Lodsys Offers Update on In App Purchase Patent Dispute, Claims Licensing Momentum

Nearly a year and a half ago, patent holding firm Lodsys threatened to file suit against App Store developers making use of Apple's In App Purchase mechanism, claiming that they were infringing upon patents held by Lodsys.

Apple stepped in to protect developers, ultimately filing a motion to intervene in the lawsuits being pursued by Lodsys against developers who were unwilling to license the patents in question. Earlier this year, Apple was granted limited permission to intervene in the case to the extent that it could seek to demonstrate that its existing license with Lodsys covers developers' usage of In App Purchase.

There has been relatively little news on the Lodsys situation over the past six months, but Lodsys today published a blog post providing a status update. According to Lodsys, the U.S. Patent and Trademark has upheld the validity of a key claim of one of the major patents in question, stymying efforts by Google to have the patent invalidated entirely.

As a part of the Inter-Parties Reexamination requested by Google, the USPTO recently issued an Office Action confirming Claim 24 of US Patent 7,222,078. This claim is particularly relevant regarding in-app purchases and free-to-paid application upgrades. In addition, we have every confidence that all claims will ultimately be confirmed through this lengthy process. In-app purchase features and free-to-paid upgrades will be a part of the litigation process that is now swiftly moving forward.

Lodsys goes on to note that Apple is continuing to press forward with its assertions that patent rights have been exhausted via Apple's license to the patents, thereby protecting developers from Lodsys' actions. Lodsys obviously contests that assertion, and a trial on the issue is scheduled for early 2013.

In a separate blog post, Lodsys notes that it has gained licensing momentum, now having reached agreements with 150 developers to license the In App Purchase patents, with over 80% of those licenses being obtained without involving litigation.

As of October 8, 2012, there are greater than 150 companies which obtained the rights to use the Lodsys Group patent portfolio, and more than 4 out of 5 of these companies have entered into licenses outside of the litigation process. These companies have realized significant savings by taking advantage of lower licensing rates.

Lodsys has taken on companies big and small with its effort, initially focusing primarily on smaller developers but later taking on heavyweights such as Rovio, EA, and Atari. Lodsys' plan has been to provide developers with notices of infringement, giving developers 21 days to obtain a license before filing suit.

It seems that most developers have elected to simply license the patents rather than incurring the expense and time commitment necessary to fight a lawsuit, but others have not backed down and with the assistance of Apple, Google, and other larger companies have been seeking to hold out against Lodsys.