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Summary:

Everyone was probably hoping that the situation with Lodsys asking app developers for royalty payments on its patents would somehow get diff…

Lawsuit legal gavel

Everyone was probably hoping that the situation with Lodsys asking app developers for royalty payments on its patents would somehow get diffused over time, but for now it just looks like it is getting messier. On the back of Lodsys last week filing lawsuits against seven developers who make apps for Apple’s App Store, the Cupertino giant has now filed a motion to intervene in that suit.

If granted, the motion — first revealed by patents blogger Florian Mueller — would make Apple (NSDQ: AAPL) an additional defendant in the case being made by Lodsys, which claims that the developers are infringing on patents that it holds on in-app transactions.

Apple has already sent a letter to Lodsys (we have a copy here) where it laid out its position, which is getting repeated again in the motion filed in the U.S. District Court for the Eastern District of Texas: it believes that because it has licensed the patents itself already, those licenses extend end-to-end on those services being run by Apple, including items created by third parties, who have agreements with Apple to operate on its platform.

The documents filed by Apple contains a few gems that speak to some of the bigger issues that surround the whole patent industry, and the charade that many companies feel they play in that game when they have to cough up money for licenses to enable certain services and features:

“Apple periodically enters into licenses for patents that allegedly cover Apple technology,” the document says (our bolding).

And they also feature glimpses of how crucial it is for Apple to get this right, with the worst case scenario being a breakdown of its whole content business model:

“There has been at least one report of an effort to organize a boycott of further use of Apple’s licensed technology by App developers until this issue is resolved. Apple’s interest is direct, very real, and of extraordinary importance to the continued success of Apple’s business,” reads one passage.

Mueller believes that the court will grant Apple’s motion, which will be a big boost to the seven defendants in the case.

This could also mean a more practical relief, with Apple picking up the bill for what might become hefty legal costs. What’s still up in the air is what will happen with the other developers — Apple and otherwise — that Lodsys has contacted but not sued — and of course the thousands of others that have yet to get “Lodsysed.” A legal decision on this first case should set the record straight on the rest.

A full copy of the motion, along with other supporting documents, can be found here.

  1. There is no way that Apple can protect all small developers against patent trolls.  The U.S. legal system, unfortunately, makes it far to easy to sue others without repercussions.  Just look at how copyright trolls are suing thousands of people to extort money from them by using the U.S. courts.

    INAL, but I think the best thing to do for a small developers in cases like this is to financially structure themselves to protect themselves legally.  For example, have the app owned by a limited liability company, which in turn pays another corporation all of its profits from the app for consultation fees, which in turn, pays all of those profits to another corporation for consultation fees, which then pays the developer for consultation fees.  Thus, the original limited liability company makes no money. Sue it if you want to, but you’ll get no money from it or you may owe the IRS a lot of money even if you win.  Thus, you make it unappetizing a target to sue.

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  2. That’s interesting, James. Haven’t seen this suggestion before. But is it legal?

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