Tuesday, July 26, 2011

Apple updated its proposed answer to Lodsys's complaint

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 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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