Saturday, July 2, 2011

Lodsys: DriveTime Automotive Group Adds Another DJ

On June 30, 2011, DriveTime Automotive Group filed a declaratory judgment action against Lodsys in the District of Arizona. DriveTime calls out the Lodsys business model in the filing:

14. On information and belief, Lodsys has a well-known reputation as a “patent troll,” which refers to companies that acquire broad or ambiguous patents and then claim they cover specific and financially productive activities in attempt to generate revenue from litigation or the threat of litigation. These companies never actually manufacture anything covered by the patents they acquire – they generate revenue from litigation and the threat of litigation alone. This practice is becoming more and more common, much to the concern of the technological and legalcommunities. Lodsys is one of the latest to attempt to profit from this disturbing trend.

15. On information and belief, Lodsys has targeted numerous companies throughout the United States with demands that the companies either pay a license or settlement fee in exchange for a covenant not to sue, or in the alternative, face the exorbitant cost of defending a patent infringement lawsuit.

16. On information and belief, many of the companies targeted by Lodsys accede to its demands despite the lack of merit to the patent infringement claims, because by design, the cost of settlement, while not cheap, is much less significant than the average cost of a patent infringement defense. [via PriorSmart]

Every new declaratory judgment action can be considered a small bit of good news for iOS developers. No single DJ will cost Lodsys enough to materially impact its profitability, but they will add up.

It is very important to the development community that the Lodsys model, asserting patents against many parties who do not actually infringe to obtain nuisance licensing fees, does not appear profitable to imitators. The companies filing DJs are doing their part to send that message.


Previous Coverage:

1 comment:

Unknown said...

Add #SlothMedia, LLC makers of #KosmicMath - a children's math game for IOS to the list of developers being picked on by Lodsys. #Lodsys knows full well that develpers are more prone to settle than stand up against them. Its the classic bully story rather give up the lunch money than take one in the eye...