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Pulls out 'pixie dust' for in-app payments

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Apple has come to the defense of iPhone and iPad app developers under pressure to fork over a portion of their in-app purchase revenue to a US patent-holder known as Lodsys.

Last week, Lodsys sent letters to iOS developers that use in-app purchasing, asking that they hand over about half a per cent of their US revenue as a license fee for a patent the company owns, and it has apparently sent letters to other developers claiming infringement of three other patents it owns. But Apple has now sent a letter of its own to Lodsys, claiming that it has licensed the rights to all four patents owned by Lodsys and that the license covers app developers as well.

"Apple is undisputedly licensed to these (patents) and the Apple App Makers are protected by that license," reads the letter, signed by Apple senior vice president and general counsel Bruce Sewell. "There is no basis for Lodsys' infringement allegations against Apple's App Makers."

The letter – available here – was also sent to various iOS app developers. It says that Apple has licensed all four patents in the Lodsys portfolio for use with certain Apple products and services and that under the license, Apple customers and business partners have the right to use these products and services without having to worry about infringement claims.

Apple contends that judging from letters Lodsys sent to developers, Lodsys's infringement claims rest solely on the use of Apple products and services. "The technology that is targeted in your notice letters is technology that Apple is expressly licensed under the Lodsys patents to offer to Apple’s App Makers," the letter reads.

"These licensed products and services enable Apple’s App Makers to communicate with end users through the use of Apple’s own licensed hardware, software, APIs, memory, servers, and interfaces, including Apple’s App Store. Because Apple is licensed under Lodsys’ patents to offer such technology to its App Makers, the App Makers are entitled to use this technology free from any infringement claims by Lodsys."

Apple asked Lodsys to withdraw the letters it sent to developers and to "cease its false assertions that the App Makers’ use of licensed Apple products and services in any way constitute infringement of any Lodsys patent."

Lodsys has said it will not talk to the press about the matter. But it has discussed the matter on its company blog, and yes, its view is quite different from Apple's. "The scope of [Apple's] current licenses does NOT enable them to provide 'pixie dust' to bless another (3rd party) business applications. The value of the customer relationship is between the Application vendor of record and the paying customer, the OS (is acting as an enabler) and the retailers (are acting as a conduit to connect that value), and taking their % for that middleman role," the company said.

In some letters to developers, Lodsys claimed that developers using in-app purchasing are violating US patent 7,222,078, which describes "methods and systems for gathering information from units of a commodity across a network". The patent application was filed in December 2003, and it was acquired by Lodsys in 2004.

"This invention helps vendors and customers by transforming their learning cycle," the patent reads. "It compresses the time and steps between setting business objectives, creating effective products and services, and improving them continuously. It also alters their roles: Customers become partners in the improvement process along with vendors and distributors."

Lodsys also owns patents relating to interactive online ads, online help, and subscription renewals. ®

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