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Summary:

Patent-holding company Lodsys has jumped the gun on its own timeline for litigation against app developers-apparently in an attempt to order…

Lawsuit legal gavel

Patent-holding company Lodsys has jumped the gun on its own timeline for litigation against app developers-apparently in an attempt to order to have a better chance of maintaining its chosen venue, the patent-plaintiff-friendly Eastern District of Texas. (“To preserve our legal options,” is how the company put it in a blog post today.) Lodsys’ demands-a .575% annual royalty payment from, essentially, the entire app economy-has outraged many small developers and spurred Apple (NSDQ: AAPL) to write a letter denouncing the company’s demands.

Lodsys has sued seven app developers, all of whom appear to be quite small: Combay, Inc., Iconfactory, Inc., Illusion Labs AB, Michael G. Karr d/b/a Shovelmate, Quickoffice, Inc., Richard Shinderman, Wulven Game Studios. Lodsys’ local attorney of record is William “Bo” Davis, a well-known East Texas lawyer who was formerly at McKool Smith, a large Texas law firm, but formed his own patent plaintiff’s firm in 2008.

One of the earliest Lodsys targets, programmer James Thomson, tweeted that he received the Lodsys patent threat letter on May 13 and was given 21 days to respond. That means Lodsys has jumped its own deadline by at least three days.

Lodsys has accompanied its lawsuit with a few blog posts, including one that disputes Apple’s position that developers are covered by a license that Apple has already taken to the Lodsys patents. The letter authored by Apple General Counsel Bruce Sewell led to “a very positive reaction in the press and blogs,” states Lodsys. “Apple appeared to give the Developer community what they wanted. Unfortunately for Developers, Apple’s claim of infallibility has no discernable basis in law or fact.”

(Apple, Google (NSDQ: GOOG), and Microsoft (NSDQ: MSFT) all hold licenses to the patents Lodsys is now using to sue developers. But those companies very likely paid for their licenses as part of a blanket agreement with the patents’ previous owner-the large patent-holding company Intellectual Ventures-and did not do business directly with Lodsys or its principals.)

The Lodsys lawsuit is embedded below. We’re reaching out to defendants for comment and will update the post if we hear back.

By filing suit first, Lodsys will likely get an advantage in any dispute over the proper venue of a lawsuit. It might need that advantage, because while Lodsys is officially a Texas company, its ties to that state appear minimal. Lodsys’ CEO is a Chicagoan named Mark Small. The company has taken steps to hide the identities of its investors and other officers. While Lodsys is a Texas company on paper, the only “owner” that it has reported to the court is a Delaware shell company called Lodsys Holdings, LLC. Delaware laws don’t require limited liability companies to disclose the names of their officers or owners.

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  1. Shakespeare famously said, “First, we kill all the lawyers.” This is a perfect example of why that line and the myriad ‘lawyer’ jokes are so ubiquitous.

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