There's a lot of outrage at Lodsys's scheme to demand patent royalties from little app developers who can't defend themselves, but there should be at least as much indigation -- if not more -- over what MacroSolve is doing. Unlike Lodsys, which firstly sent out letters offering a license, MacroSolve appears to employ a sue-first-ask-questions-later tactic at least against some and possibly all of its targets.
One of MacroSolve's victims, a small app developers with revenues that I would estimate to be only in the tens of thousands of dollars, contacted me yesterday to tell me about this. This morning I also saw a Guardian article that describes the overall situation very well, but I'd like to add a few pieces to the puzzle.
While Lodsys appears to be focused on iOS (iPhone, iPad, iPod) apps for the time being (subsequent assertions against apps for other platforms are likely, though), MacroSolve's infringement allegations include not only iOS but also Android and BlackBerry apps. Possibly also other platforms, but those are the three I've been able to verify.
MacroSolve's patent-in-suit covers electronic forms distributed via the Internet or to mobile devices
In terms of lending itself to incredibly broad interpretations and infringement allegations, MacroSolve's patent-in-suit is similarly dangerous as Lodsys's in-app upgrade patent. MacroSolve is suing companies over U.S. Patent No. 7,822,816 on a "system and method for data management", "including the steps of: creating a questionnaire; transmitting the questionnaire to a remote computer; executing the questionnaire in the remote computer to prompt a user for responses to questions of the questionnaire; transmitting the responses to a sever via a network; making the responses available on the Web." In other words, anyone who distributes electronic forms via the Internet or to mobile devices and then collects and evaluates the answers could be accused of infringing the patent.
It baffles me that the USPTO granted this patent. When reading its description, it's hard to discern any major difference between what this claimed invention does and the purpose HTML forms have been serving for a long time, and prior to HTML, electronic forms in certain client-server architectures. The patent was applied for in 2003. Even if the patent office didn't find prior art that matched exactly what the patent application describes, it should have rejected the application because any differences (if there are any at all) between that claimed invention and prior art should not be sufficient to constitute a patentable invention.
But like I explained in the Lodsys context, if app developers can't afford to defend themselves in a costly, protracted and risky U.S. patent lawsuit, the patent holder may successfully force them to pay no matter how weak the patent or how dubious the infringement assertion is.
MacroSolve sues first, asks questions later -- and the platform makers don't appear to help the app devs
MacroSolve is nastier than Lodsys. I know from one of the defendants that the first time he ever heard from them was when the complaint was served on him -- in other words, they sued without any advance warning.
Defending oneself against patent infringement claims in the U.S. is very expensive (as I explained). It's quite possible that some of the companies attacked by MacroSolve wouldn't be able to survive a full-blown litigation, so unless they manage to settle this early, they'll be put out of business by what is probably one of the most baffling patents ever asserted in the history of the United States.
At least one of the defendants contacted Apple weeks ago, but hasn't received any answer from them yet.
I don't know at this point whether any of those app devs whose Android apps are attacked by MacroSolve also contacted Google, or whether anyone who is also being sued over BlackBerry apps contacted RIM. Having looked at the judicial process so far, there's every indication that the app devs are left to their own devices. In the first of the two lawsuits filed by MacroSolve, three of the defendants have meanwhile filed their answers to the complaint, and each of them used a different law firm. If a platform maker had stepped into the ring, there would likely be some coordination with all of them using the same firm.
As far as Apple's particular situation is concerned, I believe the MacroSolve problem -- although that patent could be asserted against many thousands of iOS apps -- may be a lower priority than Lodsys. With Lodsys's patent assertion against in-app upgrades, Apple's own in-app purchasing API appears to play at least a certain role in the infringement theory. Also, Lodsys's assertions are lmited to iOS apps at this stage, and above all it's awkward that Apple itself purportedly has a license to that patent and even co-financed its original purchase by Intellectual Ventures.
But to the mobile industry at large, the MacroSolve problem should be important enough to take serious action. In my opinion, Apple, Google and RIM should in this context forget about all of their other quabbles and quarrels and jointly take on MacroSolve, just like Microsoft and Google teamed up against GeoTag, a troll who sued almost 400 of their customers.
MacroSolve has already filed two lawsuits against a total of ten companies
MacroSolve initially sued four companies that are not particularly large but not extremely small either. With the second lawsuit MacroSolve also targeted very little guys. Both lawsuits were filed with the U.S. District Court for the Eastern District of Texas, a court that is widely considered "troll-friendly".
On March 4, 2011, MacroSolve filed its first patent infringement lawsuit against four companies:
Brazos Technology: this company offers software named Brazos Technology Ticket Writer or, apparently more commonly, eCitation, that enables police officers to write parking or speeding (or similar) tickets on the spot with a mobile device. MacroSolve attacks that ticketing solution, which presumably requires custom handheld devices with a printer (not off-the-shelf smartphones), as well as Brazos's Mobile Application Environment Toolkit. Brazos's website doesn't say for which mobile platforms customers can develop applications with that toolkit.
On The Spot Systems: this startup was founded last year and provides a survey solution for businesses interested in customer feedback on a frequent basis, "accessible by any smartphone or online." An iPhone/iPad/iPod app is available on Apple's app store. There's also a link to an Android version and the app may also be available for BlackBerry and Palm devices.
Formstack: this company provides a solution for HTML forms. I haven't seen any indication that they offer mobile apps at this stage, although that might be a natural extension at some point.
Blue Shoe Mobile: MacroSolves sues this company over "its customized restaurant app products and system." The apps are available for iOS and Android.
It seems that all of the first four defendants defend themselves at this stage (although it is not certain that all of them can survive a complete lawsuit). That may have frustrated MacroSolve, which might have hoped for some quick and easy wins. At any rate, MacroSolve became more aggressive with a second lawsuit filed on April 18, 2011, against six defendants, which appear to be, on average, smaller than the initial targets:
Canvas Solutions: this company offers mobile business applications and data collection forms for several platforms (Android, BlackBerry, iPhone, iPad, and Windows Mobile).
GeoAge: MacroSolves accuses this company of infringing its patent with its Field Adapted Survey Toolkit (FAST) and SurveyMe offerings. FAST appears to be designed primarily for access through BlackBerry smartphones or desktop PCs. Windows Mobile PDAs are also mentioned but not in detail. With SurveyMe it's completely unclear to me which platforms GeoAge supports...
Kony Solutions: this company does app development for hire, with its stated mission being to "enable Fortune 500 companies to offer consumers and employees feature-rich mobile applications in less time and at lower costs than any other solution." On its Partners page, Kony lists Apple, Google, Microsoft and RIM.
Widget Press: this company is attacked because of its FormEntry product, which enables customers to "create native form based apps for the iPad, iPhone and iPod touch. No coding required." Widget Press also has an offering for the Mac.
Pogo ("People On the Go"): this company is accused of patent infringement with "its Mobi platform and/or its suite of Distribution Industry Mobile offerings". According to the company's website, this technology "supports iPhone, BlackBerry and Droid platforms" and Pogo claims it enables customers to build "dynamic, functional apps including consumer transactions" in a matter of hours.
SWD (Spelunking Web Design): this web hosting and web development company is sued over its "Sweb Development applications and/or SwebApps applications". SwebApps is a tool for building iOS apps.
MacroSolve has already stated that it sees a huge business opportunity for its patent, so the ten companies initially sued are just the start of it. They will do more, and they may already have approached alleged infringers with royalty demands (but no such incident is known at this point).
MacroSolve recently repositioned itself for a patent assertion spree
The final four paragraphs of The Guardian's article on MacroSolve's lawsuits provide some useful background. This appears to be a company that's been doing mobile development for a while, but not always successfully: its shares are currently worth only a tenth of what they used to be worth in 2009, and revenues in the first quarter of 2011 were down to only $116,000. The company's shares are traded "over the counter", which means it's a second-class citizen among publicly traded companies.
When the USPTO granted that unbelievable electronic questionnaire patent to them in October 2010, MacroSolve issued a press release in which its chairman touted the patent as "the biggest step forward [he's] seen during [his] career in the mobility ecosystem." According to a press release on MacroSolve's first patent infringement lawsuit, that chairman, Jim McGill, "spent the past 20 years consulting with companies on patent litigation issues with a focus on how to best monetize their IP" and personally leads the current assertion spree. The grant of the patent apparently enabled MacroSolve to raise $775,000 of "bridge funding" (in other words, temporary financing to avoid insolvency) in November, on the promise of aggressively enforcing and thereby monetizing that unspeakable patent.
In October, MacroSolve's president and CEO, Clint Parr, said that they are "excited to be an integral part of the evolution of a soon to be $1 trillion industry". If they developed great apps themselves that enabled them to become an "integral part" of this industry, I would congratulate them. But that patent must be fought. If that patent is (hopefully!) taken down before they generate too much licensing revenue, they'll be finished. And that's exactly what makes them so dangerous in the meantime. They'll try to sue the defenseless while Apple, Google and RIM are sitting on the sideline, or don't even seem to care at all.
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