Apple Looking into Lodsys Lawsuits
Apple studies patent infringement claims by Lodsys
Apple's legal department is understood to be "actively investigating" claims by Lodsys, a patent holding company based in Texas, to have a claim against iPhone and iPad developers who use in-app purchase systems.So far Lodsys has served papers on about a dozen iOS developers who it says are infringing its patent 10/732,102, which it bought in 2004 from the inventor, who filed it in the 1990s, covering user interaction over a network.Apple is not expected to respond to the claims, which have been passed to it by affected developers, until later this week.Lodsys is asking for 0.575% of US revenue for in-app purchase. Although that may not be substantial for individual developers, one told the Guardian: "0.575% of the in-app purchase market across all platforms would be a very nice figure to have indeed. And, of course, it's 0.575% for this patent today. Tomorrow it's another 1% from some other company, and so on."Lodsys says that Apple has licensed the patent covering in-app purchasing – but adds that it can still claim for payments that use the technology in developers' own apps. "The scope of [Apple's] licences does not enable them to provide 'pixie dust' to bless another third-party business applications [sic]. The value of the customer relationship is between the Application vendor of record and the paying customer," notes the blog's author, believed to be Lodsys's chief executive, Mark Small. "The operating system is acting as an enabler and the retailers are acting as a conduit to connect that value."In a series of blog posts, the company notes that Google and Microsoft have taken out licences, but notes that "so far no one has asked" whether apps written on those platforms might be liable for licence fees.A number of iOS developers received couriered documents last week from Lodsys claiming payments were due following their use of in-app purchases.The move has worried app developers, who see it as a dangerous and slippery slope where they become liable for payments to third parties after using the in-system APIs that they are required to by the mobile OS company. Apple does not allow apps that use other systems for purchasing to be sold through its app store, and Google is also tightening its rules on app APIs.Lodsys is also suing a number of larger companies including Samsung, Brother, HP and Motorola Mobility.Lodsys comments on its blog that:
 "There are lots of bills in life that it would be preferable to not pay if one didn't have to. Lodsys is just trying to get value for assets that it owns, just like each and every company selling products or services is, trying to do business and make a profit. It's odd that some of the companies that received notices had such a visceral reaction. Some of these companies have our favorite apps, for which we paid the asking price. We realise you have to get paid for your work and so do we."
One developer told the Guardian: "They do imply they've have a horrible weekend, but then again, I seem to be the one who hasn't slept properly since Friday, and I'm pretty sure I'm not the one who sent the letters in the first place! It feels very hypocritical for them to paint themselves as the victim here."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.Mueller fears that if Lodsys prevails it will buy more patents and use them against small app developers who would be unable to defend themselves; and other companies would follow its business model, "shaking trees for money that you just can't lose because your opponents can't even defend themselves".The risk to the mobile app economy is huge, says Mueller, and this move by a small, relatively unknown company might be the final straw needed to get the mobile companies, including Apple – which is the largest mobile phone vendor in the world by revenue – to lobby the US administration finally to do something positive about software patents. The problem is, what?