Apple iOS developers sued as in-app purchase patent fight escalates
Patent holding company Lodsys made good on its threat to pursue legal action against developers alleged to violate its rights by implementing in-app purchase options within their iPhone and iPad solutions, filing a patent infringement suit against seven iOS programmers: Combay, IconFactory, Illusion Labs, Shovelmate, QuickOffice, Richard Shinerman and Wulven Game Studios. The suit, filed in the U.S District Court for the Eastern District of Texas, contends the developers violated Lodsys patents related to in-app payments and data collection applied to user interactions. Although apps on Apple's (NASDAQ:AAPL) iOS mobile platform are the primary target of the suit, Lodsys also names one Android application and one Mac app.
Lodsys, which acquired the patents in question in 2004 from inventor Dan Abelow, previously stated that in cases where applications are offering in-app upgrades, it is seeking 0.575 percent of U.S. revenues over the period of the notice letter to the expiration of the patent, plus applicable past usage. "So on an application that sells U.S. $1M worth of sales in a year, the licensee would have an economic exposure of $5,750 per year," Lodsys wrote on its blog. Lodsys previously confirmed Apple, Google (NASDAQ:GOOG) and Microsoft (NASDAQ:MSFT) have all licensed its nameplate products and services, but contends that "The scope of their current licenses does NOT enable them to provide 'pixie dust' to bless another (3rd party) business applications."
Apple issued a formal response to the Lodsys charges last month, stating that its existing patent license applies to its developer partners as well. "Apple is undisputedly licensed to these patents and the Apple App Makers are protected by that license," wrote Apple senior vice president and general counsel Bruce Sewell in a letter addressed to Lodsys CEO Mark Small. "There is no basis for Lodsys' infringement allegations against Apple's App Makers. Apple intends to share this letter and the information set out herein with its App Makers and is fully prepared to defend Apple's license rights."
Lodsys disputes Apple's license claim. "[Sewell's] letter was very surprising as Apple and Lodsys were in confidential discussions and there was clearly disagreement on the interpretation of the license terms of Apple's agreement," Lodsys writes. "Before, during and after these interactions, Lodsys has carefully considered this issue and consulted several legal experts to consider Apple's claims. We stand firm and restate our previous position that it is the 3rd party Developers that are responsible for the infringement of Lodsys' patents and they are responsible for securing the rights for their applications. Developers relying on Apple's letter do so to their own detriment and are strongly urged to review Apple's own developer agreements to determine the true extent of Apple's responsibilities to them."
Lodsys goes on to put its money where its mouth is: "Lodsys offers to pay $1,000 to each entity to whom we have sent an infringement notice for infringement on the iOS platform, or that we send a notice to in the future, if it turns out that the scope of Apple's existing license rights apply to fully license you with respect to our claim relating to your App on Apple iOS," the firm adds.
- read this Apple Insider article
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