Last week a story broke about Lodsys, a company that sent patent infringement lawsuits to iOS developers over in-app purchases. In an attempt to clarify the fallout and their rationale for pursuing legal action, they’ve created a FAQ for all to read.
Here’s a snippet:
Q: Why is Lodsys contacting Application publishers and website publishers rather than Operating system vendors, or device manufacturers?
The economic gains provided by the Lodsys inventions (increase in revenue through additional sales, or decrease in costs to service the customer) are being enjoyed by the business that provides the product or service that interacts with the user. Since Lodsys patent rights are of value to that overall solution, it is only fair to get paid by the party that is accountable for the entire solution and which captures the value (rather than a technology supplier or a retailer).
Lodsys goes on to explain why they aren’t targeting Apple, Google, or Microsoft: they’ve licensed these patents, but it doesn’t apply to third parties like developers.
Here’s what they want to charge, at the end of the day:
In the case of an Application doing an in-application upgrade (and only this scenario), Lodsys is seeking 0.575% of US revenue over for the period of the notice letter to the expiration of the patent, plus applicable past usage. 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.
Is this the end of in-app purchases as we know it? Should Apple be stepping on here?
[Lodsys via TNW]