Lodsys explains its in-app purchasing legal threats

Lodsys explains in-app purchasing legal threats

Lodsys explains in-app purchasing legal threatsThe company Lodsys is threatening legal actions against some Apple iPhone app makers over in-app purchases and many are quickly calling the company a patent troll that may be trying to shake down some smaller developers for money. In a blog post over the weekend, the company explained its actions in a pretty clear and transparent way.

Lodsys said that it’s in-app purchasing tech is already being licensed by Apple, as well as by Google and Microsoft. That doesn’t give a blanked license to every company that uses the app store though.

The company uses the analogy of a hotel: the owners of the hotel are still legally liable for the experience of the user and Apple would be akin to the owner of the hotel’s land. There might be some ways for Apple, Google and Microsoft to take care of this, Lodsys suggests:

One blogger suggested that an OS or device vendor or retailer could choose to contact Lodsys and purchase a license on behalf of its application ecosystem, but so far such discussions haven’t taken place. From Lodsys’ perspective, it is seeking to be paid value for rights it holds and which are being used by others. Economically, the best return is probably to license each Application vendor for a piece of value, rather than to include in a “buyout” for an OS vendor.

The Lodsys in-app purchase patent could be a big deal moving down the road, as many app makers are finding that selling virtual goods within the game can be just as lucrative as selling the app itself. The in-app payments just recently landed in the Android Market and the early returns suggest this will be a hit.

How much is the company seeking? Well, it clearly stated that it wants .575 percent of U.S. revenues over the period of when it sent out a notice letter to the expiration of the patent, plus past usage.

I’m not a smart enough legal guy to know if the patent in question is legit but I do appreciate Lodsys being candid about why it’s doing what it’s doing.

[Via Lodsys, photo]

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