Yeah. The patent system clearly fosters innovation and clearly doesn't need an overhaul.
And even if it weren't, Apple has the legal manpower and the money vault to lawyer them into the ground.
In some areas of litigation, it might be possible for one side to draw out the case, and to do other things that raise the cost, so that it is possible to force the other side to abandon their case due to budget constraints.
Generally, patent infringement litigation is not one of those areas. A patent infringement case can be expensive for the plaintiff but the costs are reasonably predictable, and a pretty good upper bound can be estimated going in.
There are large, experienced, patent litigation firms that will take cases like this on contingency. They have more than enough set aside for these kinds of cases to cover anything that defendant can do to run up costs.
As far as legal manpower goes, Apple would have to hire an outside firm. Yes, like all large companies Apple has a good and competent legal staff, including IP lawyers. However, they won't have the experience of those at outside firms that specialize in IP litigation. When it comes to legal manpower, the case would come down to lawyers from a top IP firm working for plaintiff (probably on contingency) vs. lawyers from a top IP firm working for defendant (getting paid by the hour).
You can see a series of examples of this if you look at patent suits against Microsoft. Microsoft often uses Weil, Gotshal & Manges, which is one of the top law firms in the world. Plaintiffs against Microsoft are often represented by McKool Smith which is one of the top 3 or 4 patent litigation firms in the US. The net result here is that it doesn't matter how big Apple is compared to the patent owner, they are not going to out manpower them--both are likely to be represented by top 10 IP firms of about equal power.
If Apple is going to play the role of "Lord of the Manor" and demand tithes and make arbitrary rulings on what they like and don't like, then it's also their duty to go and fight off the brigands.
But suing Apple's tenants and Apple itself surely does not yield the same reaction, even if Apple has its platform's best intention in mind.
Now we've sunk to the point where the local feudal lord only halfheartedly protects his own interests, so long as the rocks aren't landing directly on his keep? Same as it ever was.
(Also, look at the state of discoverability in the iTunes infrastructure. It's the same principle, or lack of it. And, certainly, Apple is far from the only company to be so short sighted.)
(Note, I am an avid user of Apple products and an iOS developer.)
Shouldn't the Department of Justice have powers to investigate this sort of abuse of the patent system?
Unfortunately, most legislators from my state seem to believe in business by extortion. I'm so frustrated with them I've given up even communicating with them. Does Hatch ring a bell? :(
Now certainly I don't like it - but the law is on their side, at least until/unless it gets changed.
I, for one, couldn't care less if they go away. I think the patent is bad, the troll is deplorable and Apple will be setting a terrible precedent that will have non-trivial fallout in their dev community.
But on this topic, I just don't care how it shakes out. 90% of the in-app purchasing I see is predatory (smurfberries, virtual poker chips) or tantamount to it.
A lot of developers rely on using IAP to make money off their existing (and often small) customer base, and if IAP went away so would a lot of indie game developers.
I agree that good apps and good uses exists, that's just the minority in what I've personally seen. The only app I have personally used that had reasonable IAP was Camera+.
And to be fair, I hand-waved 90% not considering subscriptions.  If we roll those in, I agree there's a much lower rate of 'smurfberry' use.
> "Apple has taken steps to mitigate the issue"
Sorry if I've missed that. But last I checked they had just changed the top-revenue rankings to include IAP, and smurfberry-bearing titles shot to the top. To change that algorithm the way they did looks more like celebrating that nonsense. 
 I've been thinking of subscriptions as their own beast for a while and just didn't think of them. But I do agree, they're IAP.
 Surely Apple tested the proposed ranking change and rolled it out knowing full well what titles would dominate under that scheme.
I just looked at the top free game list, and most of the top 25 don't appear to be smurfberry titles. About 7 or 8 of them appear to be like that. Most of the ones with IAP are for removing advertising, upgrades to the full version, or additional content, all of which are pretty legitimate uses for it.
This is a taste of Apple's own medicine from when it brought suit against weaker device manufacturers instead of Google directly for Android related patent infringement.
I agree. However, the choice not to protect the developers creates problems for Apple which may be as bad as those created by protecting them. And the dilemma of a PR disaster and the precedent of establishing a B2B relationship with developers is what makes the situation so interesting.
This analogy seems pretty thin since Android's ecosystem is equally at risk here. This isn't going to scare these devs to another platform, it's going to scare them into not using the API.
Wouldn't surprise me if Google were behind it.
Apple may have lots of money, but something tells me these particular patent trolls could get the money they need if it came down to it.
Quite a lot.
After a quick read of the iOS developer agreement, it doesn't appear that Apple has any obligations in this matter, rather it appears that the application developers are required to pay for the defense of Apple due to their "(vi) [Your] use of the Apple Software or services, Your Application, Licensed Application Information, metadata, Registered Devices, or Your development and distribution of any Application." (See Section 11 - Indemnification). Depending on what Apple decides to do this could get interesting.
Apple should immediately amend their agreement to indemnify all developers against patent lawsuits stemming the required use of their APIs. Otherwise, some developer will cave and pay these guys off which will start a cascade of additional lawsuits. Additionally, no one should think this is an iOS only problem. If the patent applies to iOS in app purchases it will apply to Android as well.
This is actually worse than just iOS and Android. It applies to basically the entire gaming industry, because any game with a "Buy DLC" button infringes on the patent. Hell, this could apply to any program that has a "Rate this here" button, as well.
The problem that I have with a blanket indemnification like this is how large the coverage could be. Sure, you should cover cases that involve your business model, like the app store or IAP, but what about cases that are just usage of functionality?
Hypothetically, if the patent was over the shape of the buttons used(which would be more of a copyright or trademark issue, admittedly), and that changing the shape would make it not infringe, should the API owner, cover that? Or if the API is used as an input or output for a patented algorithm, like an audio or video codec, should that be covered? I honestly don't believe that the API owner should cover either of those cases, because they are too broad, and make them responsible for a LOT more cases than before.
In this case, however, I do agree that Apple, Google, and a LOT of other companies(Valve, Sony, and MS because of gaming DLC) have a vested interest in squashing the trolls as quickly as possible, because this patent covers a good portion of their business models for their markets.
The strategy here, is to go after the smallest pocketed person you can find, get a settlement, and then use that to go after the next. Get enough settlements and you can you establish precedent.
The person with the advantageous position gets to demand indemnification. Everyone else gets to pound sand.
The chances of app developers receiving indemnification from Apple is nil for some reasons that are lawyer-ish, and some that are basic math. Consider that there are thousands of app developers, and only one Apple. If the agreement granted indemnification to every app developer, Apple would be on the hook for a whole lot of attorneys in cases just like this. No lawyer is going to put that in to a contract, because it violates the client's interests. In other words, "you're on your own buddy."
If this is the one, then this is an unbelievably broad patent. I encourage everyone to at least skim through this thing, it is incredible that this can constitutes a valid patent.
The way that patent system in this country works for software patents is wrong, period. If it is this easy for someone to get sued then it should be made easier to fight back against these type of lawsuits.
At least doctors can get medical malpractice insurance to protect against the liability of losing a frivolous lawsuit. Software developers are on their own.
Doctors get malpractice insurance because they need it. As soon as software entrepreneurs need patent liability insurance everyone will have it. But we're going to need a lot more frivolous patent suits against small developers to make that happen.
Maybe I'm just naive, but everyone always talks about a free market, but one of the most important features of a free market is ease of entry. If software entrepreneurs have to purchase patent liability insurance then this is an artificial barrier to entry. Yet another thing that you have to consider in the course of running your online business.
Every once in a while I use Google patents to browse software patents. What I see is disheartening. There are literally patents on almost anything you can do with a web application.
Even worse, most of the companies behind these patents are not technology companies but law firms with vast portfolios of multiple, redundant patents covering a broad array of topics. They bide their time - waiting for when some unsuspecting web company turns a profit. Then they swoop in to take their cut. I find this to be disgusting. Tech firms get stomped and lawyers get very, very rich.
The worst part of it is that there doesn't seem to be any solution. It seems as though insurance of some kind to protect against patent lawsuits will eventually be a mandatory requirement for any tech startup.
The problem with entrepreneurs purchasing insurance against frivolous patent lawsuits is that it will encourage the proliferation of these lawsuits even more. If everyone is insured then when they are sued they may be more likely to settle - rewarding the patent holders.
Over time the number of lawsuits would increase and so to would the premiums on purchasing this patent liability insurance. Eventually, the cost would become prohibitive for first time entrepreneurs and they would be prevented from being able to enter into the market.
Think about it. People keep talking about how they are looking for the next Google. As software patents pile up in the hands of unscrupulous patent trolls, it becomes less and less likely that there will ever be such a thing.
I don't mean to hyperventilate, but software patents sometimes cause me to lose sleep at night. Getting hammered by a patent infringement lawsuit is my personal worst nightmare. Is anyone with teeth doing anything to fight the patent trolls???
AFAIK Europe does not have software patents, so I should be safe. But IANAL and my understanding of this subject is quite poor.
Does anybody have a good answer?
In terms of European s/w patents, sadly according to the FSF:
"In Europe the legislation has decided that software is not patentable. But laws are always interpreted by people, and in this case interpretations of the law differ. So the European Patents Office (EPO) grants software patents by declaring them as "computer implemented inventions"
If you only sell your software in countries that either don't recognize software patents, or in which the plaintiff doesn't hold a patent that you infringe upon, you're fine. 
But if you sell your software in the US, you are not safe.
Foreign firms pay a pretty penny for US patents and searches to determine if they are clear of infringing US patents, so they can sell their products in the US. Software patents included.
 Determining whether you may infringe on a patent is a chore in and of itself. And one that any IP lawyer will advise you strongly not to do yourself. If you look and infringe, the wronged party can potentially argue that you saw their patent and infringed anyway , which leads to far worse penalties than infringing due ignorance.
 And as it is very difficult to show what you didn't see, it's very difficult to defend against that accusation other than via an in-stone policy that the actual engineers and inventors never ever do searches themselves.
The only issue might be if he moves to the US. At worst.
These risks are notably less to a developer if they've incorporated, or are selling the software through a publisher. But for the lone developer, it could be quite the hassle.
Also, though the real costs of pursuing such claims might deter actual action by the patent holder, the risk doesn't go away and the 'debt' resulting from the judgment could be sold to people who have lower opportunity cost and even less moral fiber.
Do you have any evidence he's a patent troll?
2.) I Googled terms including "abelow", "lodsys", and "patent troll".
In other words, he plainly states he runs those businesses on the provided links and has a history of patent trolling.
2) I see nothing in those Google searches that shows a history of patent trolling, unless you are using a very broad definition of patent trolling (one so broad as to be close to meaningless).
Edit: Never mind, they're a completely different patent troll feeding on indie iOS developers. Shameful.
(Disclosure: I'm one of them and potentially in violation.)
I think it's an absolute bullshit patent and I hope everyone vigorously fights it, but there's no reason why developers can't settle, if they feel they should.
I'd love to see Apple indemnify developers, too, but that would probably create as big a headache for Apple as this situation will.
You might be right. The way Lodsys is going after us is for the button (or something) that connects to the mechanism that performs the in app purchase. Either way, as everyone else here has pointed out, it really is a sticky widget.
The new stories that surfaced today sounded similar, but James Thomson told me on Twitter that it's about a different company and patent this time around.
I feel like your more recent question is not directly related to the previous points (so maybe I'm misunderstanding), but I'll answer anyway: no, I don't think hackers should worry too much about patent trolls when building stuff (or else the trolling is working and limiting creation), but I do think hackers should make a stink when patent trolls do their thing--especially when they do it to the little guy.