A David vs. Goliath battle has emerged in a patent dispute between small independent iOS application developers and a Texas-based patent holding company called Lodsys.
Late last week, Lodsys sent official “notice” letters to more than a dozen iOS developers in the U.S. and Europe warning that the in-app purchasing mechanism inside their iOS apps infringes on a patent held by Lodsys. (In-app purchasing became available in iOS 3.0 in June 2009.) An in-app purchase refers to a user’s being able to pay for an upgrade from within a lite or free application rather than going to the App Store for a separate application upgrade.
The developers were told they had 21 days to start discussions with Lodsys about creating licence agreements for the right to use the patented intellectual property.
One of the developers who received a Lodsys notice, Chicago-based Patrick McCarron, tweeted that Lodsys was “going after small guys and not Apple … I can now check off being threatened by a patent troll off my bucket list.”
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Lodsys responded Sunday with a blog explaining its reasons for sending the letters, and suggested that it could be sending similar letters to potentially thousands of small iOS developers that provide in-app purchasing.
In the blog, Lodsys noted that Apple is already licenced for patents to Lodsys and added a rationale for going after small developers: “From a fairness perspective, we have decided that Lodsys should attempt to licence all users of the patent rights, on proportional terms, rather than let many ‘free riders’ not pay while only selected companies pay.”
Lodsys also said Apple’s licences do not enable Apple “to provide pixie dust to … third party business applications.”
Lodsys said it is seeking 0.575% of the U.S. revenue in the case where a developer’s application provides an in-application upgrade subject to a fee. Lodsys said that if an application has $1 million worth of sales in a year, the licencee would face paying Lodsys $5,750 per year.
James Thomson, a developer based in Scotland who is behind the application PCalc Lite tweeted that he received a Lodsys letter last week and later tweeted: “It’s not about the amount.” He joined a chorus of bloggers and activists who see the Lodsys letters as quashing the independent innovations that the App Store has helped encourage. Other developers said they worried about potential legal costs in fighting Lodsys alone, which could threaten their businesses, unless Apple can step in to help.
Apple did not respond to a request for comment.
Also in its blog, Lodsys argued it “wants people to use the rights in [its] products and services, not to stop using it. Our goal is to popularize the technology, have it used by many people and to make relatively small amounts per licencee…”
In response, some independent developers and at least one popular intellectual property activist believe the move by Lodsys jeopardizes the overall mobile apps ecosystem.
That activist, Florian Mueller, has followed more than 40 smartphone-related patent lawsuits filed in the past year by major smartphone patent holders . He blogged on Monday that Lodsys is a “patent troll…seeking to justify its business model of asserting patents against defenseless little app developers.”
Mueller, who is based in Germany and doesn’t legally represent any of the iOS developers or parties in the smartphone lawsuits added: “While the major mobile platform makers like Apple, Google , Microsoft and RIM are unanimously in favor of software patents, I don’t think they would want to see countless app developers go out of business. They don’t just court those developers for no reason with all their evangelists, conferences, and occasional freebies.”
Mueller concluded: “The ball is in Apple’s court.”