Lodsys Sues App Developer For Patent Infringement Because He Called Them A Patent Troll

from the wow dept

Lodsys, as you may recall, is the rather infamous patent troll, which is demanding payment from a ton of app developers, claiming to have broad patents (which it got from Intellectual Ventures, of course) that cover all sorts of smartphone apps. Todd Moore, who runs app developer TMSOFT, was recently sued by Lodsys, claiming patent infringement, because his White Noise app has a hyperlink that would open a URL in another app -- a rather basic thing that tons of apps do. However, it seemed odd to go after TMSOFT, given that, as Moore notes, the app itself only made $500, and Lodsys itself insists that it's often just asking for less than 1% of revenues. But, in this case it's not:
Lodsys is seeking a percentage of revenue from the time they sent me the letter to the time their patent expired. Usually they request around 1% of your in-app-purchases. My company made about $500 with in-app-purchase during this time period and 1% of that is $5. What? I'm getting sued for $5? Given it cost Lodsys $350 to file the lawsuit I assumed they would ask for more than that. And they did.

Lodsys offered to settle with my company for $3,500.
Why? Well, it appears this has little to do with actual patent infringement, and a hell of a lot to do with Lodsys trying to get Moore to shut up:
This all started in May, 2011 when my co-host and I re-launched Tech 411, formerly a radio show in Washington DC, as a podcast on iTunes. Our first couple shows discussed how Lodsys was going after app developers. I commented that Lodsys was "patent trolling" with "evil letters" that were "complete b.s." Around this time Apple had featured our show and it quickly became the #1 tech news show on iTunes.

[....] Dan contacted the lawyer for Lodsys, who actually admitted to him that this wasn't about money. It was about the things I said on my tech podcast and blog. During that time, the CEO of Lodsys, Mark Small, was getting a lot of negative media coverage and even wrote on his blog that he received several death threats. Mark obviously didn't like the comments I made about his company and retaliated by sending a patent infringement letter.
Moore is refusing to pay, and has smartly filed a motion to dismiss under Texas' anti-SLAPP law, the Texas Citizens Participation Act. Texas currently has probably the best anti-SLAPP statute around, and that's useful since Lodsys, like so many patent trolls like to sue in Texas. In his blog post, Moore notes that paying up would only lead to more trolling:
If I pay them off, what is stopping the next troll from knocking on my door? Nothing. And I've heard that if you pay a troll to go away it can lead to more trolls showing up. It's like your company gets added to a spam list. That's not a list I want to be on. I'd rather be able to talk about this issue and hope that at some point in the future our patent and legal system will change to address this serious problem. In the end, it's dragging down our economy because small innovative companies have to spend time and money defending themselves against bogus lawsuits instead of hiring new employees.
Moore is being represented by Dan Ravicher of PUBPAT and the motion to dismiss is a worthwhile read. I've actually been wondering in the past if those who speak out against patent trolls, and then are sued by them, might have a First Amendment/anti-SLAPP argument, and now we'll have a test case to see how that works, at least under Texas law.


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