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Home business strategy

The Word of the Day for App Developers is Union

by Dana Blankenhorn
May 23, 2011
in business strategy, e-commerce, futurism, intellectual property, Internet, law, patents, software, Web/Tech
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UPDATE: Apple has responded to the issue below with a letter, which offers no legal protection to app developers.

Dan Abelow The U.S. Patent and copyright regimes have evolved to benefit corporations.

That was not their original intent (it was meant to benefit small inventors like this guy), but that's discussion for another time.

For now let's focus on reality. Patents and copyrights are meant to benefit big companies. They're treated as property rights, especially in fast-moving industries. Big outfits like Apple, Google and Microsoft raise high the patent walls, buying rights to inventions they didn't create and then asserting them against their ecosystems, in order to maintain control.

Apple has done this with special ruthlessness, but now a patent troll called Lodsys (and sorry guys but you're a troll) has hoisted it on its own petard.

Lodsys bought an incredibly broad patent, number 10,732,102 for those scoring at home claiming to cover all purchases within applications, when the upgrade process is part of the app.

The “invention” was created by a man named Dan Abelow (above), in 1988, so the actual invention has nothing to do with mobile phones, apps, or anything in the current day. He sold his rights to Nathan Myrhvold's Intellectual Ventures in 2004

Lodsys got its “rights” from Intellectual Ventures. So this is not a case of small inventor getting his just desserts, even second hand. This is a law firm shaking down an industry for its own profit.


Florian-mueller-october-2010-in-munich Lodsys got Apple to license its patent, but here's where it gets tricky. Despite that agreement with Apple, Lodsys decided to go after all of Apple's app developers, claiming 0.575 percent of revenue on all purchases made within their apps. Apple says it is studying the matter.

Studying the matter is not good enough. Apple licensed this capability to its developers when they started creating apps. It was a required part of what they bought from Apple. If Apple sold them something it didn't own, and didn't tell them about, isn't it in violation of its agreements?

Florian Mueller (naturally — he's German) sees something even darker at work here. Small app developers are small companies. They're minnows swimming in the wake of giants like Apple. If Apple allows this shakedown, others can do the same thing. The minnows will get eaten by lawyers.

Despite the unfairness of it all, Mueller is telling the app developers to pay up. You can't afford to go to court, he writes. Your business could be destroyed by your legal costs if you fight, and half-a-percent on your revenues is not worth the risk.

Mueller adds that this is the second patent attack against iOS developers in just the last few months. A troll called H-W Technology LLC sued some app developers in March.

If it were up to me, I'd have the app developers send bills for their costs to Chief Justice John Roberts but this is not a question of right-or-wrong. It's pay-or-play. And if you want to keep doing business, you pay. After all, if you got $1 million from in-app purchases, we're talking about less than $6,000 – a tip.

Organize Then you scream bloody murder at Apple, organizing with other app developers to sue the giant if they don't repay what you just paid out, or at least assure (through their lawyers and lobbyists) that such shakedowns can't happen again.

Better yet, how about forming an App Developers Union so the minnows can assert their rights publicly, and in court, against not only Apple and the trolls, but against Microsoft, Google and the rest of the industry as well? And once you learn what unions are for, maybe you'll start to support them for workers as well?

That last is too much to hope. But I'm American.

 

 

 

 

 

 

Tags: app store patentAppleappstoreFlorian MuellerLodsyspatent lawpatent trollspatentssoftware industry
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Dana Blankenhorn

Dana Blankenhorn

Dana Blankenhorn began his career as a financial journalist in 1978, began covering technology in 1982, and the Internet in 1985. He started one of the first Internet daily newsletters, the Interactive Age Daily, in 1994. He recently retired from InvestorPlace and lives in Atlanta, GA, preparing for his next great adventure. He's a graduate of Rice University (1977) and Northwestern's Medill School of Journalism (MSJ 1978). He's a native of Massapequa, NY.

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Comments 4

  1. cheap jerseys says:
    15 years ago

    Then you scream bloody murder at Apple, organizing with other app developers to sue the giant if they don’t repay what you just paid out, or at least assure (through their lawyers and lobbyists) that such shakedowns can’t happen again.

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  2. cheap jerseys says:
    15 years ago

    Then you scream bloody murder at Apple, organizing with other app developers to sue the giant if they don’t repay what you just paid out, or at least assure (through their lawyers and lobbyists) that such shakedowns can’t happen again.

    Reply
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