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Oracle sues to smash patent troll Lodsys

Oracle (s orcl), it seems, is not one for irony. Right after an epic court fight with Google (s goog) in which it was accused of abusing its intellectual property, the software maker is now trying to dissolve another company’s patents.

This time, though, Larry Ellison’s company gets to be the good guy. In a lawsuit filed in Wisconsin federal court, Oracle is asking the court to invalidate four patents belonging to a patent troll that has been terrorizing corporations and small software developers across the country.

The troll in question, Lodsys, is a Texas-based shell company that gained infamy last year by suing app makers who included a common “in-app” purchase feature in their Apple (s aapl) products. The company’s business model is based  in part on using threatening letters to force app makers to hand over part of their revenues —  money which then fuels new legal campaigns.

Oracle has decided to weigh in because Lodsys “has repeatedly threatened numerous Oracle customers” such as Walgreens over the use of a web-chat feature Lodsys claims to own. Oracle is asking the court to declare that the four patents Lodsys is using to bully its customers are not new inventions. The patents, including US Patent  5,999,908 (“customer based design module”), came to prominence last year when Lodsys used them to sue Best Buy, Adidas and others.

Oracle’s lawsuit also takes a swipe at Lodsys’s status as a patent troll — a shell firm that doesn’t make anything but instead collects patents to sue companies that do:

Lodsys did not invent the technology claimed in the Patents-in-Suit. Instead, Lodsys claims to have acquired the Patents-in-Suit from a non-practicing entity, Webvention, LLC, and now seeks to extract royalties by demanding that Oracle’s customers, or Oracle, take a license under the Patents-in-Suit.

Lodsys is a patent holding company that does not practice any of the Patents-in-Suit but attempts to obtain licensing revenues in connection with its assertions of those patents.

Oracle is not the only heavyweight to challenge Lodsys. A court recently gave Apple (s appl) permission to intervene on behalf of its developers in a Texas case.

The patents themselves were obtained by Dan Abelow, a self-styled inventor who attended several business schools but appears to have no training in science or engineering. The front man for Lodsys is a Chicago man named Mark Small but the real owners of the shell company have yet to reveal themselves. Lodsys is believed to be tied to Intellectual Ventures, a Seattle firm that aspires to make patent trolling a multi-billion dollar industry.

Here’s the Oracle suit:

Oracle v Lodsys
(Image by Tereshchenko Dmitry via Shutterstock)

13 Responses to “Oracle sues to smash patent troll Lodsys”

      • You guys obviously do not make software. I would like to hear one, just one, salient point attesting to oracle being the good guy in the case.

        We are both referring to the same oracle right? The one who tried to argue Google should owe them millions for a 12 line RangeCheck?

  1. Dan Schuh

    I’d be a lot more impressed if Larry took on Intellectual Ventures or some other large-scale operation. But every little bit helps.

    Larry ought to have a pretty good idea what it takes to invalidate a bogus patent by now, anyway. Ain’t easy, but it can be done, just requires a lot of expensive lawyering. I’d say he could just redirect what he was paying Florian Mueller to pay for it, but Florian probably was never getting paid a lawyerly rate.

  2. Steve

    Litigation is expensive. If anything it seems to me these “troll” companies provide little guy inventors who can’t afford lawyers with a way to make money on their inventions. The problem is not the “troll” companies. It’s that sometimes patents that shouldn’t get approved do.

    • NormM

      I agree, but the problem is worse than that: it’s *mostly* patents that shouldn’t get approved that do. Good patents are a small minority these days. The same ideas are awarded patents over and over. Even worse, most patents are granted for obvious ideas: companies are sued when they reinvent the obvious way to do a given task. Since complicated software includes hundreds or even thousands of ideas, it’s impossible to write a substantial piece of software without infringing. So most patents are simply a tax on innovation playing no role in making an idea available to the world.

  3. Robert

    Companies like Lodsys which use lawsuits to generate revenue are like a cancer attacking community, they are a method that funded corporations drain the startup community without delivering any innovation to the market.

    • Thanks for your comment, Michael. Oracle provides an extensive list of prior art to suggest the inventions are anticipated (though that’s no guarantee they are).

      More generally, though, are you suggesting the troll’s business model is legitimate and/or useful? While patents have the potential to be a spur to innovation, Lodsys is simply a dead weight transaction cost. It appears Abelow and others have figured out how to game the patent system and are now using a government issued monopoly to tax one of the most innovative sectors in the country. Is this really defensible?

      • michael

        When a company files a complaint or an answer saying a patent is not valid or not infringed, that is not evidence that it is so. Just like it is not evidence when a patent owner files a complaint or counterclaim saying the patent is infringed.

        I know nothing of this particular company, or its patents for that matter. But let me ask this – if the inventor of the patents had sued in his own name, and if his patents are in fact valid and infringed, then what is the difference if he set up a company and then sued? The whole “troll” argument comes down to an argument that no one should be able to have a patent unless he/she/it not only made the invention but makes a product that embodies the invention. Do you believe that position is defensible? If so, that’s really a quite radical position, despite all those who claim to be categorically against “trolls.”

    • Michael, per your follow-up comment, I think we have to be careful not to succumb caricatures in the debate over intellectual property — ie where all patent owners are trolls and all those who oppose the status quo are radicals. The question is more subtle and turns on how the government should calibrate the patent system (and its artificial monopolies) to encourage innovation. The current model clearly isn’t working.