Apple looking into Lodsys’ in-app purchasing patent claims

May 17, 2011
Tech

Apple is reportedly investigating claims by Texas tech company Lodsys over in-app purchases – claims which aren’t being levied against Apple, but against independent developers of apps on Apple’s iOS platform. So far, about a dozen such legal claims have been issued to small developers, according to a story from the UK newspaper The Guardian. […]

Apple is reportedly investigating claims by Texas tech company Lodsys over in-app purchases – claims which aren’t being levied against Apple, but against independent developers of apps on Apple’s iOS platform.

So far, about a dozen such legal claims have been issued to small developers, according to a story from the UK newspaper The Guardian. Lodsys holds a patent on in-app purchases, for the use of which Apple (AAPL) pays the company a licensing fee. Google (GOOG) and Microsoft (MSFT) also pay fees for the use of the technology, but Lodsys claims that individual developers also need to pay a licensing fee. The company is asking for 0.575 percent of revenue from the apps that use in-app purchases.

No motion from Apple is expected until later this week, although developers who received legal documents about the possible actions are awaiting further information (and instructions) from the company. As per Apple’s licensing agreement for iOS development, companies can’t settle with Lodsys in any way that might bind Apple.

But developers talking to The Guardian are pretty worried about the implications of the patent dispute, especially since developers utilizing in-app purchases have been told they can do so by Apple’s own licensing documents. Some app makers, like those that sell newspaper and magazine subscriptions, are required to offer in-app purchases by Apple’s subscription agreement.

Lodsys’ point of view, as described in several blog posts from the company, is that it deserves to get paid for the technology that it owns. And what’s more, licensing that technology doesn’t mean Lodsys has licensed every developer who makes an app and benefits from the in-app purchasing technology. Here’s a quote from Lodsys’ blogs: “The scope of [Apple’s] licenses does not enable them to provide ‘pixie dust’ to bless another third-party business applications [sic].”

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One analyst thinks that if Lodsys is successful in its patent dispute, however, it could have serious effects on the app market in general – possibly destroying it. Developers have expressed fears that if Lodsys is successful with its claim, it’ll set a precedent and others will start to come out of the woodwork and eat into app profits with other disputes, as well.

Here’s a quote from The Guardian story:

Florian Mueller, who has tracked patent disputes in the US and EU, suggests on his blog: “Lodsys is trying to abuse the patent system in a way that could ultimately destroy the entire mobile apps economy, which is not only thriving on its own but has been and continues to be a key factor in making new mobile devices so useful and popular.

He says: “It’s actually questionable whether Lodsys’s patents would survive a well-funded effort to have them declared invalid, adding: Even if they could be upheld under the system as it stands, there’s no way that those patents represent a fair deal between society and Lodsys, which bought them from the inventor.”

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Phil Hornshaw

Phil Hornshaw is a freelance writer, editor and author living in Los Angeles, dividing his time between playing video games, playing video games on his cell phone, and writing about playing video games. He’s also the co-author of So You Created a Wormhole: The Time Traveler’s Guide to Time Travel, which attempts to mix time travel pop culture with some semblance of science, as well as tips on the appropriate means of riding dinosaurs. Check out his profile.

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