Independent developers of iPhone and iPad apps that use Apple’s in-app purchase systems are being threatened withy legal action by a company that claims to hold a patent covering the technique. Like all patent disputes, this one promises to be long, complicated, and expensive. But Apple, which owes much of the success of its iOS products to these developers, should do the right thing and promise to indemnify them.
The threats are coming from a company called Lodsys LLC. which bought a portfolio of patents from inventor Dan Abelow. Lodsys is what’s known in patent-speak as a “nonoperating entity,” or more disparagingly, a “patent troll”–a company which seeks to derive revenues from intellectual property it owns but doe snot use in the course of its own business. I have no opinion on the validity or applicability of Lodsys’s patents or its demand for a royal of 0.575% of all in-app purchase revenues. My concern is with the relationship between Apple and the developers.
It’s clear that the developers have acted in good faith using technology for purchases that Apple not only provides but demands that they use. There’s also some evidence that Apple might have known there was a potential problem; Lodsys says that Apple itself (along with Google and Microsoft) has acquired a license to use its technology in its own branded products. But, says Lodsys, “The scope of their current licenses does NOT enable them to provide ‘pixie dust’ to bless another (3rd party) business applications.”
Some providers of in-app purhcases, such as Time-Warner and Conde Nast, could certainly fend for themselves. But many others, including the makers of useful but niche-y iOS apps, clearly cannot. And while the royalty sought, which amounts to $5.75 on every $1,000 in sales, isn;t going to break anyone, companies have reason to object in principle to handing over payments to companies whose demands may or may not be valid, but which they cannot afford to challenge on their own.
Apple, which has so far been silent in the matter, should take the lead here and protect its community of developers. There are several things it could do. If it believed Lodysys’s claims are valid or aren;t worth the expense of a lengthy court fight, it should negotiate a broader license that would let it spread “pixie dust” over developers. At the same time, it should either persuade Lodsys to waive claims for past infringement or it should indemnify developers for any costs. Considering Apple’s financial condition, they could probably do this by collecting the change from sofas around One Infinite Loop.