KludgeCode

is Ben Rudgers

Lodsys and Apple: follow the money to it’s logical resting place(s)

While the techpress has been falling-over-each-other-quick to classify Lodsys as a patent troll  – do parallel actions make Techcrunch a “copyright troll?” – unsurprisingly little analysis has been done regarding possible outcomes which benefit the major parties involved, i.e. Lodsys and the app store owners (Apple and Google). Given Apple’s non-response response and  that both Apple and Lodsys have claimed to be in negotiations over the meaning of an existing agreement licensing the patent, it would appear probable that the ultimate outcome will be beneficial to both parties.  I’ll admit that typically patent licensing negotiations are approximately as interesting as a those surrounding the taxation of Nabooean trade routes, but when they involve Apple, patent negotiations become almost as interesting as their method of screwing. And speaking of screwing, that’s what I suspect app developers will get out of the Lodsys – Apple negotiations.

Given the way events have unfolded, it doesn’t take rocket science to make an intelligent guess as to the sticking point of the negotiations – how much developers pay for use of the Lodsys patents and how much of that Apple takes off the top for collecting it. Lodsys’s first public step was to anchor the price implausibly high and Apple’s to anchor it implausibly low, virtually insuring that developers will ultimately pay something.

Beyond the fact that they are not taking legal action and have disincentives to do so even if they do not collect a cut, Apple’s recent history is to increasingly monetize third party development on their platforms. Because the development ecosystem for Apple’s platforms is almost entirely based upon a pay to play model (you can still go OSS route on the Mac but Xcode now costs $5) it seems an easy step to roll a “patent fee” into the platform access cost structure Apple imposes on developers.

Such an outcome should be a win for Apple – more revenue, more control of developers, and I suspect making explicit what has been implicit in their developer agreements: developers owe Apple money for the use of the intellectual property underpinng their products.  From a PR standpoint the Lodsys situation is a perfect construct – Apple doesn’t precipitate the change, yet the groundrules are changed to allow additional development fees “for using IP in Apple’s current patent portfolio and such IP as may be developed by Apple in the future or such third party IP as may be incorporated into Apple’s products”  (interestingly the terms of an Apple style developer agreement seem to write themselves – and they remind me of credit card fees).