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Lodsys Hunts For Bigger Game, But Gets Slapped With A Lawsuit In Chicago

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Lodsys became infamous for demanding patent royalty payments from small app developers, but it’s now become clear that the company is asking for payment from all kinds of companies doing basic business online, big and small. Lodsys sent letters alleging patent infringement to Best Buy, Adidas AG, and WE Energies, and those letters have been made public, now that a servicer provider to the three companies has filed a preemptive-strike lawsuit in Chicago that seeks to invalidate some of Lodsys’ patents.

The lawsuit was filed by a ForeSee Results, a marketing analysis company that provides customer surveys to all three of those companies. It’s what’s called a “declaratory judgment” (DJ) lawsuit, which is basically when a potential defendant who has received legal threats decides to just go ahead and move the dispute into court rather than waiting around to be hit with a lawsuit. This happens frequently in patent disputes because there’s often jockeying over the venue of the lawsuit, with plaintiffs often wanting to get into venues where litigation moves quickly, or venues that are perceived as pro-plaintiff. That includes East Texas, where Lodsys has been filing suit. This DJ lawsuit, filed in Chicago, is likely an attempt by ForeSee to avoid fighting this battle in East Texas.

Lodsys has said on its website that it’s asking for a royalty payment of .575% from app developers, but it isn’t clear if the company wants the same terms for this online survey patent. The letters simply state that Lodsys “[is] interested in reaching a negotiated non-litigation licensing arrangement with you for all of your uses of the Lodsys Patents under your brand names and would like to discuss this matter with you within 21 days of your receipt of this letter.

I called and emailed Lodsys CEO Mark Small to ask about the DJ lawsuit and its claimed inventions, but haven’t heard back.

Here’s what this new lawsuit shows us about Lodsys:

»  The company believes it “owns” a huge array of basic online practices, and its wild claims aren’t limited to the mobile space. It’s saying that Adidas, Best Buy, and WE Energies all owe it money simply because they send out customer satisfaction surveys, and do it online. The claims are dressed up with barely-intelligible legalese, but Lodsys’ claim charts show what they really mean.

What does it mean that Lodsys claims “a system for managing information about a value to users of units of a computer product that are in use by the users?” In the view of Lodsys, it means sending out surveys. It sounds like a classic example of taking basic business behavior and getting a patent on a computerized version of it.

»  Lodsys isn’t just going after “little guys.” It’s more of a classic I-own-the-internet patent trolling campaign. And when you go after bigger companies, like Best Buy and Adidas, they’re much more likely to fight back (or, as they have here, “encouraged” their service provider to take care of this matter.)

»  Read the Lodsys lawsuit [PDF]

»  Read the Lodsys licensing letters & infringement charts: Exhibit E [PDF], Exhibit F [PDF], Exhibit G [PDF]