Apple Is Dismissed From Lodsys Suit Against App Developers

Apple Inc. has been dealt a setback in its fight against Lodsys Group, a nonpracticing entity (or “patent troll”) that has rankled Apple by suing dozens of app developers for patent infringement.

Apple sought to intervene in one of Lodsys’ many lawsuits and argue on behalf of the 11 app developers named in the case. U.S. District judge Rodney Gilstrap in Marshall, Texas, granted Apple’s motion in part in April 2012.

Earlier this month, Lodsys moved to dismiss Apple’s claims that its own license allows its developers to use the products and services covered in the patents. On Tuesday, Gilstrap agreed with Lodsys that those arguments had become moot because Lodsys had reached settlements with all the named defendants in the case. 

Lodsys, represented by Kelley Goldfarb Huck & Roth, settled cheaply with the developers in the case but it has sent more cease-and-desist letters and filed more lawsuits against dozens of other app developers. According to the Electronic Frontier Foundation, Lodsys has now sued about 30 app developers in the Eastern District of Texas.

Tuesday’s decision means that if Apple wants the courts to declare that its license protects its developers, it will have to pick a different case against an app developer and start the process all over again by filing a new motion to intervene. Apple, which was represented by Simpson Thacher & Bartlett, was hoping for a declaratory judgment saying Lodsys’ claims against the developers were barred by the doctrines of patent exhaustion and first sale.

“What Lodsys did is slimy, but the ruling means they’re just kicking the can down the road,” said Julie Samuels, a staff attorney at the Electronic Frontier Foundation, which filed an amicus brief supporting Apple’s efforts to intervene. “It’s unfortunate because it will take months or years to get to the same point, but it’s an important legal issue and the question will come up again.”

Lodsys, which filed the patent infringement action in May 2011, gradually settled with all 11 of the defendants—presumably because it did not want to tangle with Apple, which filed to intervene in the case a month later. But it also may have outmaneuvered the computer and smartphone maker, knowing that Apple would have a tougher time showing it should be able to intervene if claims against all the defendants were dropped.

“Notwithstanding the Court’s discretionary power to adjudicate an intervenor’s claim on its own…the ‘case or controversy’ requirement of Article III of the United States Constitution prohibits federal courts from considering questions ‘that cannot affect the rights of litigants in the case before them,’” Gilstrap wrote.

Jeffrey Ostrow, a partner at Simpson Thacher & Bartlett in Palo Alto, Calif., referred calls to Apple.