Wednesday, August 10, 2011

Atari, EA, Quickoffice and Square-Enix ask court to let Apple intervene in Lodsys lawsuit

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 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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