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Lodsys Defends Its Patent Stance, Devs Fume, Apple Says Zip

By Erika Morphy MacNewsWorld ECT News Network
May 16, 2011 2:50 PM PT

The mysterious entity that allegedly filed suit against a number of Apple developers using the company's in-app purchasing system has spoken -- quite defiantly too -- for the first time since the developers received their notices.

Lodsys Defends Its Patent Stance, Devs Fume, Apple Says Zip

The company, Lodsys, posted its version of events on its company blog, starting with the observation that the death threats and other nasty comments that have come its way were quite "uncool."

First, some background.

Last week, several developers -- James Thomson of TLA Systems, developer of DragThing and pCalc, and Patrick McCarron, for MobileAge, among them -- began tweeting about documents that appeared to be patent suits or cease-and-desist letters for patented technology in Apple's in-app purchasing system.

There was some confusion about the patents and technology in question, as well as the company behind the mailing. Eventually the name of the firm, Lodsys, was unearthed, leading to, presumably, an onslaught of hate mail aimed at the company.

A Call for Reason

In its response, Lodsys said it was trying to open negotiations for licensing with these developers. It also stood its ground over apparent accusations of being a patent troll, noting that it owns the patent in question and is entitled to compensation.

Lodsys did not return a request for comment to MacNewsWorld in time for publication.

The fees it is seeking to charge developers, it said, are quite reasonable and will depend on the company and the way it is using the technology.

For applications using the patented software for an in-application upgrade, Lodsys is seeking 0.575 percent of U.S. revenue.

"So on an application that sells US$1m worth of sales in a year, the licensee would have an economic exposure of $5,750 per year," it said in its blog.

On the whole, the developers will not be dunned too badly, assuming it comes to that, Randal Ivor-Smith, a partner with Raines Feldman, told MacNewsWorld.

"These are not high fees for an individual developer but in the aggregate will add up nicely for Lodsys," he pointed out.

Where Is Apple?

Still, the entire scenario is strange. Apple has licensed the technology, Lodsys acknowledged in its blog. Assuming that is true, why wouldn't Apple include licenses for its third-party developers, especially since it required them to use this technology? Ivor-Smith wondered. "It could have been an oversight -- but that is so hard to believe about Apple."

On the other hand, there is no other logical conclusion to draw, save for a sleight-of-hand legal maneuver on the part of Lodsys. Apple wouldn't have required developers to use this technology without obtaining their right to use it, Ivor-Smith reasoned.

There are other ways Apple could have been outfoxed, but it is difficult to believe that of the company, said Christopher M. Collins, a partner with Vanderpool, Frostick & Nishanian.

"Sometimes a patent holder will give a partial license and hold back related licenses that will be needed later. Or it could be a case of a follow-on patent," he said.

Only a novice company would be taken in by either strategy, he added.

Ultimately, it is in Apple's best interest to fix this so developers won't go elsewhere, said Ivor-Smith.

The problem is, Apple has been mum on the subject -- it didn't respond to MacNewsWorld's request for comment, and based on tweets by developers such as Thomson, it is not returning their calls either.

Lodsys' blog alluded to similar licenses held by Google and Microsoft. However, it is unclear if these companies have made the technology available to developers or are requiring them to use it, Ivor-Smith said. "When Apple speaks up, we will have a much better sense of what is happening."

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