Patent holding company Lodsys continues to wage its war of terror against the mobile developer community. More than a month after Apple (NASDAQ:AAPL) filed to intervene against a Lodsys lawsuit alleging that multiple iOS developers are violating its intellectual property rights by implementing in-app purchase options within their iPhone and iPad solutions, Lodsys responded last week, petitioning the court to deny Apple's request. In a heavily redacted document filed in the U.S. District Court for the Eastern District of Texas, Lodsys contends that Apple's motion fails to take into account recent changes to the suit: Late last month, Lodsys amended its complaint to target five additional defendants including Rovio Mobile, maker of the smash Angry Birds, as well as gaming firms Electronic Arts, Atari, Square Enix and Take-Two Interactive.
"Apple repeatedly asserts that the defendants are allegedly individuals or 'small entities with limited resources,'" Lodsys argues. "But Apple prematurely filed its Motion before Lodsys filed its Amended Complaint against several large companies with substantial financial and technical resources. Accordingly, there can be no serious dispute that the defendants will more than adequately represent Apple's purported interest."
The Lodsys suit alleges that developers are violating patents related to in-app payments and data collection applied to user interactions. Lodsys is seeking 0.575 percent of U.S. revenues over the period of the notice letter to the expiration of the patent, plus applicable past usage. "So on an application that sells U.S. $1M worth of sales in a year, the licensee would have an economic exposure of $5,750 per year," Lodsys wrote on its blog.
Lodsys previously confirmed Apple, Google (NASDAQ:GOOG) and Microsoft (NASDAQ:MSFT) have all licensed its nameplate products and services, but contends that "The scope of their current licenses does NOT enable them to provide 'pixie dust' to bless another (third party) business applications." Apple issued a formal response to the Lodsys charges stating that its existing patent license applies to its developer partners as well, explaining that the developers identified in the suit "are individuals or small entities with far fewer resources than Apple and... lack the technical information, ability, and incentive to adequately protect Apple's rights under its license agreement."
Mobile software developers are now removing their applications from the U.S. outposts of digital storefronts like Apple's App Store and Google's Android Market over fears posed by patent trolls like Lodsys and Indian firm Kootol Software, which last month sent notice to multiple tech companies alleging their services and products infringe on Kootol's patent rights. Kootol claims that more than two dozen firms--including Apple, Google, Microsoft, Research In Motion (NASDAQ:RIMM), Facebook and Twitter, as well as smaller startups like The Iconfactory, Seesmic and Ubermedia--are infringing on U.S. patent application 11/995343, "A Method and System for Communication, Advertising, Searching, Sharing and Dynamically Providing a Journal Feed," which covers core messaging, publication and real-time search technologies.
The Guardian reports that some overseas developers are now abandoning the U.S. mobile application market in an effort to avoid the headaches and financial strains caused by companies like Lodsys and Kootol. "All my apps removed from US app stores (all platforms)," tweeted London-based iSimples developer Simon Maddox last month. "0.575% of total revenue put in a spare bank account. Screw you, Lodsys." Cheltenham, U.K.-based Shaun Austin added "Selling software in the US has already reached the non-viable tipping point." Craig Hockenberry of Greensboro, N.C.-based IconFactory, named in both the Lodsys and Kootol suits, tweeted "I became an independent developer to control my own destiny. I no longer do."
But other developers are mad as hell and they're not gonna take it anymore. Mike Lee, who co-founded Tapulous and later joined the Apple staff, announced on his blog the launch of the Appsterdam Legal Defense Fund, a collective effort to fight back against the patent troll hordes. "We will let the patent trolls know: If you attack one indie, you attack all indies, and we will file every motion we can against you, we will attack your patents, and we will show you for the mafioso thugs you are," Lee writes. "Legal action will be the start of our three-pronged attack. Next we'll take the fight to Washington, raising a wall of legislation against future attacks. Imagine a law that allows small software companies to opt out of the patent system. We will also mobilize the many talented designers and evangelists in our community to launch a massive media marketing campaign to let the public know that small businesses, jobs and the economy are being threatened by parasites."
In an interview with Ars Technica, Lee explains that the Appsterdam initiative is about nurturing strength in numbers, adding he expects the group's ranks to grow quickly. In fact, Lee anticipates the majority of mobile developers will sign on: "I think of it this way," he said. "You have two options: join us, or wait to be next. The purpose of today's announcement is to rally and cheer the community. To give people hope. To get people ready." Lodsys wanted a fight--and that's exactly what it's going to get. -Jason