Patent Troll Lodsys Settles Lawsuit Only Because Developer Had Pro Bono Help


Todd Moore reports that Lodsys, a patent troll that has sued a long list of developers over in-app purchase patent infringement, has dismissed the lawsuit against his company TMSOFT, at a price: never sue Lodsys over its patents, dismiss all motions with prejudice, and make a donation to a mutual agreeable charity.

I was a little confused about why Lodsys wanted to make a donation to charity. I asked my lawyer if it was to make them appear more human. He said it is most likely because if we would have said no to this offer, the judge could have said we were not behaving reasonably. That seems a little ridiculous given they were the ones that filed this frivolous lawsuit. But, I get the point that Lodsys could say to the judge they were willing to dismiss it if only I’d make a small donation to a charity. This would be their way of making me look like I was the one wasting the court’s time by continuing to fight the case despite Lodsys being willing to dismiss it without me having to pay them anything.

While this is good news for small companies, as it could suggest the fight is over, and that their businesses could be saved from millions of dollars of lawsuit costs, Marco Arment highlights a different side of the story.

First, this doesn’t mean that Lodsys has become a “good guy.” Secondly, it absorbs the negativity from the real vice background player, Intellectual ventures: a patent troll.

Thirdly, the donation doesn’t have anything to do with charity: they required the defendant — in this case TMSOFT — to make a donation to a charity.

Lodsys didn’t really “lose” anything. They spent very little to file the suit, caused someone else to effectively spend $200,000 to defend against them, and they lost nothing except their own legal fees in the process. Again, the scheme still works.

As Marco points out, this isn’t a victory against patent trolls, as it won’t be repeatable. Todd had the luck of saving $190,000 as two patent lawyers represented him pro bono. This figure could have been in the range of a million had the case gone to trial. And the patent trolls target small companies, which don’t have this amount of money. As a result, they will obviously settle.

Todd can finally sit back relaxed, and may have a sort of victory feeling, but the only winners are Lodsys and Intellectual Ventures, which make their money by extorting it from hard-working people in the tech industry.