Apple Says Lodsys Has No Case Against Developers; Will Defend Them Against Suits

from the patent-exhaustion? dept

With Lodsys providing an excellent case study in the patent system run amuck with its plan to sue a bunch of independent iOS developers for offering Apple's official in-app payment offering, one of the big questions was how Apple would respond. Lodsys insisted that Apple had a license, but that it only applied to Apple, not to any Apple developers. Apple has now publicly disagreed and claimed that it would defend developers against any such claims.

I was wondering if Apple would even contest the validity of the Lodsys patent or whether the in-app payment offerings were infringing, but the company didn't even bother. Instead, it notes that Apple has indeed licensed the patent, and any of the developers using the in-app payment solutions aren't doing their own thing, but are using the already licensed Apple technology, and under the famous Supreme Court ruling in the Quanta case, if a patent holder licenses a product to one player in the supply chain, it can't then go after others down the stream. While some are claiming that this will still involve a fight between Apple and Lodsys over the exact terms of Apple's license, I don't actually think that's the case. Apple's not arguing the nature of the license, but is claiming that since these developers are using Apple technology, the patent has been exhausted in this case. In fact, it seems like a pretty direct parallel to the Quanta case, which is going to make it difficult for Lodsys to get very far.

Filed Under: in-app payments, patent exhaustion, patent trolls, patents
Companies: apple, lodsys

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  1. icon
    Andrew F (profile), 24 May 2011 @ 4:58pm

    Patent Exhaustion and First Sale

    There's actually an interesting twist here I think.

    The Quanta case only says that if you license someone to SELL a product that embodies a patent, then any downstream users of that product don't need a license as well.

    The catch is the "sell". If I license the technology, but you choose to sublicense or relicense the technology rather than sell a product, then the patent hasn't been exhausted. This is similar to the first sale doctrine in copyright law, and it's why software companies always insist on "licensing" technology to you rather than just sell it.

    So in order for a patent exhaustion claim to move forward, Apple is saying that it sold, not licensed, its SDK to its developers.

    Why is that interesting? Well, it basically means developers can now IGNORE all of Apple's licensing terms without violating copyright law. They're the owners of the software, not licensees! They can resell the software, develop apps for jailbroken iPhones, etc.

    Note that Apple can still bring a breach of contract claim against the developer, because this is separate from the copyright issue. But Apple cannot bring a breach of contract against any random person who manages to get a hold of an SDK (e.g. off eBay) but did not agree to anything with Apple. In the past, Apple might have brought a copyright claim, but in conceding that they've actually sold something, they can't do so anymore.

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