Apple given the OK to intervene in in-app purchase lawsuit
Nearly a year after filing a request to intervene in a controversial case involving app developers being sued for using in-app purchase features, Apple has been given the go-ahead by a district court judge to step into the fray.
Intellectual property tracking blog Foss Patents reports that Texas judge James Rodney Gilstrap today granted Apple's original request, saying it could become a part of the proceedings as long as the company's role was "limited to the issues of license and patent exhaustion."
The case Apple's getting into is one kicked off by Lodsys, a Texas-based software patent-holder. Last May, the firm took aim at app makers on both Apple's iOS and Google's Android, alleging that they were infringing on patents it owns related to the online purchasing of consumable supplies.
A month after the suit, Apple filed a motion to intervene in the case, saying that its own rights were not "adequately protected by the current defendants in this case," and that Lodsys was going after smaller targets than Apple to effectively undermine its own license agreement. This particular suit involves big names like Atari, Electronic Arts, and Rovio, as well as smaller companies too.
While Google, Apple, and Microsoft are licensees of Lodsys' technology, in its suit the firm argued that these licensing deals did not cover applications from third-party developers. Yesterday Lodsys told CNET that Amazon -- which earlier this week launched its own in-app purchase technology -- is not a licensee.
Apple and Lodsys did not immediately respond to requests for comment.
The bigger picture
Apple introduced in-app purchasing in early 2009, and later that year enabled the feature to work inside of free applications. The feature was designed to add an extra revenue stream for developers, as well as simplify the process of publishing apps so that additional paid features could be added even after a piece of software was released.
Competitors have followed suit, including Google and Microsoft. Earlier this week Amazon joined that list, adding in-app purchase APIs for use on its own Appstore, which currently runs only on Google's Android platform as a separate storefront.
All of this did not escape the attention of Lodsys, which last year began a concerted effort to capture royalties for the process, which it says are covered in patents it owns. Shortly before these suits emerged, the company began a campaign to solicit licensing agreements from app makers, threatening litigation if such deals were not struck.
The growing importance of in-app purchase is not to be ignored given the rise of apps that are released free of charge, which then use in-app purchase systems to glean additional revenue. One such recent example is Paper, a sketchpad-style app that was released two weeks ago and has since tallied up more than 1.5 million downloads. The app, which is free of charge, offers additional pens and brushes as paid add-ons. Similarly, Draw Something from Zynga (formerly OMGPOP), sold for $200 million after rocketing up in popularity. Much of that purchase was derived on the app as a business, with users buying virtual currency from within the app.
Updated at 2:57 p.m. PT with additional background.