Thursday, May 19, 2011

Of Lodsys and Apple

While not obsessing about the matter, I've been reading whatever crosses my path about Lodsys's attempt to extor--er, obtain royalty payments for a patent that allegedly covers in-app purchases. Lodsys went after small iOS developers rather than Apple, undoubtedly because the patent troll knows small developers don't have the resources to sustain a legal fight. More information can be found in a MacWorld analysis (link courtesy of Daring Fireball).

The question every article I've read raises is, "Where's Apple in this fight?" Although not directly contacted by Lodsys, Apple undoubtedly has heard from developers who were, since a clause in the developer agreement requires them to notify Apple of any action that could affect Apple's legal rights. Apple, however, has made no public comment about the matter.

I'm not surprised Apple hasn't commented yet. If third-party developers face a few unpleasant options, so does Apple.

Third-party developers are widely seen to have only these choices:
  • Agree to Lodsys's terms for royalties, including retroactive ones. This has the unsavory side effects of encouraging Lodsys to pursue this extortionist tactic with other developers and of giving the vulturine entity more money to do so. However, it gets the cooperating developers out from under the threat of litigation.
  • Seek a reexamination of the patent in question. This requires money, but not nearly as much as litigation would. Unfortunately, this move doesn't preclude Lodsys from litigating in the meantime.
  • Call Lodsys's bluff. It's barely possible Lodsys doesn't want to litigate. However, everything I've read suggests the patent troll is well enough funded to go to court, and it has everything to gain by making an example of a small developer or two. (It also has little to lose, since it doesn't need anyone's good will to prosper -- good will I guarantee it doesn't have).
That's all developers can do with respect to Lodsys. With respect to Apple, they have exactly one course of action: they can threaten to pull out of iOS (and possibly Mac OS X) development altogether. This is a threat Apple must take seriously, especially on the iOS side, where it is the great variety and high quality of apps that makes the platform so appealing to consumers.

In fact, the threat is not merely to Apple. As the MacWorld article notes, the tactic Lodsys is employing is very likely to work against Android or other development platforms as well, using the same or other patents. What Lodsys is doing, therefore, has the potential to cripple software development by individual developers and small companies.

First Amendment discussions often revolve around the "chilling effect" a restriction on speech would cause. Lodsys's predatory actions create an analogous chilling effect on development.

So with its prosperity threatened in a fundamental way by Lodsys, why hasn't Apple responded?

I suspect this is an emergency for Apple's legal team. I don't know whether that team wargames worst possible scenarios, but even if it does, this particular approach might well have gone unnoticed, or at best unplanned-for. I'd guess they're scrambling to figure out a response. The trouble is, Apple's options aren't all that appealing, either.
  • Apple could agree to defend third-party developers against Lodsys. To those developers, that's the only responsible action for Apple to take, since the developers, as far as I know, are simply using APIs and toolkits provided by Apple to take advantage of in-app purchasing. Developers, logically enough, claim they did everything right and if somebody's not happy about it, it's Apple's fault.

    Apple could litigate Lodsys into the ground. Unfortunately, it would set what could be a very costly precedent: who knows whether there aren't other, better-funded patent trolls who would be happy to take on Apple in court? (Okay, that's not very likely, but it's a tactic that a behemoth like Google or Microsoft might find palatable at some point.) Moreover, there is always the possibility that Apple could lose in court, in which case it could have to pay out much, much more than it would have otherwise.
  • Apple could reach a settlement with Lodsys that grants third-party developers the right to use the patented process. In the short run, this would probably be significantly cheaper than litigating. However, it sets a potentially costly precedent, as Lodsys and other patent trolls would be emboldened to pursue the same tactic with other patents.
  • Apple could do nothing, on the pretext that Lodsys hasn't threatened it. That would be tantamount to kissing off the entire third-party development ecosystem around its products, which would be disastrous for the company.
Which of these would you choose? I certainly don't know, and I'm glad I don't have to make the decision.

So I understand Apple's failure to make a public statement so far. I have no doubt the company will respond in some way, eventually. It must.

As for Lodsys, I think every one of its executives should be publicly shunned. The only executive identified on Lodsys's Web site is Mark Small, so start by shunning him. Do no business with him. Refuse to accept his dry cleaning. Don't serve him in a restaurant. Let your leaves blow into his yard. Don't invite him to parties. Glare at him. Refuse to let him into traffic. Fart in his general direction. Proclaim your home and your business to be "Mark Small-free" zones.

You get the idea.

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