Patent Holder Asks For Percentage of Developers' In-App Purchase Revenue, EFF Responds

By May 21, 2011
filing a lawsuit

Several iOS developers have been asked by patent-holding company Lodsys to remit due to infringement on their in-app purchasing tech. Apple requires developers to use this code, and some say should protect these smaller entities.

Patent-holding company Lodsys has begun sending patent infringement notices to developers of iOS applications this month. The Texas-based company is asking developers to license the in-app purchasing technology that it owns the patents for, at a rate of 0.575 percent of US revenue generated from such in-app purchases. Most of these developers were surprised to receive these notices, since Apple requires them to use this specific technology in accordance with App Store protocol.

Since failure to comply with the Lodsys notices would result in lawsuits that might amount to greater costs for the developers, many are opting for the simpler solution of paying the patent-holding company.

The Electronic Frontier Foundation has taken umbrage at Apple's role in this situation - developers must use tech that puts them in this legally vulnerable situation - and is calling on Apple "to stand up and shoulder the burden," according to coverage from ReadWriteWeb.

The EFF explains in their blog today, "Apple's failure to defend these developers is troubling and highlights at least two larger problems: patent trolls and developers' vulnerability when harassing and counter-productive patent litigation comes around." The foundation considers Lodsys an example of such patent trolls, and suing small developers is becoming more common.

Apple is immune from this patent lawsuit, since the Cupertino-based tech company took a license from Lodsys' predecessor to use this patent. However, Apple does not have to compensate developers when they become the target of a lawsuit because of tech that Apple provides. The EFF speculates that this will harm not only developers but consumers, who "will see fewer apps and less innovation."

The Lodsys blog has released a FAQ, which in part addresses why Apple is not responsible for or taking care of the developers of iOS apps. "The scope of their current licenses does NOT enable them to provide “pixie dust” to bless another (3rd party) business applications (sic)." The blog author suggests it would be possible for a mobile OS or device vendor to purchase a license that would cover an entire app store ecosystem, but that so far, Lodsys has not been approached for such a solution.

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