND issues and non-standard-essential patents such as the "Steve Jobs patent". That decision is almost overdue by now (more than four months after the appellate hearing), and will most likely strengthen Apple's position vis-à-vis Google.

Of course, a decision is only a decision when it issues. I know that some people are generally skeptical of conclusions drawn from what judges say at a hearing. While it's true that changes of mind sometimes occur after hearings, there are many cases in which a court indicates its inclination clearly enough that it's perfectly reasonable to predict the outcome (always recognizing the uncertainty that inevitably remains) on that basis. As far as the copyrightability of Oracle's Java API declaring code is concerned, I would go even further: it's practically inconceivable that the district court's non-copyrightability holding will be upheld considering that the circuit judges made perfectly clear that District Judge Alsup confused "fair use" and copyrightability issues and that Google's whole non-copyrightability theory, which Judge Alsup adopted in its entirety, rests on a complete misreading of two key cases (Sega and Sony). Simply put, just based on what the circuit judges said at the hearing, Google's (and Judge Alsup's) non-copyrightability theory is totally in ruins, and the rubble is being cleared away now as the appeals court is writing its decision. (Only with respect to "fair use", the outcome is impossible to predict.)

A settlement between now and the Federal Circuit decision would make a lot of sense. It would be out of character for Google not to take its chances, yet this result is more realistic than affirmance of the fundamentally erroneous non-copyrightability conclusion.

Even if the Federal Circuit ruling never came down due to a prior settlement, no infringer of API copyrights would be able to get any mileage whatsoever out of the Northern District of California ruling. The December 4, 2013 appellate hearing was recorded and transcribed. Any right holder who has to defend the copyrightability of API declaring code (provided that it's truly creative and original, as is the Java code) will cite to what the circuit judges said at the hearing. The only way this could change (apart from an unforeseeable about-face by the court) would be a Supreme Court ruling, and while I fully expect Google to ask the Supreme Court for writ of certiorari, I don't think a finding in favor of copyrightability -- unlike one to the contrary -- is "certworthy". Affirmance of the Alsup decision would have created a conflict with Supreme Court precedent (for example, the rule that even a modicum of creativity is sufficient to justify copyrightability). But why should the SCOTUS have any problem with what the Federal Circuit is apparently going to do? Google can't point to any SCOTUS case in which a similar quality and quantity of original expression was deemed uncopyrightable. Google's best case will be something like the affirmance by an equally divided SCOTUS in Lotus v. Borland -- and the Oracle case is easily distinguishable from that one (even Google's counsel conceded at the Federal Circuit hearing that what was at issue in Lotus was "less developed than Java"). Google will presumably claim that Sega and Sony established an interoperability exception to the scope of copyrightable works, but I really doubt that the SCOTUS would view those cases differently from the Federal Circuit: those are just "fair use" cases that allowed only very limited copying for the purpose of writing compatible programs.

Now, in light of this situation, we are in for a total doomsday scenario if we want to believe what the EFF, CCIA and other Google-funded, Google-aligned organizations warned against in their public campaign on Google's behalf as well as the amicus curiae briefs they submitted and orchestrated. The fact of the matter is that, unless you're Google or close to Google, there's no reason at all to be concerned. On the contrary, it would really have been a threat to software development if the appellate hearing had worked out more favorably for Google because this would have made it very easy for large companies to hijack APIs developed by small, innovative players.

Google is one of a very, very, very few entities to hijack third-party APIs this way -- by hijacking I mean unauthorized use of API code (with or without modifications) in a new (typically competing) platform. I take issue with its unauthorized distribution of more than 7,000 lines of (on balance) exceptionally creative declaring code, and I disagree with its assertion that the Linux API declaring code it also integrated into Android was devoid of copyright protection in the first place ("This header was automatically generated from a Linux kernel header of the same name [...] It contains only constants, structures, and macros generated from the original header, and thus, contains no copyrightable information."). Linus Torvalds may be on Google's side, but he didn't author Linux single-handedly and does not have legislative authority over the question of copyrightability.

The way all software developers -- including yours truly (as I mentioned in a couple of posts last year, I'm working on a smartphone and tablet computer app, which is why I've recently limited my consulting on IP issues to two days per week) -- use APIs sooner or later is that we write software for a platform and need APIs to make our software run on (or with, if it's about network-based communication) a given platform. This type of API use is simply not at issue in Oracle v. Google. If, hypothetically speaking, Google had developed a Google Maps client for some Java-based Nokia or BlackBerry devices (which used to be popular at some point, but nowadays Java has been almost completely displaced by Android on mobile devices), Oracle wouldn't have sued over infringement of declaring API code. Had Oracle done so (in an alternative universe), then the likes of EFF and CCIA would have been right and there would have been a serious issue -- which would not have been a copyrightability issue but more of an estoppel and fair use issue or maybe a matter of interpretation of license agreements.

It's just not a possibility that someone could publish an API, encourage third parties to write code for it (because that's what makes an API successful), and later turn around and sue them for doing so. It's commercially illogical, but above all, it would be a legal non-starter. Any software developer could choose among various defenses. There could be a contract-based defense. There would always be equitable estoppel, promissory estoppel, and fair use. Legitimate API use is fair use. Hijacking APIs the Android way is unfair, but using them the way they are intended to be used is above board.

Given that someone trying to go after legitimate API developers this way has no prayer, there wouldn't even be a point for a "troll" in acquiring API copyrights for a litigation campaign like this. It would be a money-losing proposition. No one in his right mind would do this (or fund this).

Some zealots and lobbyists supporting Google have over the last couple of years propagated the allegation that Oracle's position on API copyrightable is somehow extreme and extends the scope of copyrightable subject matter into, if not beyond, the realm of patents. In reality, it's Google's position that is extreme, and Oracle's position is balanced and moderate. The two extremes would be a scope of copyrightability without meaningful boundaries and requirements (the perfect scenario for abusers) and another one in which even non-API program code could be denied copyrightability, despite being creative (a fact Google never contested in the Android-Java case), because of some functional purpose it serves, in which event software developers would be able to protect their works only through patents and trade secrets. Google's position is, unfortunately, very close to the latter -- in its cross-appeal it also disputes the copyrightability of a certain (not huge, but still significant) amount of non-API code. Oracle, however, would never claim copyrightability for a single line of very simple API declaring code such as the header of a maximum value function (two parameters, result is the greater of the two numbers) in its own right. Oracle's case here is based on an enormously creative, large-scale body of code and its structure, sequence and organization.

As long as there is a sufficient creativity threshold, honest software developers are protected, not threatened, by copyright law. They are not threatened because if such code is reasonably creative, none of us will write the same code independently by happenstance: infringement will, in practical terms, require willfulness. They are, however, protected with respect to the code they author independently and can prevent others from infringing on it.

A couple of paragraphs ago I mentioned that Google and its allies misportrayed Oracle's position as an extreme one. This is not just my opinion. Circuit Judge Kathleen O'Malley also set the record straight on this question when Google's counsel made an attempt to mischaracterize Oracle's copyrightability position at the December 4 hearing. The relevant part of the official hearing recording starts at 46:50, and this is what it's about:

Google's counsel Robert van Nest referred to § 102 a and b of U.S. copyright law. In a nutshell, 102ドル a giveth (defines what is copyrightable) and §102 b taketh away (defines what copyright does not extend to), but not in the sense of a straightforward subtraction: it's more like §102 a defining what types of works are copyrightable and §102 b ensuring that enforcement doesn't reach further beyond. For example, you get a copyright on a cookbook under §102 a, but §102 b ensures that you can't use that copyright and sue everyone who cooks a meal according to your book. For software, it means creative code (including declaring code) is copyrightable, but you can't assert broad patent-like monopoly rights later over methods of operation.

Google's counsel misrepresented Oracle's position on copyrightability by saying that "the basic structure of the copyright statute is you have (a) and (b), and they're proceeding as though (b) doesn't even exist -- they're saying 'if it's creative under (a), boom, you're home'". Circuit Judge O'Malley contradicted immediately and firmly: "I don't think that's what they're saying at all. No. They're just saying that a method of operation [which copyright does not extend to] should be looked at at a more abstract level." She got this so right: contrary to Google's counsel's representations, Oracle does not want to use copyright to monopolize abstract concepts such as the idea of having a function that determines the greater of two numbers -- Oracle just claims copyright in a body of work that involves in this case many thousands of lines of highly creative declaring code, which is concrete and not abstract. It's about specific expression, not about high-level concepts and algorithms.

When I listened to the hearing recording for the first time, the passage I just quoted was one of the most important ones to me. It indicated to me that the copyrightability part of the case was strategically lost for Google, and that all of the FUD submitted by Google and its amici curiae failed to manipulate this sophisticated appeals court.

Google will have to respect Oracle's and other companies' and people's copyright in API declaring code, and it will have to take licenses and/or make the necessary modifications to Android to address those issues. But in the long run, even Google may very well find itself in situations in which it benefits from copyright protection of APIs. I already wrote about a year ago that Google might one day use API copyrights to prevent Samsung from making Android apps run on Tizen.

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On June 9, 2011, Apple filed a motion to intervene in a lawsuit instigated by non-practicing entity Lodsys against various app developers. Apple argued that it has a license to the patents Lodsys is asserting, and that its developers are licensed by extension. The concept is called patent exhaustion and sometimes raises complicated legal and technical issue.

Originally, the defendants in that lawsuit in the Eastern District of Texas were mostly small companies, but in an amended complaint, Lodsys also targeted some larger organizations including Angry Birds maker Rovio.

In late July, 2011, Lodsys filed its opposition to Apple's motion for an intervention. In early August, Apple insisted that its motion should be granted. But for a long time, nothing happened with respect to Apple's motion. In the meantime, the judge originally presiding over the case resigned. Today, finally, Apple's motion was granted in part: "Apple is permitted to intervene in this suit, but such intervention is limited to the issues of patent exhaustion and licensing."

Judge Rodney Gilstrap concluded that Apple was entitled to intervene, and in any event, a permissive intervention (one that the court can allow in its discretion) was also an option.

Here's the short summary that entered the public record (I also saw the actual order):

"SEALED MEMORANDUM OPINION and ORDER - Apple has satisfied each of the four requirements for intervention as a matter of right under Rule 24(a)(2). The Court finds that permissive intervention is also appropriate under Rule 24(b). To avoid any potential prejudice to Lodsys rights under the License Agreement such intervention shall be and is hereby limited to the issues of license and patent exhaustion. Apples Motion to Intervene is GRANTED-IN-PART to the extent and as specified herein. Motions terminated: [4] MOTION to Intervene filed by Apple, Inc.. Signed by Judge Rodney Gilstrap on 4/12/12. (ehs, ) Modified on 4/12/2012 (ch, )."

A friendly source told me about this. As a service to the app developer community, I wanted to provide this update. But as I pointed out last summer, there's so much going on between large operating companies that I haven't been able since then, and won't be able in the foreseeable future, to monitor lawsuits by non-practicing entities. The only lawsuit filed by a non-practicing entity on which I reported during the last six months or more was an Intellectual Ventures lawsuit against Motorola Mobility (and I reported on that one only once).

I wish the app developer community luck as far as Lodsys is concerned. I saw that some of the smaller defendants, including Iconfactory, settled the dispute on undisclosed terms, presumably because they couldn't afford the cost and deal with risk of protracted litigation. I wish the remaining defendants as well as all those facing the threat of being sued that Apple's intervention will help to get his troll defeated. I also hope that Google's reexamination requests will be successful. I still believe that those large players should do a whole lot more for app developers than what they are doing at this stage (for example, I believe they should give them blanket coverage against litigation costs), but there's no need to go into further detail on that. I'm glad that Apple has, finally, been admitted to the proceedings as an intervenor, and I hope this will help defeat Lodsys.

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These past few days I have received several more messages (on Twitter and via my contact form) reporting continued assertion-letter-mailing activity by Lodsys. After a quick update on that, I'll recommend an online boot camp for app developers targeted by patent trolls, and I'll also explain why I won't have the time to blog about Lodsys too frequently in the future.

I have received a copy of a letter dated August 23 sent by Lodsys to an Android game developer based in Germany.

Several months ago I already explained that Lodsys can bring assertions against persons and companies based outside the United States as long as those do business in the U.S., such as through Apple's app store or Google's Android Market. As a matter of fact, Lodsys has already sued overseas companies: Wulven Games of Vietnam (dropped from the action, presumably due to a settlement), Illusion Lab of Sweden, and Rovio of Finland.

A few days ago the BBC reported on a Lodsys letter to a Spain-based developer of Android apps (also in Spanish). In July, the BBC reported on a British developer who received a Lodsys letter.

Withdrawing one's apps from the U.S. market may help to reduce the problem in he future but Lodsys would still want to be paid for "past infringement", which developers cannot make undone that way.

Two weeks ago Google pulled a PR stunt by announcing reexamination requests against two Lodsys patents. After giving that story exclusively to one publication, Google then provided its reexamination requests -- long before they entered the public record -- to an unreliable blog that's known for its pro-Google bias especially in connection with the Oracle lawsuit. That blog celebrated Google's reexamination requests as a game changer.

Apparently, and not surprisingly, the problem hasn't gone away at all. Instead, it seems that Lodsys now sends even more letters to Android developers than in the weeks before.

The problem is that such a reexamination request doesn't help app developers who receive (or have already received) a Lodsys letter and have to decide whether to pay or whether to take their chances. I have for a long time been advocating a more cautious approach, favoring settlements on reasonable terms over costly and drawn-out litigation. Google's reexamination requests aren't a basis for app developers to ignore Lodsys's letters. Lodsys can send letters regardless of those requests. Lodsys can sue developers regardless of those requests. Maybe they'll have some effect further down the road, but there's no guarantee they'll ever have any useful effect. I talked to a reexamination expert and he couldn't find anything impressive in Google's reexamination requests.

What app developers need is coverage and guidance. Without coverage, it's incredibly risky to fight a well-funded troll. Without guidance, most of them don't even know what to do.

Google's general counsel Kent Walker told Wired on the occasion of those reexamination requests:

"Developers play a critical part in the Android ecosystem and Google will continue to support them."

Support? What does Mr. Walker call "support"? I dont know of even one app developer who received a substantive answer from Google when asking them about how to deal with a Lodsys letter. I don't know of anyone who received coverage from Google so he can pick a fight with Lodsys.

Maybe Google's initiative will have some useful effect at some point in the distant future. But an increasing number of app developers have a problem right here and now. Mr. Walker, what do you do to support them when they really need you?

Don't be evil.

On Twitter, a BlackBerry game developer named RottenOgre -- maker of the Lonely Turret game -- told me about a letter he just received from Lodsys:

After iOS and Android developers, Lodsys is now also going after BlackBerry app devs. Since RIM faces a lot of challenges, I don't know how much help those developers can expect from their platform maker. But since neither Apple's motion for an intervention in a Lodsys lawsuit nor Google's reexamination requests have provided any timely solution, RIM can hardly do anything less useful than those two companies...

I have already referred many "lodsysed" app developers to the Electronic Frontier Foundation, a non-profit organization that truly cares about these kinds of issues. The EFF has now scheduled a virtual boot camp for September 9, 2011, at 12 noon Pacific Time (that's 8 PM London time, 9 PM Central European Time). On this page you can find further information on how to participate.

There will be a panel of law professors and patent attorneys who can explain to the app developer community what it means to be threatened with U.S. patent litigation, and how patent licensing works.

I think it's great that the EFF organizes this event and I encourage all app developers to participate.

When you follow those presentations, always think about this in terms of what's best for you under the circumstances. One "lodsysed" developer told me he generates about 70ドル per month with his game. He figured that if he acceded to Lodsys's royalty demand, the total cost would be in the tens of dollars. The cost of advice from a patent attorney is in the hundreds of dollars per hour, and even an initial analysis of this issue takes many hours, not just one. That's why for most developers there really isn't any reasonable alternative to blanket coverage from their platform makers (Apple, Google, RIM).

I previously said on Twitter and Google+ that I'll generally do a lot less reporting on non-practicing entity (NPE) issues (such as Lodsys) in the future since there's so much going on now between large operating companies.

This blog has become much more popular than I ever thought it would, and that's also because the topics I cover are of interest to a rapidly-growing audience. Recently, traffic almost doubled on a monthly basis, for three months in a row. It's obvious that traffic can't continue to grow exponentially -- nor can my number of Twitter followers triple every three months (as it just did). The importance of patents to the mobile devices industry became very apparent to many people due to some major events: Apple's settlement with Nokia, the Nortel patent auction, the ITC's initial determination finding HTC to infringe two Apple patents, etc.

I still have to update several of my battlemaps that visualize major disputes. There are also some other topics related to those major disputes and transactions that I want to cover. So I have to make some choices, including tough choices.

I'm originally a programmer, and that's why I personally cared very much about the Lodsys type of issue. I saw a need to counter various attempts by some people to mislead the app dev community. I told people the truth, which is that for 99% or more of all app devs it's simply not a responsible choice to waste time, money and energy on high-risk legal fights with trolls.

This blog is my personal blog. Only I decide which topics I write about, and which positions to take. Blogging about Lodsys was a personal priority. But with all that's going on now, I have to face the fact that I'm in the consulting business and none of my clients ever asked me questions about Lodsys, while I get many questions about the long-term impact of intellectual property issues on the market shares of large players, on the state of affairs in the lawsuits involving large players, on Google's proposed acquisition of Motorola Mobility, and on possible acquisitions of patent holding companies such as InterDigital.

As long as it was possible to cover those "big company" issues and additionally report on Lodsys, I tried to do both. At this point there's too much work to do, and as much as I regret it, I won't be able to focus on Lodsys.

I may still report on it every once in a while if something extremely important happens and when I find the time, but I won't follow the various Lodsys lawsuits and assertion letters in detail.

At this point I think it's very likely that Apple's motion for an intervention will be granted, but it's not a solution in and of itself. I think it's somewhat likely that Google's reexamination requests will result in "first Office actions" by the USPTO regarding those patents, and the USPTO may very well reject those patents on a preliminary basis, but a final rejection will probably take years and is not guaranteed to happen. It seems that Lodsys continues to pressure app developers into license agreements. I believe at some point Lodsys will announce such license deals either on its website or in a court filing. Unfortunately, there's also a significant risk that we may at some point -- probably within a matter of months -- see another Lodsys lawsuit against a long list of app developers who refused to pay. This sad story will continue, and I'm sure there will be media reports on major developments. Again, it's still possible that I will write about it every once in a while, but not nearly as much as during those past few months, for the reasons I explained. Thank you for your understanding.

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Wired.com just reported that Google filed reexamination requests with the USPTO late on Friday, seeking the invalidation (or at least narrowing) two of Lodsys's four patents: the '078 patent and the '565 patent, both of which were used in litigation against app developers.

While I agree with Google's senior vice president and general counsel Kent Walker that those patents should never have been issued, I don't consider those reexamination requests -- unless they will be accompanied by more forceful and useful measures very soon -- a serious commitment to supporting Android app developers against trolls. If this is all that Google does, it's too little, too late, and calling it "half-hearted" would be an overstatement.

Let me make this very clear: reexamination of Lodsys's patents certainly could have positive effects further down the road. It's possible (though by no means certain) that Lodsys's ongoing litigation might be stayed - however, as Wired's article explains, this happens in the Eastern District of Texas only "around 20 percent of the time". In other words, there's an 80% likelihood, just based on statistics, that Google's reexamination requests won't delay Lodsys's litigation.

Google did a pretty good job on its reexamination requests against Oracle, and in that case, the likelihood of a stay is greater than 20%. I watch the case closely, and I think the judge will stay that case at least in part unless he can reach an agreement with Oracle on the number of patent claims to be asserted at trial. But a fight between Oracle and Google has completely different parameters and litigation economics than one between Lodsys and little "indie" app developers.

For app developers, the critical question is still what they should do when they receive a Lodsys letter (and when they get formally sued by Lodsys). They need a basis for deciding what to do next, and Google's reexamination requests don't change the calculus of a rationally-acting developer in any meaningful way.

Lodsys keeps sending out assertion letters. This morning I just got yet another message, via my blog's contact form, from a recipient of those letters. He asked me to put him in contact with fellow developers. I gave him three names and addresses, including the Electronic Frontier Foundation, which is in touch with many affected developers.

Even though Apple tries to be admitted as an intervenor and Google now filed those reexamination requests, app developers still don't get what they really need: blanket coverage concerning both litigation costs and, very importantly, potential damage awards.

Apple is reasonably likely to be admitted as an intervenor in the ongoing litigation, but the scope of its proposed intervention is narrow: it's strictly limited to the question of whether a license agreement that Apple entered into with a previous owner of those patents (Intellectual Ventures) extends to developers, and while that defense may succeed, one can have reasonable doubt about it. Google took an alternative route by filing reexamination requests, which is, as Wired's article mentions, a relatively cheap way to challenge patents, but for the reasons I explained, it still -- neither on its own nor in combination with Apple's motion for a narrowly-focused intervention -- doesn't provide app developers with a basis on which they could simply ignore Lodsys's letters and take the risk of being sued.

Unless and until Apple and Google provide blanket coverage, I maintain my recommendation that app developers should give serious consideration to a license agreement on reasonable terms. By fighting it out with Lodys, it may be possible to get away without having to pay Lodsys -- but for more than 99% of all app developers, it's probably not worth taking the risks involved.

Many app developers may feel great about the notion that two big brothers -- Apple and Google -- have entered the fray. But on closer scrutiny, it turns out that they take measures that may or may not succeed, falling far short of what would really be needed.

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Four of the companies defending themselves agaist Lodsys in its lawsuit against (mostly) iOS and (partly also) Android app developers -- Atari, Electronic Arts, Quickoffice and Square-Enix -- filed a joint letter to the court yesterday that culminates in the following request:

"In view of the Supporting Defendants' critical need to rely upon Apple's assistance in developing the evidence in this matter, Apple's willingness to participate as a party in this action, and the lack of any cognizable prejudice to Lodsys, the Supporting Defendants respectfully urge this Court to grant the pending motion to intervene."

This letter, which I have uploaded to Scribd, follows Apple's reply brief defending its motion for an intervention against a lengthy -- but probably and hopefully not too strong -- opposition brief from Lodsys.

The four defendants who filed this letter are all represented by the same law firm: Gibson, Dunn & Crutcher LLP (a large and very reputable firm). They wouldn't be using the same law firm if they didn't have the intention to cooperate closely throughout this litigation. Quickoffice is the largest one of the seven app developers Lodsys sued originally. It raised approximately 30ドル million of venture capital a few years ago. The three games companies with which Quickoffice is partnering here are much larger, of course. They, unlike Quickoffice, were named as defendants only after Apple's original motion to intervene. Therefore, those three companies have not even been served their summons so far. But they didn't want to wait. They wanted "to ensure that their voices are heard in connection with the pending motion to intervene".

This is how the four copmpanies argue in favor of Appe's intervention:

1. They summarize the gist of Apple's motion for an intervention as stating that "the terms of [Apple's existing] license [to Lodsys's patents-in-suit] operate to immunize application developers (such as the Supporting Defendants) from any infringement of the Asserted Patents on account of iPhone or iPad games such as those made or published by the Supporting Defendants". Note that these four companies aren't accused of infringement of Lodsys's patents with any Android-based apps (unlike Angry Birds maker Rovio from Finland and Illusion Lab AB from Sweden).

2. They accurately conclude from Apple's motion for an intervention that "[i]f this were proven to be correct (the Supporting Defendants do not yet have access to the confidential license at issue), the Supporting Defendants would each have a complete defense to the claims of Lodsys in this matter, regardless of whether the Asserted Patents are valid, enforceable and infringed (all of which the Supporting Defendants dispute)". It's reasonable to assume that Apple would indeed not let those companies take a look at the license at this stage. After a possible admission of Apple as an intervenor, that may happen, but not yet. It's furthermore true that Apple's license would resolve this issue in favor of those particular defendants (though not the two companies who are also sued over Android-based apps), rendering all other questions (validity, enforceability and infringement of those patents) irrelevant. They refer to this as "what may prove to be a complete defense to the infringement claims in this action".

3. In connection with the foregoing, Apple's supporters underscore Apple's strongest argument for an intervention -- that Apple can uniquely contribute potentially outcome-determinative information to the proceedings:

   "Apple has the very best information available to anyone on the subject of the nature and operation of its own licensed technology. Similarly, as one of the two contracting parties, Apple will have vital information regarding the negotiation, nature and scope of its license.

   Moreover, Apple is uniquely positioned to respond to any claim made by Lodsys that the scope of its license does not operate to the benefit of Apple's application developers."

4. Then they explain that Apple can only be truly helpful as an intervenor, not as a third party:

   "To do so, however, Apple must be a party to this action, not a third-party.

   For example, as a party in this action, Apple and its counsel would have access under this Court's protective order to all written discovery and testimony on the subject of the background and scope of its license, as well as the nature and operation of its own, licensed technology. Were Apple's participation in this action limited to that of a third-party, Lodsys would be able to insulate the testimony of Lodsys's documents and witnesses--as well as the reports of Lodsys's experts--from review, critique and response by Apple."

   The foregoing is an argument about access to information. To assess whether Apple's licenses covers app developers, it will be necessary to look at both Apple's own technology (to which the license relates) and at what app developers do. There's nothing that would preclude app developers from disclosing their technology to Apple, but Apple wouldn't be able to disclose the content of its license agreement. There might still be a need to keep certain parts of that license agreement confidential, but if Apple gets to intervene, then there'll be a much more effective flow of information between Apple and the app developers.

I think it's a good thing that those four defendants filed such a joint letter to the court. It's possible that those companies' lawyers coordinated this letter with Apple's lawyers, but they didn't necessarily: they could also have concluded from Apple's filing all on their own which points still needed to be stressed in their clients' best interest.

After Apple's reply brief, I was reasonably optimistic about Apple's motion for an intervention being granted. But it's better not to take any chances. Lodsys put a lot of effort into its pleading against Apple's motion, and in such a situation, it's advisable to make reasonable efforts to maximize the chances of success of Apple's motion. I also believe that those defendants -- and all other app developers -- would like to see Apple's motion granted sooner rather than later. So would I.

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About two weeks ago I reported on Lodsys's lengthy opposition brief to Apple's motion for an intervention. Many iOS app developers -- not only the ones who have already been sued but also countless others who have not yet decided on whether to accede to Lodsys's demands -- are anxiously awaiting a court decision on Apple's motion, which was filed almost two months ago.

In today's reply brief, which I have uploaded to Scribd, Apple still requests a court hearing on its motion. Things may still take some more time, but there will be no more written pleadings unless the court asks the parties to address particular questions in more detail. At this stage it's possible that the court decides very quickly, and I continue to be reasonably optimistic that Apple's motion will be granted.

Apple's filing tears into pieces the arguments put forward by Lodsys's opposition brief. Here's a quick summary:

1. Lodsys made a license argument that was heavily redacted. Apple's reply is also heavily redacted except for a passage in which Apple says that Lodsys's request to stay Apple's motion pending discovery is a non-option: "Factual issues concerning the construction of this provision [presumably this refers to a provision in the license agreement] must be resolved on the merits, not at the pleading stage on a motion to intervene.

2. Apple dismisses Lodsys's argument that its motion for an intervention was "premature" (just because Lodsys later amended its complaint) as "flawed". Apple argues that a motion can only be "untimely" if it's too late -- not because it's too early.

3. Lodsys claimed Apple had only an "economic" interest in this case. However, Apple says that Lodsys has ignored "the authorities cited by Apple in its opening brief, which hold unambiguously that a license is itself a sufficient property interest as a matter of law." Moreover, Lodsys had denied that Apple had a supplier-customer relationship with the app developers that could be a basis for an intervention, but Apple says that it "provides products and services to the App Makers in exchange for payment, precisely the type of supplier-customer relationship courts have found sufficient to permit intervention". Apple adds that it's too early for the court to take decisions on the nature of Apple's relationship with the developers: "Those issues must be resolved through discovery."

4. Apple claims an impairment of its interests if it isn't allowed to intervene: "Apple's License lies at the heart of this case, Lodsys has already sued numerous significant Apple customers and threatened dozens of others, and a boycott of some of Apple's core products by App developers has been proposed." I believe Apple's claim that "dozens" of other customers have been threatened is a very conservative estimate. I've already become aware of so many Lodsys letters (and seen several of them) that I wouldn't be surprised if the actual number was in the hundreds rather than dozens, but maybe Apple itself has so far only received reliable information concerning dozens of them.

5. Lodsys tried an end run around Apple's motion for an intervention by claiming that the more recently added defendants -- Lodsys, EA and other major games companies -- are (unlike the app developers Lodsys sued originally) capable of defending themselves. This is what Apple has to say about that: "Although some of the new defendants may have greater resources than the original defendants, Lodsys does not contest the fact that none of the defendants have the technical information, expertise, and knowledge regarding how Apple's technology works or the negotiation and intent of the License itself to fully articulate and develop Apple's exhaustion defense. [...] This distinction alone is sufficient."

6. As a fallback that would also serve Apple's purposes, Apple continue to argue that the judge would have every option to grant a permissive intervention. Apple claims that "Lodsys concedes that Apple's Motion raises many common issues of law and fact to those likely to be raised by the parties to this action." What Apple calls "concedes" is just that Lodsys quoted from Apple's motion and from a different case. It's not like Lodsys affirmatively stated that Apple's motion raises common issues, but Lodsys didn't really contradict that claim either, and the combination of all of that is what Apple calls a concession.

Let's hope that the court will grant Apple's motion very soon.

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On Wednesday I reported on Lodsys's opposition to Apple's motion for an intervention. Lodsys's lawyers clearly put a lot of effort into that pleading, which some others described as a sign of Lodsys being afraid of Apple. In my view, that's an exaggeration. I'm sure Lodsys knows that Apple is reasonably likely to be allowed to intervene, in which case Lodsys appears to be fully prepared to contest Apple's exhaustion theory, but Lodsys tries to nip Apple's intervention in its bud.

After dropping Wulven Games of Vietnam from its app developer lawsuit by not listing it as a defendant in its amended complaint, Lodsys has dismissed another app developer, Richard Shinderman. He was accused of patent infringement with his Hearts and Daggers game for the iPhone. Yesterday Lodsys filed the following notice of dismissal with the court:

Plaintiff Lodsys, LLC ("Lodsys"), pursuant to [Federal Rule of Civil Procedure] 41(a)(1)(A)(i), hereby notifies the Court of its dismissal of all claims in this action between Lodsys and Defendant Richard Shinderman, without prejudice and with each party to bear its own costs, expenses, and attorneys' fees.

The words "without prejudice" mean that Lodsys did not waive its right to file a future lawsuit over the same issue against Richard Shinderman. Since Richard Shinderman had not yet responded to Lodsys's complaint, Lodsys was able to unilaterally dismiss him from the litigation. However, it's more likely than not that this dismissal results from a settlement between the two parties, and if Richard Shinderman is now licensed, then he'll be fine.

A settlement can result in a dismissal with prejudice (barring the plaintiff from suing the relevant defendant over the same matter), but it doesn't have to. Since Lodsys's notice doesn't mention a settlement, it could also have been unilateral. However, it's hard to see any particular reason for which Lodsys might have thought it had a weaker case against Shinderman than against the others. I don't mean to overrate the merits of Lodsys's assertions. I'm just saying that there isn't an obvious technical characteristic that sets Richard Shinderman's software apart from that of the other defendants. Therefore, a settlement is rather likely.

In the event this was a unilateral act by Lodsys, one possible motivation might be that Lodsys wants to reduce the number of "little guys" among the defendants. In its motion for an intervention, Apple had stressed that Lodsys sued small companies and individuals. But if Lodsys had decided to dismiss all individuals from the lawsuit, it would also have dismissed Michael Karr (doing business as Shovelmate).

Absent blanket coverage from Apple (and Google with respect to Android apps), I believe every app developer who signs a license deal with Lodsys on reasonable terms does the right thing for himself without missing out on an opportunity to make the world a better place: whatever happens in the Lodsys case is not going to do away with software patents, or with trolls at large.

App developers weren't the only target audience for Lodsys's assertion letters. Lodsys also wrote to companies accused of infringing one or more of its patents with ad click tracking, questionnaires and live chat. As a result, six companies filed declaratory judgment actions against Lodsys's patents. Companies expecting patent lawsuits in East Texas often launch such pre-emptive strikes so they can litigate in a less troll-friendly district. Four of the six companies filed their DJ actions in the Northern District of Illinois (Chicago and surroundings) because they had seen a LinkedIn profile of Lodsys CEO Mark Small that stated "Greater Chicago Area" as his place of residence, which would (if accurate) give that court personal jurisdiction over the guy.

However, in its replies to those DJ complaints Lodsys claimed that Mark Small actually lives in Oconomowoc, Wisconsin. As a side note, Wikipedia states that "The Wizard of Oz premiered at the Strand Theatre in Oconomowoc on August 12, 1939". At any rate, what matters for the question of proper venue is geography, not wizardry. Oconomowoc is located in the Greater Milwaukee Area rather than the Greater Chicago Area. According to Google Maps, it takes approximately 120 miles (by car) to go there from Chicago.

The U.S. District Court of the Northern District of Illinois granted the four aforementioned companies their request some discovery of Small as far as it is exclusively related to the question of personal jurisdiction. Those parties had asked for the right to take a deposition of Small, and that's what I guess is going to happen soon. While the court order refers to discovery and doesn't explicitly say "deposition", it's hard to imagine how this discovery would work without a deposition of Small.

While Small has refused to answer questions from the media, this means he'll get interviewed by The New York Times, or more precisely, The New York Times Company's counsel.

The most likely scenario is that Small stated his place of residence in a very imprecise form on LinkedIn. In that case, the lawyers of the four companies who sued Lodsys in Chicago made an amateurish mistake by relying on a vague piece of information from a LinkedIn profile, and their clients might in that case pay for that mistake if their DJ action is dismissed or otherwise consolidated into Lodsys's East Texas lawsuit against the six parties that brought DJ actions. Having to litigate in East Texas may or may not be bad in the end but it's clearly what those companies sought to avoid by suing in Illinois first.

In my opinion, those companies should have made more of an effort to find out about Small's actual place of residence. When big companies really want to find out about someone's whereabouts because of a lawsuit, they sometimes even hire private investigators (for example, Oracle hired "private eyes" to hunt down former SAP and now HP CEO Léo Apotheker). Again, it baffles me how someone can rely on a vaguely worded part of a LinkedIn profile. Professionals would have taken note of that information but would have taken it with a grain of salt. They would have seen that the profile mentioned some of Small's former colleagues, which would have been another great starting point for private investigators in addition to all other information available and possible sources of more information.

By taking a deposition of Small, those companies make a last-ditch effort to maybe find a way to prove that Small does at least some business in the Chicago area. Also, even if their lawyers end up embarrassing themselves in terms of having jumped to an incorrect conclusion, they may find legal reasons for which the lawsuit should go ahead in Chicago. But if they had done their homework properly, this couldn't have happened in the first place. I'm skeptical that Small's testimony is going to be productive.

Those fighting Lodsys's assertions should not underestimate a potentially very well-funded troll. I think Apple's lawyers, too, did a sloppy job on their proposed answer to Lodsys's complaint. Even though the consequences of their sloppiness are minimal (if necessary, they can resubmit a corrected answer, while the mistake those other copanies' lawyers made about Chicago and Oconomowoc could enable Lodsys to have the dispute transferred to its preferred venue), it's disappointing that they didn't properly distinguish between iOS apps (to which their license might extend) and Android apps (to which Apple's licenses certainly doesn't extend).

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Lodsys had an (extended) deadline today to respond to Apple's motion for an intervention in a patent infringement litigation in which Lodsys is suing 11 app developers, five of which are rather small. The non-practicing entity's lawyers just filed a set of documents, totaling 92 pages including various exhibits, with the U.S. District Court for the Eastern District of Texas in opposition to Apple's motion for an intervention.

Here's the document -- I'll sum up its gist further below:

Lodsys asks the court to dismiss Apple's motion or to at least stay it pending some discovery of Apple that Lodsys would want to conduct. The document is redacted, and the scope of Lodsys's proposed discovery of Apple is not made public.

Lodsys's opposition to Apple's motion is at least going to cause further delay. Apple will now have the chance to file a reply defending its motion against Lodsys's opposition, and then there will probably be a hearing and, certainly, a decision. It may take several more weeks (though presumably and hopefully not much longer than that) until app developers know whether Apple is admitted as an intervenor. In the meantime, app developers appear to depend on their own financial resources as they need to defend themselves and soon file their answers to Lodsys's complaint.

Lodsys presents the following legal reasons for its opposition to Apple's proposed intervention:

1. Lodsys makes an argument based on the scope of Apple's license to those patents. Almost the entire related passage is redacted. Quite likely, that passage addresses Apple's patent exhaustion theory.

2. Lodsys argues that Apple's "purported interest is, at best, purely economic", and speculative (referring, for example, to Apple's claim that Lodsys's patent enforcement against app developers could "lead to loss of significant revenues from all developers"). Lodsys claims that "courts have consistently held that economic interests do not satisfy the requirements for intervention" and that there also must be a legal interest. No doubt Apple will contradict.

3. Apple's original motion for an intervention described the defendants in that lawsuit as individuals or "small entities with limited resources". That was the case based on the original complaint filed on May 31. But Lodsys amended it last week, dropping one of the "indie" developers and adding five games companies, all of which are presumably larger than the original defendants. The new defendants most notably include Electronic Arts and Rovio (Angry Birds). Apple just updated its proposed answer to Lodsys's complaint accordingly, but Lodsys claims Apple's argument about resource constraints is no longer well-taken since the likes of EA and Rovio "will more than adequately represent Apple's purported interest".

In its pleading, Lodsys complains that "Apple previously refused to provide even Lodsys's counsel with a complete copy of the License and, instead, redacted all but two paragraphs of the License." That statement leaves no doubt that Apple does not have a direct license agreement in place with Lodsys. I already wrote on May 17 that Apple's license (and licenses that Google and other well-known companies have) most likely harks back to the time when Intellectual Ventures held those patents. The patents were subsequently sold, and Lodsys has to respect existing licenses, but it's not Apple's direct contractual partner.

Lodsys now accuses Apple of "disingenuous conduct and repeated attempts to hide the ball" for refusing to disclose the license in greater detail. I guess Intellectual Ventures' license agreement may be very strict, as I explained in another blog post, which focused on the question of whether Apple and Google may be barred from challenging Lodsys's patents. IV may have agreed with Apple on confidentiality obligations that mean Apple can only present that contract in its entirety if ordered by a court of law.

Concerning Apple's interest in an intervention, Lodsys disputes that it's "direct, substantial, [and] legally protectable". Again, I'm sure Apple will defend its right to intervene.

Lodsys's opposition brief cites certain passages of the iPhone Developer Program License Agreement to show that Apple doesn't indemnify its developers (at least not to any meaningful extent), and holds this fact against Apple:

"Thus, by Apple's design, the relationship between Apple and the Developers is the complete opposite of the manufacturer and customer relationship [that was considered relevant in another case]."

With respect to the financial resources of some of the defendants named in the original complaint, Lodsys cites certain publicly available information:

"For example, Illusion Labs has publically disclosed that its total revenue for fiscal year-ended June 30, 2010 was (US) 5ドル.1 million, with total assets of (US) 4ドル.6 million. [...] And Quickoffice purports to have '[i]nstalled on over 300 million devices in more than 180 countries.'"

Lodsys's lawyers put a fair amount of thought and research effort into that brief. I have been watching Lodsys's filings in the various lawsuits it started and the declaratory judgment lawsuits in which it is the defendant. There's no doubt to me that Lodsys is pretty well-funded, at least for the time being. It spends serious money on these lawsuits. App developers thinking about picking a fight with Lodsys should take this observation into account and give serious consideration to my suggestions for a focused, cost-efficient way to work out a solution.

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After Lodsys sued seven app developers (on May 31), Apple filed a motion to intervene (on June 10), on which the court has yet to decide. Meanwhile, Lodsys amended its complaint (on July 22), dropping one app developer from the original complaint but adding five new ones, most notably Rovio (Angry Birds) and EA. Apple has just updated its proposed answer to Lodsys's complaint accordingly. It's a proposed answer only because formally it's not a pleading in this lawsuit until the court admits Apple as an intervenor, which could happen shortly.

Apple provided the court with two versions of the new proposed answer: a clean version and one with colorful mark-ups that highlight the edits Apple made to the proposed pleading. I have uploaded the marked-up version to Scribd.

There isn't any noteworthy change. Apple continues to argue exclusively on the basis of an exhaustion theory: Apple claims that the license it has to Lodsys's patents (which it almost certainly received from Intellectual Ventures, a previous owner of those patents) extends to its app developers. As much as I'd like to see Lodsys defeated, I've previously raised doubts about this theory. I'm not saying Apple is wrong -- just that the court may arrive at a different conclusion.

It's disappointing that Apple still doesn't challenge the validity of Lodsys's patents nor the assertion that there is an infringement. Apple's license agreement with Intellectual Ventures presumably precludes Apple (and Google) from this unless they risk losing their license to those patents and potentially many others (up to more than 30,000). Still, the problem is that app developers are left to their own devices in this respect, and the exhaustion theory is far from certain to defeat Lodsys. Lodsys itself doesn't appear to take it seriously at all as this 1,000ドル wager shows.

So far I don't see any indication that Apple is funding the developers who have to defend themselves. I still hope (though I'm skeptical) that Apple will be able to do that if it's formally admitted as an intervenor. In my view, only blanket coverage is a basis for little "indie" developers to pick a legal fight with a troll like Lodsys unless they want to pick up huge costs and take incalculable risks.

Apple's proposed answer appears to have a flaw that suggests to me that Apple's legal department didn't put nearly as much thought into that one as it does in its major disputes with the likes of Samsung. If you read Apple's proposed answer, it doesn't make any reference to the fact that two of the accused products in that dispute are actually Android-based. Lodsys accused not only the iOS but also the Android versions of Illusion Lab's "Labyrinth" and Rovio's "Angry Birds". Apple's proposed pleading, however, asks the court to dismiss Lodsys's compaint in its entirety based on the assertion that Apple's license extends to its developers. There's no way that Apple's license can extend to Android apps. Since Apple's proposed defenses and counterclaim don't make that distinction, it's quite possible that Lodsys could convince the court that Apple needs to resubmit its answer. Maybe there are people at Apple who dream of a monopoly, but they don't have one.

Of course, the fact that two Android apps are among the accused products raises the question of why Google isn't involved in any way. In a long post on Google's new anti-patent stance, which I published earlier today, I also mentioned the Lodsys situation as a credibility issue for Google. This link leads directly to the section on Lodsys.

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Today Lodsys has amended its complaint against mobile app developers and modified the list of defendants, leaving out one of the seven developers sued on May 31 (Vietnamese company Wulven Games) but adding five famous games companies:

• Rovio is accused of infringing at least one of Lodsys's patents with Angry Birds for iOS and Angry Birds for Android -- here's the related paragraph (click to enlarge):

• Electronic Arts: The Sims 3 for iPhone

• Atari: Atari's Greatest Hits for iPhone and Atari's Greatest Hits for iPad

• Square Enix: Big Hit Baseball for iPhone and Big Hit Baseball for iPad

• Take-Two Interactive: 2K Sports NHL 2K11 for iPhone

The number of defendants in this lawsuit has now increased from 7 to 11 (7 original defendants, 1 left out, 5 new ones added). Here's the header of the amended complaint:

I have also uploaded the complaint to Scribd.

This amended complaint shows several things:

• Lodsys is not afraid of suing deep-pocketed app developers. I'm not surprised, given that Lodsys has three other lawsuits going, all of them against big companies including the likes of HP, Brother, adidas, Best Buy, The New York Times Company, etc.

• Lodsys continues to go after Android apps as well. In the original lawsuit against seven app developers, one of the games was available for iOS and Android (Labyrinth). That one is still part of the list, but now Angry Birds, a much more prominent cross-platform game, has joined it. Recently, Lodsys sent a number of assertion letters to Android developers, and Android community websites increasingly report on the problem (as I mentioned in this blog post on how app developers can cost-efficiently deal with the situation). Google's silence and inactivity about this issue makes it likely that Lodsys will sue more Android developers if they don't pay.

• Lodsys is still not impressed by Apple's assertion that its own license to Lodsys's patents extends to its app developers. I also pointed out that Apple's "exhaustion" theory is not necessarily accurate. Also, Lodsys may be able to capitalize on contractual commitments that might preclude Apple and Google from challenging Lodsys's patents and the related infringement allegations.

With today's amended complaint, Lodsys is currently suing a total of 37 defendants, and there may be more to come.

In this context I'd like to recommend an article written by a staff attorney of the Electronic Frontier Foundation in light of the fact that there are app developers who have removed their products from the U.S. market due to the rampant patent troll problem (a fact that was reported on by The Guardian).

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Quizcover game app (by Quizista GmbH) [U.S. trademark application data on Justia.com]