Apple tells Lodsys that developers are licensed, asks them to withdraw threats [updated]

According to The Loop, Apple has sent a letter to patent holder Lodsys, asking them to stop threatening iOS developers with patent infringement letters.

“Apple is undisputedly licensed to these patents and the App Makers are protected by that license,” wrote Bruce Sewell, Apple Senior Vice President and General Counsel.

Good for Apple. More as this develops.

UPDATE: Macworld has the full text of Apple's response letter. Here are some good bits. [Macworld]

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.

Through its threatened infringement claims against users of Apple’s licensed technology, Lodsys is invoking patent law to control the post-sale use of these licensed products and methods. 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. 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.” Quanta Computer, Inc. v. LG Elecs., Inc., 553 U.S. 617 (2008).

Therefore, Apple requests that Lodsys immediately withdraw all notice letters sent to Apple App Makers and cease its false assertions that the App Makers’ use of licensed Apple products and services in any way constitute infringement of any Lodsys patent.

UPDATE 2: FOSS Patents weighs in with Florian Mueller's analysis [FOSS Patents]

I don't mean to be negative here. I just want to make all app developers fully aware of the issues they may still face. Since Lodsys is already suing a group of large players, which is collectively even more powerful than Apple, it would be irresponsibly optimistic to assume that Apple's letter all by itself is going to make Lodsys give up. Unless Apple settles the deal with Lodsys (neither the terms of such a deal nor the mere fact might ever be announced -- Lodsys might simply never follow up on its original infringement assertions), there will be some next step in this process, and things could still get nasty. So let's be optimistic today, but let's also be cautious.

UPDATE 3: Nilay Patel offers his thoughts as well [This is my Next]

The big question now is whether Lodsys is willing to take Apple to court in order to challenge that license interpretation; Lodsys would be fairly foolish to have not considered exactly this situation when they formulated their business plan. We’ll see what happens, but for the moment things have taken a promising turn.

Rene Ritchie

Editor-in-Chief of iMore, co-host of Iterate, Debug, Review, Vector, and MacBreak Weekly podcasts. Cook, grappler, photon wrangler. Follow him on Twitter and Google+.

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Apple tells Lodsys that developers are licensed, asks them to withdraw threats [updated]

30 Comments

Looks like Apple is stepping up to the plate on this one. This is understandable since if they didn't it would scare off many of the App developers. Also, it is a good thing that Apple actually licensed the Patent (even though I don't agree with the current Patent process as it applies to software) instead of getting sued later on for having violated the Patent.

End of the day every corporation big or small tries to enforce their patents. Some sort of reform is what we need. And by reform I mean a new system that doesn't amount to a "Hey I thought of it first!" "No fair!" "Teacher he/she stole my idea?"
Glad to see Apple protecting one of the biggest bread and butter stables of it's iPhones. The Devs.

It's about time. What good is all that money in the bank if you don't use it to defend one of their assets...and the App Store is one of their biggest assets.

Don't think Apple is doing this out of the kindness of their heart. They are all about money and this would cut into their money. Not a lot, but some.

absolutely. Apple doesn't want anything deterring the growth of its platform. It's out there trying to protect it's interests. That's what all companies do. Now whether they are legally in the right is a separate question. But it's not altruism that motivates them.

Not mistaken for even a moment. However, you gotta imagine that Apples PR department loves stories that this that are both self serving as well as paint apple in a positive light.

Interesting. I'd love to see this go to court cause it's interesting. I'm not sure Apple's argument would work though.
There are several hurdles it seems but the Quanta case cited doesn't seem to be perfectly on point. First off, in Quanta the Supreme court highlighted the sale of patent by the licensee triggering license exhaustion. In that case it was a chipset sold by the licensee for the purpose of being incorporated into a new product. The court held the person buying the chipsets was covered because the sale triggered license exhaustion. I don't think Apple in any way sold it's license to app developers. I sincerely may be wrong as i'm not a developer and not totally familiar with the process so if so forgive me. But i thought the SDK use would be free. So i'm unclear as to what "post-sale" Mr. Sewell is referring to. So I'm struggling to see the sale Apple is referring to. If they mean the sale of the final app well according to my reading that's not the correct sale to trigger patent exhaustion by the seller.
The second hurdle seems to be the fact that in Quanta there were two separate agreements, one to license the patented chips, and a seperate agreement requiring Intel to notify purchases of the chips that patents did not extend to them. The courts held that a separate agreement could no limit the first stating, "nor can a notice provision in a separate agreement create limitation not contained in the license itself." So if Apple's only has one license agreement and it specifically says it doesn't cover developers products it may be difficult for Apple to claim this claim is controlled by Quanta as there would be no separate agreement limiting the first and as previously, stated, even if the was there appears to be no sale of the patent by the Apple.
Something that could be in Apple's favor, and this is speculation, maybe the license flat out covers developers. Another thing, maybe they actually do sell the SDK or the licensed tech. Again, unless they make the actual text of the agreements public we won't know that. Now Lodsys could have bad lawyers, get scared and kinda cave, or just not want to risk the financial burden of a suit from Apple and go away. Which wouldn't surprise me cause, well when you're faced with shelling out millions of dollars many people think twice, whether they have a case or not. That said, profiting off these fights are basically the whole reason you buy the patents so i'd slightly be surprised if they just went away.
Anyways that's my initial take. Off to get coffee.

Sewell refers to post-sale of the patent license TO Apple, not BY Apple. Apple is saying that the use of the patents is covered by Apple and the methods are exploited internal to Apple APIs and the devs are thus not infringing. I tend to agree.

Oops, some typos there :) Suffice it to say that Apple believes that their license covers where the patentable bits are utilized and that they are within Apple's APIs and thus not anything to do with the individual AppDevs.

Yeah that's right. That's why it's strange. Because that's not how exhaustion worked in Quanta. LG licensed a chip to intel. intel sold it to Quanta. Quanta made a new product with the chip in it and got sued. So you have LG licensing to Intel and Intel selling creating exhaustion. In this cause you have Lodsys licensing to Apple and Apple giving developers the product free then developers sell a product. So what Sewell refers to as a post sale as you say to Apple doesn't is not analogous to the sale of the chip by the licensee to in Quanta. Quanta was about the licensee, selling the entire patented product, to a purchaser. Apple is the licensee here but didn't sell anything.
Now, again, developers can be covered if it's in the agreement, and below Sewell seems to indicate they are. For some reason i'd bet that's not clear in there agreement because if it was he wouldn't have to go through the rest of that stuff. But it's possible.
Typos? Not a problem. Only crazy people harp on other people's typos on the internet. I sure won't.

:) Yeah, and I think that's where the heart of this is -- Apple says the patent applies to methods contained within Apple APIs. That devs make use of these APIs in their products does not matter as the patentable action takes place inside of Apple's App Store (or at least so Apple asserts as far as I can tell), which is where they are covered by the existing Lodsys license.

Yep, That's the nooks and crannies of the dispute. Yeah i'm sure Lodsys would argue "no the developer made a seperate program using our patent" and Apple may say, "nope they are just using a tool we created they." Who wins who knows at this point. And unless someone wants to pay me 500 an hour i surely am not going to seriously investigate the merits. Be interesting to see if Lodsys just back off. Apple will surely have the public on its side due to it's popularity. Whether it has the law on it's side remains to be seen. We'll find out, as they say on Precentral, "In the coming months." (Ok yeah i'm still bitter about my darn failing Palm Pre, lol.)

Technically, the SDK is free. But if you want to be able to use it for an app that runs on a real device, you'll have to pay an annual fee for the full developer program membership.
I would be interested to see what happens if Lodsys decides to ignore Apple's letter and sue the developers anyways. Of course, I sincerely hope it doesn't come to that. But if it did, would Apple step in again?

Interesting, Apple could argue the membership fee qualifies as a sale but i honestly don't think that passes the smell test. Seemed plausible when i started the sentence. I'm not sure now. lol.
Apple could sue on their own. They could be be compelled to join especially if some of Apple's rights are somehow at dispute. Though that doesn't seem to be the case. Developers getting sued clearly damages there business so they have some incentive to be involved.

another thing. based on the full text it says "Under its license, Apple is entitled to offer these licensed products and services to its customers and business partners,." if that's the case i'm not sure why they didn't just say that in first place. But I'd have to look at the actual agreement to know if this is just posturing.
Another funny thing is apple kinda slates them for suing developers but using screen shots of apple's app store. Which is rather clever. Basically saying if you're complaining about developer products you can't claim they are not apple products but then use screenshots of apple products.
again though apple claims that Lodsys patent claims are on "apple products" but it seems to me they are on developer products.
Regardless i do find it problematic from Apple's perspective that they first say "These Apple products and services are offered by Apple to the App Makers to enable them to interact with the users of Apple products—such as the iPad, iPhone, iPod touch and the Apple iOS operating system—through the use or Apple’s App Store, Apple Software Development Kits, and Apple Application Program Interfaces (“APIs”) and Apple servers and other hardware."
But then later refer to "post-sale" as it seems this "offering" of service may not rise to the level of a sale sufficient to create exhaustion. Anyways will be interesting to follow. Ok now i'm really off for coffee.

Enemy of my enemy and all that.
Hopefully, first sale/patent exhaustion will be applied for Apple here, and against Apple in the other situation.