

Full text: Apple Legal's letter to Lodsys - atularora
http://www.macworld.com/article/160031/2011/05/apple_legal_lodsys_letter_text.html

======
grellas
A few thoughts:

1\. Nothing in the letter commits Apple to defend the developers or to hold
them harmless. Legally, Apple does not have to do this. One can only hope that
its self-interest in protecting its app-store ecosystem will be enough to
cause it to do what is right. For now, Apple is saying only that it will fully
defend its "license rights." One can read more into this than is stated but
that is all that is stated (of course, Apple's throwing its weight behind
developers even at this level is no small thing).

2\. The letter does not quote the license agreement in any way. Normally, if
there is something definitive in such a document, it is put front and center
in a letter of this type. This could mean that the license language is not as
definitive as the tone of this letter might suggest. Only time, and a detailed
review of the license language itself, will tell on this point.

3\. It is plain that Apple wants to do the right thing for its developers. Yet
the situation is trickier than that. As of now, Apple has no legal obligation
to defend or hold them harmless, and that step is an order of magnitude
greater than that of saying it will merely defend its license rights - and
hence the hedging in the letter.

If the goal of the patent system is to promote innovation, then this case is
Exhibit A for how it is failing. Thousands of patents are gathered up in a
portfolio held by an IV affiliate and licensed in bulk ("monetized") to big
players such as Apple, Microsoft, Google, etc., who in turn believe that they
have clear rights to build systems around them. But the patents are
"monetized" again to lesser players with shadowy relations to the original IV
group, who in their turn try to "monetize" them further by attempting to
double-dip with the original licensees based on limitations in the original
licensing language. At each step, threats of lawsuits abound and nowhere can
one find even one example of a patent developed by a company for its own
innovative uses. Instead, we have the equivalent of shadowy trafficking in
intangibles that are now being used, not to encourage innovation, but to
attack the very developers who are _trying_ to innovate. Positively
Kafkaesque.

~~~
SoftwareMaven
From the letter:

 _Apple intends to share this letter and the information set out herein with
its App Makers and is fully prepared to defend Apple’s license rights._

The letter explicitly states they think their rights include being able to let
developers use the technology.

 _Because Lodsys’s threats are based on the purchase or use of Apple products
and services licensed under the Agreement, and because those Apple products
and services, under the reading articulated in your letters, entirely or
substantially embody each of Lodsys’s patents, Lodsys’s threatened claims are
barred by the doctrines of patent exhaustion and first sale._

At this point, isn't Apple saying there is nothing to hold developers blamess
for?

 _Apple intends to share this letter and the information set out herein with
its App Makers and is fully prepared to defend Apple’s license rights._

This seems pretty clear (if not within full legalese) that Apple will go after
Lodsys if they don't retract the letters.

Bigger question for me (as a legal noob): What is Apple's recourse? Is it to
sue Lodsys for breach of contract? Would a cease and desist request be part of
that?

~~~
grellas
Apple likely can sue Lodsys for declaratory relief if Lodsys persists in its
claims against developers. This would be an action by Apple against Lodsys
seeking a court judgment that its license covers the challenged activities and
a related declaration that no infringement exists by reason of such
activities. Developers clearly benefit from any such action by Apple but this
is a little different from committing to hold the developers themselves
harmless from any legal action. A "hold harmless" would mean that Apple
commits to defend any developer who is sued and, further, agrees to pay any
damages suffered should that developer be found to infringe. Since Apple has
not yet committed to do this (indeed, I believe its contract terms say that it
will not do this), in theory, the developers might still be sued and have to
defend their individual cases even if Apple does bring a declaratory relief
lawsuit against Lodsys. Of course, a court in any such action might act to
consolidate the various lawsuits and stay those brought against the developers
pending resolution of Apple's primary suit. My point is not that developers
are not helped by Apple's stance, as they plainly are. It is only to state
that Apple has not yet committed to cover them against all harm here,
regardless of what Lodsys might do. Apple might choose to take this further
step as events develop but the letter as worded is more guarded than that. I
think Apple is waiting to see if the _in terrorem_ effect of its letter will
solve this before considering further options.

~~~
SoftwareMaven
Thanks for clarifying! You are a great asset to the community here.

~~~
andybak
Yes that was great.

You might want to consider hitting the return key a few more times with posts
of that length though. :)

------
Groxx
> _Apple is undisputedly licensed to these patent and the Apple App Makers are
> protected by that license._

That's a _very_ good thing to hear. And extremely definitive. I'd imagine devs
are breathing a lot easier now.

~~~
xsmasher
It's actually a little scary for non-ios devs; isn't Apple recognizing that
the patent is valid?

~~~
evan_
That the patent exists and was legally acquired is not up for debate.

~~~
xsmasher
I should have asked: Does Apple's license make it harder for someone else to
challenge the patent?

I assumed it would, but if I'm reading MedImmune v. Genentech correctly then
it doesn't even make it harder for _Apple_ to challenge.

------
krschultz
The letter itself doesn't do much for the legal defense of app developers vs
Lodsys, it is only Apple's opinion and Apple wasn't the one being threatened,
but it does show that Apple plans on throwing its weight around to defend the
app makers. And that is all we really need, becuase I sincerly doubt Lodsys
really wants a full on legal battle with one of the most cash rich companies
in the world.

~~~
tptacek
It's a cease and desist letter. It implies that if Lodsys continues trying to
enforce patents Apple has licensed, Apple will sue them.

~~~
dhimes
What I find interesting about this is that there is nothing in the Apple
letter that Lodsys would not have anticipated while deciding whether to make
claims against the developers. Do they have a response ready? Or were they, in
fact, simply trolling, and are suprised that Apple got involved?

What had me annoyed now has me interested.

~~~
checker
They probably just figured it was worth a shot to get some money, ethics be
damned.

------
mattyohe
I imagine Apple's lawyers always begin letters with "Dear Mr. Small"

~~~
rbanffy
Just imagine the abuse Mr. Small had to endure as a kid...

No surprise he became a patent troll...

------
brudgers
> _"Lodsys’s threatened claims are barred by the doctrines of patent
> exhaustion and first sale. As the Supreme Court has made clear, “[t]he
> authorized sale of an article that substantially embodies a patent exhausts
> the patent holder’s rights and prevents the patent holder from invoking
> patent law to control postsale use of the article."_

I find it interesting to see Apple invoke the First Sale Doctrine given the
restrictions which it places upon its hardware (e.g. iPhone).

~~~
bradleyland
First sale applies to copyright, not patent licensing. With copyrighted
material, you can "transfer" it to a third-party. A patent license typically
spells out explicitly whether the patented material may be used for
"distribution" to third-parties.

This matter will come down to whether or not Apple's existing license extends
to third-party developers, based on the language in the patent license
agreements.

~~~
brudgers
Apple's letter [as presented] explicitly argues first sale doctrine.

~~~
bradleyland
I missed that in my first read, but I [mistakenly] thought that first sale
only applied to consumers, not business licensing agreements.

------
UtestMe
I heard Marco Arment at a 5by5 Show also saying it's easier to pay 0.5%
instead of going into a long and expensive trial.

I believe it's not necessarily a troll patent issue that Marco was talking
about, this is what trolls are meant to do, anyway; I think it's an issue with
the law itself and its enforcement.

Could you believe this some 40 years ago: "I'm going to pay this parasite tax
just because I cannot be protected by anybody"? Try "associate with" instead
of "protected by"!

------
UtestMe
“[t]he authorized sale of an article that substantially embodies a patent
exhausts the patent holder’s rights and prevents the patent holder from
invoking patent law to control postsale use of the article.” Quanta Computer,
Inc. v. LG Elecs., Inc., 553 U.S. 617 (2008).

In plain English: because Apple bought the patent from Lodsys, Lodsys cannot
ask for any benefit that might be related to the patent. Period.

~~~
ghaff
Apple licensed the patent. Their claim is that the license covers the relevant
downstream use.

------
rvanniekerk
Bravo Apple, bravo.

------
cyanbane
If Microsoft pays a patent holder for the licence to use a patent for
microtransaction purchases within the windows operating system, and someone
writes a windows app that utilizes the method, under this argument is it the
same as long as Microsoft controls the transaction (ie we payed once, and it
applies to our app makers)?

~~~
extension
That depends entirely on the terms of the license.

------
emehrkay
> The amount of skill that you have in a certain area is proportional to the
> amount of work that you put into it. There is no such thing as a 'creative'
> or 'technical' type. The reason I was bad at art starting out is the same
> reason we are bad at anything starting out. One day, I sat down and put in
> hours of serious work, refusing to stop until I liked the results. And,
> gradually, I got better at art.

I tell my son there is no such thing as talent, just understanding. This keeps
the As coming in, dude is awesome

------
exit
i can't believe they actually pay lodsys already. what a joke.

~~~
toadkick
They didn't, they licensed the patents from Intellectual Ventures years ago.
Lodsys acquired the patents after the fact.

~~~
SwellJoe
Intellectual Ventures is _also_ a patent troll. It's just higher profile and
has people involved that had some level of existing respectability at some
point in the past.

------
nickolai
Its good to see Apple make stand for its App store developers, but where's the
iFlameThrower? This looks a bit too nice a response for the petty shakedown
run lodsys tried to pull off. Oh well... I guess _Apple_ does not have to
speak loudly to be heard.

~~~
jerf
The tone of this letter, combined with grellas' comments above, give me the
troubling feeling that Apple is not certain they would win. Only two arguments
are made, one based on terms we're not privy to and as grellas pointed out
you'd expect them to quote if it's solid, and one based a doctrine that the
Apple license is extended to the app developers by virtue of the app
developers using the licensed product, but there's enough ambiguity in the law
in terms of what software "contains" (for lack of a better word) other
software that I don't think I would have a hard time arguing that the app
instances are still legally separate instances of the patented capability. I
could argue either side pretty forcefully if I wanted to.

IANAL but by lawyer standards this strikes me as very, very tepid. If I were
an app developer, I would at least feel a bit better that Apple has
acknowledged the problem and has taken some position on my side... but I
wouldn't feel _much_ better.

------
RyanKearney
And there goes Apple using the word App/Apps generically again. Not exactly
helping their case against Amazon.

~~~
scott_s
I just re-read it paying attention to how they use the word "App," and I don't
think their use is generic. Every time they use the word, they are referencing
either developers who make applications for their devices, the applications
for their devices, or their store.

~~~
RyanKearney
I'm not too sure, this is the line that really stood out to me:

> and delivery of applications (or “Apps”)

Basically making a direct relationship between the word application and apps.
Either way, I think the whole App Store argument is ridiculous.

~~~
scott_s
That was the only line that gave me pause, but that's actually where they
_define_ what "Apps" means: applications for their devices.

------
arapidhs
patent wars instead of standards...why

------
juiceandjuice
If I was a conspiracy theorist, I'd say some of this looks awfully convenient,
and maybe even well timed, for Apple.

"See, the 30% we charge you isn't so bad after all, is it?"

~~~
cheald
I sincerely don't think that it's a stunt by Apple, and to claim that it is
would require a fairly myopic view of the state of software patents today.

That said, the "conspiracy theory" falls apart because this is ultimately
self-serving by Apple; in-app purchases translate to money for them, and if
developers are too scared to include content purchasing options in their apps
(since in-app is the only permitted method, natch), it means a direct hit to
Apple's bottom line. It isn't altruistic towards developers, so it's silly to
see it as a justification of Apple's 30% cut.

~~~
juiceandjuice
Apple Exec: People are pissed about the 30% in-app thing, what should we do?

Other Apple Exec: Add value to it.

Apple Exec: How do we do that?

Other Apple Exec: Show people that if they didn't use our methods and lose
their 30%, they'll get sued for licensing fees for an in-app purchasing patent
and probably lose it anyways.

Apple Exec: "Hey Lodsys, we're already paying you money, but could you do us a
favor real quick..."

I'm not claiming this is what happened, because I sincerely don't think it is
what went down. I'm just illustrating a theoretical and likely fictional path.

~~~
cheald
But...the problem is that developers are getting sued for the thing they were
pissed about before, so now they're just double-pissed. It's not like they're
getting sued for using some alternative that saves them 30% on purchases.

------
morphoyle
So basically, Apple fully supports software patents so long as it benefits
them. When another company wants money for a BS patent, it's a travesty. You
gotta love the way business works.

~~~
kenjackson
Apple has a long history of supporting patents. In fact in a keynote that Jobs
gave a few years back one of his lines was something like, "And we've patented
this up and down" which was followed by loud cheers. Apple is a very strong
believer of HW and SW patents.

~~~
guptaneil
He said that when announcing the iPhone because Apple failed to properly
patent the iPod when it was first released, and subsequently got tied up in a
lot of litigation and licensing fees when other companies started trolling
them. If anything, Apple hates the patent system, but is forced to play the
game.

~~~
kenjackson
I'm not sure if this is historically accurate. See:

<http://www.techdirt.com/articles/20070117/191446.shtml>

A lot of people believe Apple used its patents, for example, to block Android
from getting certain features. There's also speculation that MS spent a lot of
time dealing with legal issues before WP7 -- which is why WP7 has different
design decisions in so many places Apple has patents -- and one reason it was
so late after WM6.1.

It's speculation, but it sounds like Apple may have used its patents as a way
to stop competition on other carriers. Is that good or bad? I don't know, but
it's legal.

And note that having patents doesn't protect you against trolls. Trolls don't
care as they usually don't have product. Patents are only defensive against
other actual product companies.

~~~
guptaneil
I haven't read anything about Apple proactively blocking other companies, but
it's believable that post-iPhone Apple is less shy about pushing the
competition around a little. I know they did protect their multitouch gesture
patents, which is why Android couldn't have pinch to zoom for a while.

Regarding the accuracy of my comment, see
[http://www.macworld.com/article/46460/2005/08/ipodpatent.htm...](http://www.macworld.com/article/46460/2005/08/ipodpatent.html)
for a quick summary of how Microsoft patented a key aspect of the iPod's
navigation UI 5 months after Apple released the iPod and then demanded
licensing fees. Apple ended up settling for $100 million. This is an actual
product company.

The article that you linked to, while interesting, is purely opinion. Its
argument hinges on the assumption that exclusivity with AT&T was a bad
business deal for Apple, which I would strongly disagree with. I didn't like
the lock-in as a consumer, but the deal was excellent for Apple because it
gave them control over the carrier in a way other phone manufacturers had only
dreamed of until that point.

~~~
kenjackson
This article seems to say that MS patented this BEFORE Apple did:

"Last month the United States Patent and Trademark office denied Apple a
patent for some user interface elements of the popular iPod MP3 player, citing
a patent submitted by Microsoft developer John Platt five months BEFORE
Apple’s claim."

Whereas you say _Microsoft patented a key aspect of the iPod's navigation UI 5
months after Apple released the iPod and then demanded licensing fees_.
Obviously MS couldn't patent something used in a product months after release
(and if they did it would be overthrown in court).

~~~
guptaneil
Yes, that was my point. Microsoft patented aspects of the iPod BEFORE Apple
did, but AFTER the introduction of the iPod. Should it have been allowed?
Probably not. I can't find any articles about the settlement, so Apple may
have managed to appeal and get it overthrown eventually. I don't remember.
Regardless, the reason patenting the crap out of the iPhone was a big deal was
that Apple was basically showing it had learned from past mistakes.

via [http://www.seattlepi.com/business/article/Microsoft-beats-
Ap...](http://www.seattlepi.com/business/article/Microsoft-beats-Apple-to-
punch-on-key-iPod-patent-1180497.php)

> A similar method outlined in a Microsoft researcher's patent application,
> filed after the iPod was introduced but before Apple sought its own patent.

~~~
kenjackson
I think the media didn't understand this based on that article. See:
[http://girtby.net/archives/2005/08/17/microsoft-patents-
ipod...](http://girtby.net/archives/2005/08/17/microsoft-patents-ipod-or-
something-else-entirely/)

Apple couldn't file for a patent after it released the iPod. You have to do it
before public disclosure. And of course MS couldn't have gotten the patent if
Apple had released the iPod.

To bring in the Groklaw quote mentioned:

"The rejected Apple application is not exactly a critical one. It also doesn't
appear that the Microsoft patent covers the subject matter of the Apple
application, rather it was used as an example to deny the Apple application
because it isn't an original idea.

Platt's application covers a way to automatically generate playlists from
songs similar to one or more song manually chosen by the user. As an example
of usage, Platt described a portable music player that uses a menu hierarchy
for navigation. The menus aren't really the invention though.

The Apple application, on the other hand, is all about hierarchical menus.
Yes, seriously, that's what they were trying to patent, the idea of using a
tree of menus to operate a portable music player. Can you believe it? (I knew
you could.) I'd chalk this rejection up to an example of the USPTO doing some
good.

The rejected Apple application is 10/282,861 - Graphical user interface and
methods of use thereof in a multimedia player

The Platt application is 10/158,674 - Auto playlist generation with multiple
seed songs"

This makes a LOT more sense. The Apple patent was rejected because it wasn't
an invention. And the MS patent went through because it was actually patenting
something that wasn't in the iPod.

