Can Apple Save These Companies From a Hungry Patent Troll?
Lodsys — a patent holding company based in Marshall, Texas — has once again launched a rampage. Back in 2011, the company earned its reputation as a patent troll when it first went after small app developers, demanding a payment of 0.0575 percent of their revenue if they use in-app purchases, a technology that allows for users of devices like Apple’s (NASDAQ:AAPL) iPhones to purchase subscriptions and extra content from within an application. Even though a legal battle is mounting, Lodsys has not given up on its designs to extract payments from companies that violate any of its patents related to this technology, reported Ars Technica Sunday.
While Apple — whose smart devices make use of in-app purchasing technology — has argued since May that because it has licensed the Lodsys patents, its developers should be protected, that argument has done little to rectify the situation as of yet. Numerous lawsuits have been filed in an East Texas court, but not much has been accomplished. According to the publication, as many of the cases have been consolidated into a single lawsuit, the judge in charge of the case has decided that the case must plod through discovery before Apple’s arguments are considered. The trial is scheduled for October 2013…
But Lodsys is not sitting back and letting the legal process work out the details. While Apple busies itself with legal arguments, the patent company is cashing checks and filing new lawsuits. “If the Lodsys case proves anything, it’s that the vigorous intervention of ‘big guys’ like Apple and Google (NASDAQ:GOOG) can’t always stop a patent holder determined to extract payments from smaller targets,” noted Ars Technica.
For its part, Lodsys has claimed that it is entitled to royalties from websites that have incorporated certain types of “interactive chat, user feedback form, and survey features,” to their design, and this stance has allowed Lodsys to practically sue any company with a website. In November, in just one lawsuit, Lodsys charged that charter.com, a cable company, lampsplus.com, a retailer, corbisimages.com, an image licenser, and shop.nordstrom.com, the website for retailer Nordstrom (NYSE:JWN), had all infringed on two of its patents — numbered 7,620,565 and 7,222,078. Last week saw the start of the company’s latest round of lawsuits, with mobile game companies Gameloft (GLOFF.PK) and Gamevil being targeted…
Many companies have chosen to fight Lodsys in court, but many have also simply paid up. Ars Technica reported that, as of October, Lodsys had stated that more than 150 companies had been convinced to pay penalties, and that number has surely grown since then. As the consolidated case docket indicates, Lodsys has made deals with Hasbro’s (NASDAQ:HAS) Atari, Take Two Interactive (NASDAQ:TTWO), Estee Lauder (NYSE:EL), and The Men’s Wearhouse (NYSE:MW). All cases were settled in January and involved Lodsys opponents large and small. Lodsys first gained a “bad reputation” for going after small developers, according to the publication, but it is increasingly targeting larger companies as well.
Since 2013 began, a dozen new targets have been put on Lodsys’s hit list. Each lawsuit filed is based on the same two patents, name user feedback and interactive chat features as the infringing, and are brought in Marshall, Texas. In January, Lodsys sued Crocs (NASDAQ:CROX), Sacks (NYSE:SKS), General Motors (NYSE:GM), and seven other companies. In February, Volkswagen (VLKAY.PK) of America and eight other companies jointed that list, with ten mobile game studios added at the beginning of April.