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Full text: Apple Legal's letter to Lodsys (macworld.com)
270 points by atularora on May 23, 2011 | hide | past | web | favorite | 91 comments

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.

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?

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.

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

Yes that was great.

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

Are hold harmlesses common?

I'd have thought they'd be exceedingly rare in cases like this given the open ended liability that could result, certainly as part of an opening gambit.

Why does everyone assume that Lodsys is incorrect? If you sell someone a patent they can't arbitrarily declare everyone else owns that patent too. If apple wanted developers to be allowed to use lodsys patents they should have made it clear when they bought the rights to this bullshit patent that they could arbitrarily allow anyone they wanted rights to the patent..

Isn't that exactly what Apple is claiming? "Under its license, Apple is entitled to offer these licensed products and services to its customers and business partners, who, in turn, have the right to use them."

hey grellas - I hope you don't mind tangential questions from a trainee. Whilst (clearly) none of us can do more than speculate as to the terms of the licence, I was wondering whether you thought it possible (in light of industry practice) that Apple licensed the patents for anything less than the full remaining term of the patent? Even if so, is the licence likely to be revocable by IV or Lodsys? And what happens to patent licences when the patent they cover is invalidated, further down the line - is it typical to see clawback provisions allowing the licensee to recover money already paid?

Even in a bulk deal, the term of the license would undoubtedly be the full remaining term and the license would be irrevocable. Thus, I would doubt that Lodsys is staking its claims against the app developers on any such ground.

If I were to speculate, the likely issue is whether the licensing for Apple's products (iPad, iPhone, iPad) effectively covers the downstream development of software intended to run on those devices. Lodsys would be arguing that the license does not extend to what the app developers do; Apple is saying in this letter it does and that Lodsys is misusing its patents if it claims otherwise (such misuse, if legally tenable, constituting grounds to invalidate the patents).

As to clawback, that would be highly unusual and would almost certainly not be in a license of this type made to major players.

>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.

>That's a very good thing to hear.

It would be but for the distinction between "undisputedly" and "undisputably". All this says is that it hasn't been disputed, not that it can't be.

I think Apple meant something very specific as any other reading doesn't make sense. They are saying it is "above dispute". Apple knows what they licensed.

They aren't saying "above dispute", they are saying "has not been disputed" (and implying that it will not be disputed, but it could).

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

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

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.

No one is questioning the existence of the patent - it's the validity of the patent that's being doubted. Given the current processes followed by the USPTO, existence says _nothing_ for its validity.

Apple actually has a license for the patent. So yes, but in a much more direct way than you suggest.

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.

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

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.

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

I think you're right that they're likely anticipating this.

Legal cases are like chess - a series of small moves rather than one big bang and it's done.

Lodsys will undoubtedly have hoped that Apple wouldn't involve itself but it would seem unlikely they're going to be put off by a single letter. The very earliest I'd expect them to drop it would be the point at which they got a court summons from Apple or the point at which a settlement was reached (still I'm guessing the most likely outcome).

The next move will likely be an open letter from Lodsys disputing Apple's view and reasserting their claim which will put the ball back in Apple's court but I'd also guess that alongside the public discussions there will likely be private ones going on to which we'll obviously not be privy.

I think they honestly thought they had a shot, and went for it. Their documentation displayed a stunningly nieve but logical interpretation of their patents and it was a low-risk move to approach a number of developers to gauge reaction.

Though nieve the documentation did seem sincere.

Agreed. I'm not a usual Apple apologist but this letter was the right thing to do.

App developers can breath easy and know that this non-technical understanding regarding their patents and the use of a fully licensed API is being incorrectly interpreted by Lodsys.

Apple certainly can claim PR victory. They are always so cool under pressure. Each time some sort of scandal comes up they hol up, think about it, gage interest and consumer intent, then act accordingly.

I'm not sure it's all we need. Lodsys may not prevail, but it has shown other trolls the way. What about patents from companies Apple doesn't have a license for?

They've always been a threat. The reason Lodsys were interesting was because they presented a potentially new and interesting business model: license to the few big guys, squeeze the legions of little guys.

Patent trolls meet the Long Tail :/

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

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

No surprise he became a patent troll...

>"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).

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.

First sale actually applies to both:


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

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

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"!

“[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.

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

Bravo Apple, bravo.

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)?

That depends entirely on the terms of the license.

There are several mentions of Apple servers and Apple services and Apple APIs. If Microsoft were providing all of the infrastructure for said micropayments in your hypothetical microtransactions service, then yes, it would be a comparable situation. If not, and the infrastructure is not Microsoft's, I don't see how it would be the same.

> 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

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

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

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.

When you're at Apple's scale, license costs for things like these are a rounding error compared to the cost of a legal defense, even if you win. It's cheaper to pay them off.

> license costs for things like these are a rounding error

Paying a troll is like dumping toxic waste on your water supply. It's, at minimum, inconsiderate. By doing that, they further enabled this troll to go after everybody else.

>Paying a troll

Considering that Apple has already licensed the patent before being sued, why do you call them a patent troll. How as Apple to know that they were going to go after other developers?

It could have, for all you know, been a legitimate patent licensing issue - unless you think anyone claiming infringement on any software patent is a patent troll - which is a stance I don't really disagree with, but that's a separate argument, I guess.

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.

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.

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

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.

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.

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

They shouldn't win that one anyway. My TI calculator has an "Apps" button.

patent wars instead of standards...why

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?"

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.

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.

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.

Why bring it up then?

For the original application purchase, 30% wasn't ever bad. Back in the heyday of PalmOS apps, I was paying 50 on the big ones.

Per-subscription costs, however, are a different story.

This issue is only about in-app purchases, not app purchases, and that's where my comment was targeted (i.e. Amazon's kindle app)

30% is a lot more than the 0.575% Lodsys is asking for licensing.


Unshortened URL: http://www.lodsys.com/1/post/2011/05/q-what-are-you-charging...

0.5% doesn't seem much, but if they succeed in this, many more other patent trolls will come out of the woodwork and all will demand a small percentages. Lots of these quickly add up, with 100 patent trolls parasiting on your App, you lose already half the profit.

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.

Hardly. Apple isn't claiming the patents are invalid or that software patents in general are invalid - they're simply claiming that Lodsys is trying to get iOS app developers to pay for something that Apple has already bought (and been given rights to license to the iOS developers).

> something that Apple has already bought

Implying they support software patents.

That’s ridiculous.

I can be opposed to the current income tax rate while still paying all my taxes. Observing the law should not be confused with endorsing the law.

You seem to believe Lodsys patents are as unavoidable as the taxes you pay. That's a funny idea.

They are not. Apple could have taken Lodsys to court for their patents were, in fact, quite feeble.

Now, thanks in part to Apple, Lodsys has enough money to litigate. The only way to crush a troll is if everyone refuses to pay extortion for worthless patents. Without a source of easy money, the troll dies.

Apple’s lawyers seem to believe that licensing those patents is unavoidable or at the very least that not licensing would cost more than licensing them.

You might disagree with that interpretation of the law but you should never claim that it’s an endorsement of software patents.

I do not know Apple’s stance on software patents but I simply cannot see how Apple’s actions in this case can be interpreted as revealing Apple’s stance on software patents in any way.

I do not disagree that crushing Lodsys forever would have cost more than enabling it by paying their racket. OTOH, it will cost more to the market as whole not having crushed Lodsys when it was easy and, by helping it grow, Apple has done a disservice to us all.

And yes. They failed to take a stand because it was cheaper not to. Does that look anything but revealing?

> They failed to take a stand because it was cheaper not to. Does that look anything but revealing?

Apple is a corporation. That is exactly how corporations behave: they do not take a stand unless they see material benefit in doing so. If you want to claim that something is revealing about Apple's view of patents, perhaps you should consider the number of patents Apple has.

Also, an analogy: if someone mugs me and I hand over my wallet, that does not mean that I'm endorsing the process of mugging. It means that I've decided that the known cost of complying (the contents of my wallet) is less than the potential cost of any injuries I might sustain in the process of fighting back.

Apple is a corporation, but we like to delude ourselves thinking they are a different kind of corporation, founded on different values.

Why wouldn't they support software patents? The dispute here isn't some silly ideological pissing contest about whether software patents are valid or not. This is Apple saying they bought these licenses to be used in the App store and the same patent can't then be applied to their own customers.

Apple already licenses the tech, this is not a fundamental patent issue at all.

I think you are all missing the irony here...

What irony? Apple licenses thousands of patents in both directions. As does Google, Microsoft, Facebook, and anyone other major player in the tech industry.

If you have something to add to the conversation, could you please just say it?

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.

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.

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


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.

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... 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.

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).

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...

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

I think the media didn't understand this based on that article. See: http://girtby.net/archives/2005/08/17/microsoft-patents-ipod...

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.

I don't think I've ever seen Apple gloat about software patents. They mostly talk about hardware patents, things like the MagSafe connector, which is a really good invention and they deserve to keep the credit for inventing it.

Their software patents too are always very specialized, with no real vague areas that can be used for patent trolling. Not that they need to make a habit of patent trolling when they can print money with their sales anyway.

I'm sorry to burst your bubble, but really anyone who wants to get into this game has to play by the rules.

Even a tiny startup company full of web 2.0 rockstars who hate software patents will be advised to patent as much as they can, because if they don't, some other count will come along and patent their stuff from under them and force THEM to pay.

Pretty much nobody likes the software patent system except for software patent trolls, and as such we have to deal with it. Software patents won't go away until bad people go away.

patents are mostly for big boys to throw their weight around

that is what is happening did you see how many people on HN (who are coders) want to abolish software patents?

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