Patent troll Lodsys explains itself

Lodsys, a patent troll who threatened mobile developers over their use of in-app upgrade/purchase buttons, started a blog to explain itself—and why it targets small companies that can't afford to fight back.

There is a misalignment in the market where the litigation costs greatly influence the incentives. At the low end, the cost of litigation exceeds the value of the license and this puts strong pressure on small vendors to take a license rather than litigate. However, above a certain threshold, there is a perverse incentive for the larger market players to not pay (even if they should) and to force the rights holder into litigation since the higher expenses of litigation and the risk may knock out the need to pay. This cost of doing business often means that individual inventors cannot afford to attempt to license (or they don't have the expertise), and so they sell to companies that specialize in rights licensing and which have the economic reserve to deal with the litigation costs and/or they partner with contingency law firms. Ironically, contingency law firms take a % that is in the range of what Apple and Amazon charge to retail digital goods.

Emphasis added. Here's the pricing:

In the case of an Application doing an in-application upgrade (and only this scenario), Lodsys is seeking 0.575% of US revenue over for the period of the notice letter to the expiration of the patent, plus applicable past usage. So on an application that sells US$1m worth of sales in a year, the licensee would have an economic exposure of $5,750 per year.

The implication is that it's cheap. But any price is too high when your patent is thin air. Also on offer at the blog is a rambling explanation of intellectual property, offered to address the question, "Why is something as obvious as an upgrade/purchase icon a patentable innovation?" The honest answer -- "because it is" -- emerges only implicitly as Lodsys prattles on and on about the role of IP in tech history. Indeed, the most direct reference to the patent in question is to note that the original filer "visualized/created metaphors." The jokes about vague patents write themselves: Lodsys can't even find a word to singly describe what the inventor even did. Given that these upgrade buttons are a built-in element of Apple's mobile development platform, the assumption's been that Apple didn't know about Lodsys and would maybe kick its ass or something. Lodsys, however, writes that Apple, Google and Microsoft have already entered into licensing agreements with it. Given that fact, the quote posted above -- ostensibly a no-nonsense explanation of IP outfits' legitimate place in the market -- starts to look more like a strategy guide for patent trolls. Forget the more spectacular method of demanding huge sums directly from "larger market players." Recognize that they have "perverse incentives" to refuse, and instead secure deals that leave them unfleeced, but less able to protect their dependent markets. Then launch the real attack: threats sent to the "low end," where media exposure and outrage is guaranteed, but huge numbers of victims, unable to afford litigation, will pay handsomely in aggregate.

• [rmstallman]

  The article could be clearer if it avoided using the misleading term
  “intellectual property”. Lawyers with a vested interest have made
  that term fashionable, but just because people use it doesn’t mean it
  has a coherent meaning. The term lumps together patent law with a
  dozen other unrelated laws, so the feeling of understanding you might
  thing you get from this pseudo-concept is really a misunderstanding.

  See http://www.gnu.org/philosophy/not-ipr.html

  The problem of trolling is specific to patents; other laws have some
  problems, but they work differently so they have different problems.
  If you read “patent” wherever the article says “IP”, you will get a
  sharper and clearer understanding of this problem.

  The solution is simple: get rid of software patents. Every software
  patent is an obstacle and threat to software development. The
  supposed reason for having patents is to “promote progress” (US
  Constitution), but patents in the software field are impediments to
  progress. See endsoftpatents.org.

• [Anonymous]

  Lodsys’s “About the inventor” page says:
  Dan Abelow is [...] an expert on website usability

  His website http://computing2.com/ is uses that most usable web technology of… a picture with an image map on it.

  Yes, really: http://computing2.com/images/master_home_page.jpg and so on.

  Yikes.

• [VagabondAstronomer]

  I said just one more thing a little bit earlier; I lied. I think that Lodsys’ approach, as Rob put it, is to go after low hanging fruit now, especially since the printer companies (et al) they sent out their earlier letters to are now pushing very hard to have the cases dismissed, and they have bigger guns.

• [Anonymous]

  How old is this patent – as I am sure I can think of prior art for it – like the old shareware Java Mobile apps that had an ‘upgrade button’ back in 2001/2002. (I think they worked by sending a premium rate text or similar.)

• [Glenn Fleishman]

  The Texas thing is because the US District Court for the Eastern District of Texas has a judge who pretty much always finds for patentholders. Losers often appeal and win. Congress has bipartisan support for patent reform over this kind of thing, and it will eventually happen. The idea of venue shopping will be removed, and additional limits put on patents that have never been commercially exercised in products. The Supreme Court adds more limits to patent lawsuits every time they hear a business-method case.

  The Dems may sometimes be seen as in the pockets of trial lawyers (which isn’t true, in any case), but patent lawyers are a subset of trial lawyers, and most large firms now prefer to cross-license rather than to troll. And the Republicans, in the pockets of big business, are allied against trolls, as it’s not in any major business’s interest.

• [Anonymous]

  See, Anon #19… that’s what I thought when I first read this. If ANYONE, ANYWHERE, EVER had an UPGRADE button on their software before these jerks, it would nullify this ridiculous Troll

• [codesuidae]

  Without patent trolls taking advantage of the stupidity in the system, people would not get pissed off enough to do something about the stupidity in the system.

• [7-Haight]

  Lodsys didn’t license these large companies. The patents were previously owned by Intellectual Ventures. Microsoft, Google and Apple all took blanket licenses to a wide array of IV patents. They likely didn’t even look at these patents individually.

  Lodsys is using these licenses to make the patents sound like they’re higher quality than they really are. (Google and Apple have licenses, so shouldn’t YOU, little developer?)

• [Anonymous]

  I haven’t read all 91 pages of patent #5999908 (available free from Google Patent Search), but it seems to be a patent on improving any product by getting feedback from users of the product, with examples of simple ways to do this. If someone here has found the upgrade button example, could they post the page number?

• [Anonymous]

  This is indeed a troubling trend — the fact that MacroSolve and Lodsys are filing patent enforcement actions against one-person app development shops, rather than against the “deep-pockets” targets like Google and Apple, does not bode well for the future of innovation. Such lawsuits will inevitably discourage some small-scale developers from continuing their work, which will in turn deprive consumers of technological advances. What a shame.
  http://smallbusiness.aol.com/2010/05/10/how-to-file-a-patent/

• [EeyoreX]

  “Given that these upgrade buttons are a built-in element of Apple’s mobile development platform, the assumption’s been that Apple didn’t know about Lodsys and would maybe kick its ass or something. Lodsys, however, writes that Apple, Google and Microsoft have already entered into licensing agreements with it.”

  That part doesn’t make a lickload of sense. It can only mean one of two things: Either Lodsys are lying their asses off about their affiliation with Apple, or Apple quite knowingly gave all developers a crummy deal with hidden Lodsy hassle attatched to their development package as a suprise bonus.

  Regardless of wich alternative is true, the resonable thing for all lawyers to do would be to dump the entire mess back into Apple’s lap, from whence it came, and thereby force them to take the fight.

• [grimc]

  Using Lodsys’ financial program, I was able to make $45,000 in one week from the comfort of my own home!

• [Anonymous]

  If you own a patent, but you do not use the patented invention in a product or service, you are still entitled to enforce your patent. You are known in the world of patents and patent enforcement as a “non-practicing entity” or “NPE” — or more rudely put, a “patent troll.”

• [kmoser]

  I don’t get it. Software containing varying ways of persuading the user to pay for a registered version has been around for ages (nagware, anyone?). How is this any different?

• [chip]

  Patent trolls are truly vile creatures. Even pimps and loansharks provide a service (of a sort), but IP mongers add nothing to either business or society. If these scumbags don’t want to work for a living, they would do less damage if they turned to burglary. If you’re ripped off in a home invasion, at least your homeowner’s insurance will reimburse you for your losses.

  I don’t know what it’s going to take to reform these asshats out of business, but whatever the cost, it will be worth it.

• [teapot]

  Lodsys – You have a whole internet of new enemies.

  Is this the same idiots who have a quote from Edison on their homepage?

  “I never did anything by accident, nor did any of my inventions come by accident; they came by work.” -Thomas Edison

  We all know Edison was a litigous thief who doesn’t deserve his place of importance in history… Maybe this Mark Small jerk is really just taking a page outa Edison’s book.

• [mikenon]

  Patent 7222078 “Methods and systems for gathering information from units of a commodity” Abstract:
  “In an exemplary system, information is received at a central location from different units of a commodity. The information is generated from two-way local interactions between users of the different units of the commodity and a user interface in the different units of the commodity. The interactions elicit from respective users their perceptions of the commodity.”
  http://www.google.com/patents?printsec=abstract&zoom=4&pg=PA1&id=nA2AAAAAEBAJ#v=onepage&q&f=false

  39 pages of clip art and flowcharts later, I still don’t see how this applies to in-app transactions. tidbits.com has updated the article BB linked to on Friday, http://tidbits.com/article/12174

• [Anonymous]

  Apple, Microsoft et al don’t necessarily have licences from Lodsys. All the linked post says is that they are licenced.

  The patent in question was bought by Lodsys from Intellectual Ventures, a much bigger IP company. It’s certainly possible Apple etc in the past got a broad licence from IV covering many patents, including this one of which IV have now sold on. If this is what happened, Apple etc need not have had any contact with Lodsys.

  I’m not saying this is what happened, just that it’s a possibility.

• [weatherman]

  Can’t these defendants band together and countersue as a class?

  • [cuvtixo]

    One problem is that Lodsys would have to have deep enough pockets to make it worthwhile for a lawyer to accept the case. I don’t think they do. Also note that LLC means Limited Liability Company.
    The technology was invented and patented by Dan Abelow, who also has his own website for an intellectual properties company called Computing ver. 2 (Cv2) and a consulting company called Breakthrough Usability.
    Another article about them: http://www.action-intell.com/2011/02/16/lodsys-launches-patent-infringement-suit-against-brother-canon-hp-samsung-and-others/

    • [Anonymous]

      >The technology was invented and patented by Dan Abelow

      You mean the vague idea was patented. No “technology” was “invented”

  • [tim]

    Pretty much; they can band together to fight the issue. Not at all uncommon.

• [VagabondAstronomer]

  Digging into their site a little bit more is interesting. Can’t help but notice that the “inventor” also happens to share the name of an author who wrote books on sex…

  • [someToast]

    I haven’t done the same digging on the site, but… so?

    • [jjsaul]

      The sex authorship could be relevant to the prior art… “that’s going to cost you extra, honey, but for another $500 I’ll let you put it there.”

      The plaintiff’s pimp name is probably “Upgrayedd”, with the double-d for a double dose of his trollin’.

      • [Amelia_G]

        Prior art but probably not inventive step

    • [VagabondAstronomer]

      @some… just looking at the (amazingly vague and general) patents. It just amuses me how these outfits work. Apparently, some of the parties in their previous litigations are pushing to have the cases dismissed, and for all the right reasons.
      Yeah, I love some of the comments on the blog as well. Especially this ditty…
      “Golden rule: do unto others as they would do to you. You would like people to pay for your product and services, so would we. Finally, you would like to be treated in a human manner, so would we.”
      Great. Well then, go out and make something yourself.

• [Anonymous]

  should have patented the “enter” button on a keyboard before it was “return”.
  There has to be a better way or a better patent office.
  The sales of these item overseas makes up for the monies paid to these trolls.

• [shadowfirebird]

  What we need is for the EFF to patent patent trolling.

• [websorcerer]

  Another possibility for the app developer is to cut their losses and withdraw the offending apps. If they get together and all do this, perhaps Apple will get involved.

  [Maybe they can even start to develop Android apps instead]

  • [Anonymous]

    How would developing for Android prevent this issue? The patent doesn’t mention Apple and would be exactly as relevant to Android apps.

  • [morcheeba]

    Huh? That doesn’t make sense. And changing platforms won’t solve the problem, either – where did you get that idea?

• [shiva7663]

  Patent trolls and axe handles, they’re not just for breakfast anymore.

• [Anonymous]

  The fact is that there are plenty of people that will exploit an avenue for wealth if they can and it’s the law that allows them to do this. Until the law changes, this will continue to happen.

  You can’t go through life expecting people to be altruistic. It would be nice, but the world doesn’t work that way yet. Maybe one day it will.

• [ian.vitro]

  I hereby patent the idea of using a human-computer interface (including, but not limited to: touchscreen, stylus, trackball, touchpad, clit-mouse, mouse, and keyboard) to engage an “update” icon.

  Now what?

• [spocko]

  Thanks for this Rob. And I think your pointing out that this is ‘a strategy guide for patent trolls.” is really a huge point.

  And for the people talking about banding together for the purpose of a counter suit? That takes time, money and energy.

  A friend of mind got hit by the Righthaven copyright troll law firm. She had to pay up NOW or they were going to seize her domain name. EFF Lawyers didn’t want to take her case pro-bono because they already had plenty of cases going after Righthaven.
  Also, as someone pointed out a LLC company might not have the money you can get from them either.

• [cella]

  Family member has gotten involved in this. Very experienced IP litigator sank $1 million of own cash into patent portfolio and started sending out letters.

  If it cheers any one up, he has seen a pretty crappy ROI.

• [William George]

  How do you get a group of lawyers to smile for a picture?

  Just say “Fees!”

• [VagabondAstronomer]

  One more thing… this firm appears to be based in Marshall, Texas. Ironically, http://www.nytimes.com/2006/09/24/business/24ward.html

• [archmagetrexasaurus]

  LOL. The guy who invented this junk, Dan Abelow, has apparently been patented nonsensical computer-related things for a long time. Check out this gem from 1993:

  http://www.google.com/patents?id=P4MpAAAAEBAJ&zoom=4&pg=PA1#v=onepage&q&f=false

  In particular, the graph where ‘now’ imagination is separate from business and computing, while in ‘future’ imagination and all the other concepts merge by way of a venn diagram being squeezed together.

  Wharton business school may not have prepared him to know anything about computing, but I dare say it taught him all about building a vague portfolio of patents to trap folks with real skills. Of course, it’s Mark Small at work now, (perhaps others, but I think Lodsys may just be him), who bought this junk from Abelow in 2004.

  • [MythicalMe]

    As near as I can tell the patent describes a directory or folder. Those structures predate his patent.