Recently, we have been reporting an increasing number of lawsuits, particularly in the mobile industry. As smartphone innovation moves forward at an increasing rate, manufacturers including Apple, HTC, Nokia and Google have been moving to protect developments in their mobile operating systems, at times taking legal action against companies that leverage the very same ideas they sought to protect.
More recently, a new wave of “patent trolls” have emerged, issuing warnings and filing lawsuits against the likes of Apple and Google, but also the developers that support the platform. With little or no funds to support a legal fight against the patent holders and little support from the vendors themselves, developers are facing some tough decisions that could seriously impact their revenue streams.
Wanting to expose just what the lawsuits mean for vendors, developers and the end user, we spoke to Florian Mueller, owner of the popular and extremely informative FOSSpatents blog, to gain an insight into what patent companies are trying to do and whether they stand a chance in successfully forcing developers to license their patents.
Patent lawsuits are prevalent in technology industries but the mobile industry, especially the smartphone market. This was helped by the introduction of the iPhone by Apple, the first real “smart phone” that changed the way handset owners interacted with their devices by introducing a dedicated touchscreen, a unqiue user interface and focus on applications.
With Apple making the first move in 2007, the industry was quick to follow. Within months, mobile vendors introduced their own interpretations of the iPhone, helped also by the launch of the Android operating system.
As competition has increased, the focus for innovation has shifted to the mobile operating system with vendors looking to position themselves to incorporate the next big feature that their rivals can only immitate.
The New York Times sums up just how many of the large mobile phone manufacturers have been involved in legal action in recent years, all facing lawsuits regarding mobile technologies:
A Case For Lodsys
Perhaps the most high-profile patent case at the moment is that of Lodsys, which has sought to protect technologies which it believes developers are infringing on with the use of Apple’s and Google’s in-app subscription mechanisms.
In May, Lodsys began targeting iOS developers that utilise in-app purchasing features, threatening to issue a patent infringement lawsuit to creators of applications that utilise the payment processing mechanism. The affected developers, not knowing which course of action to take, waited for a response from Apple – it took ten days, but it came.
Apple moved to confirm that all iOS developers are already licensed for Lodsys patents, issuing a letter to Lodsys to state unequivocally that the company was licensed under Lodsys’ patents and that apps developers were too. It said that Lodsys misunderstood the issue and had no grounds to continue pursuing developers:
“Because I believe that your letters are based on a fundamental misapprehension regarding Apple’s license and the way Apple’s products work.
I expect that the additional information set out below will be sufficient for you to withdraw your outstanding threats to the App Makers and cease and desist from any further threats to Apple’s customers and partners.”
That didn’t stop Lodsys, it filed seven lawsuits, including one Android developer. Again, developers had to wait over a week for Apple to make a move, but move the company did, seeking a motion to intervene in the lawsuits.
The court has to approve Apple’s motion to enter the case as an intervenor, but with the company already submitting an answer and counterclaim, it should be granted access – even if Lodsys moves against Apple’s motion.
At the time, Florian Mueller believed that Apple will likely cover the legal costs of the seven defendants, noting that Apple refers to the affected developers as “individuals or small entities with far fewer resources than Apple and […] lack the technical information, ability, and incentive to adequately protect Apple’s rights under its license agreement.”
Apple’s filings (found here) reiterate the company’s assertion that the infringements are covered by the company’s existing license agreement, a statement that was first raised when the company sent a letter to Lodsys.
Speaking with Mueller about the potential outcome of the case, he believes that developers – at least those that have apps in Apple’s App Store – will not have to pay to license Lodsys’ patents, but also comments on the servity of the lawsuits themselves:
Now that Apple appears to be committed to the cause, I doubt that many iOS developers will pay. But Android developers will have to pay unless Google also steps to the plate. I’d be very surprised if Google didn’t match what Apple does. They’re both competing for the hearts and minds of developers.
The problem is that app developers can’t just easily ignore Lodsys’s royalty demands. A Texas patent attorney who isn’t involved with the case in any way but watches it accurately noted on Twitter that this must be taken seriously: it’s not a game, joke, or scam. Lodsys means business.
Anyone should consult a lawyer before signing a license agreement like that, but Lodsys is clearly not the worst troll problem one can face. The story of those baby tracker apps that were asked to pay $5,000 per quarter plus 15% of sales is far steeper.
As Mueller points out, Google has yet to issue a statement on the Lodsys patent and has yet to reply to any of our requests. Both Apple and Google could eventually end up working together towards a common goal, increasing the chances of succesfully avoiding developer licensing agreements with Lodsys.
Patent suits are interesting to study, especially because many companies fighting to protect innovations don’t employ the technologies or have any intention of doing so. In many cases, “patent trolls” buy the rights to innovations solely with the intention of making money by licensing the rights to it, as is the case with Lodsys.
When asked about the substantial rise in patent disputes and whether it was a case of them being easy to enforce or that companies aren’t able to innovate as freely as they once used to, Mueller provided the following insight:
There’s a quality problem and there’s also the problem that too many patents are granted even though others will inevitably come up with the same methods or features independently. Inadvertent infringement means that the first one to have filed a patent is rewarded and all subsequent ones are penalized even if they make an independent creation and don’t commit any wrongdoing.
It suggests that in the mobile market at least, there are only so many features and services that can be utilised on a mobile phone. As mobile vendors try to be first to market with a unique feature, they run the risk of infringing on ideas that benefit a company because it was the first to register a concept, even if it had no intention of actually implementing it.
In a market were the success of a mobile phone or its operating system should be judged on its strengths or weakness, patent battles could potentially affect the adoption or feature set of a mobile platform.
Different commissions or courts can impose import bans on products, force products to be removed from sale or increase the price of licensing payments. With many cases still ongoing, we aren’t able to predict how various rulings would affect the products we use today, that’s if anything was to change. In many cases, licenses can be exchanged and lawsuits dropped, and devices continue to operate as usual.
As smartphone and tablet sales continue to increase, it is expected that the number of patent suits will only increase. With new technologies needing more advanced operating systems and software innovations to intrepret and deliver the very latest features, developments in the coming years could dictate what is possible in a competitive market for years to come.
There’s so much at stake in strategic terms. We’re probably at the beginning of a period of a few years that will shape the market for some time to come. There will always be new entrants and groundbreaking innovation, but the transition from traditional computing models to the cloud and to new devices is immensely important.