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Suit Up! Smartphone Rivals Brace for Patent Fights Targeting App Developers

Apple (AAPL) is nervous about app developer legal issues, according to Thomas Claburn at InformationWeek. The new iOS developer agreement now asks software companies, "Do you have any apps that may have a legal issue?"

The question likely has everything to do with recent cases of patent trolls targeting app developers. But there's a bigger issue: how do companies handle the legal vulnerability of partners they depend on? It's particularly keen in the mobile industry, and not limited to Apple and its developers.

The hundreds of thousands of iPhone apps now available certainly played a role in the iPhone's success. Giving consumers a wide choice of software that can grab the attention of almost any niche can't hurt. How could you not smile at the Smithsonian app that identifies trees based on pictures of leaves, flowers, fruit, seeds, or bark? Snap and find out whether the village smithy is really standing under a chestnut tree or a sugar maple.

However, the more a company depends on partners, the more it can suffer second-hand harm when their businesses are hit. And lawsuits are a great way to damage a company, particularly a small one. That's why Apple tried to step in when Lodsys targeted some iOS developers whose software used in-app purchasing. Although Apple already had a license from Lodsys for the patent in question, it does no good if the app developers don't have one as well and a court decides that's a problem. Stop a transaction at either end and business comes to a screeching halt.

Suddenly, competitors have a new way to attack. They can either acquire patents that might slow what business partners can do, or they can lay some Astroturf at the courthouse, by surreptitiously funding patent trolls to target their rivals' business partners -- i.e., app developers.

A similar strategy is already in play by Apple and Microsoft (MSFT), as they target Google's (GOOG) hardware partners. Microsoft already gets an estimated $5 per Android phone that HTC sells, and other handset manufacturers with products that use Google's operating system could wind up paying between $7.50 and $12 per unit. In a business that tries to control manufacturing costs to the tenth of a penny.

Shake up the hardware companies, and it could become easier for Microsoft to promote Windows Phone, which isn't free, but comes with indemnification for legal challenges. And there's already evidence that patent troll Round Rock might be readying an assault on mobile semiconductor manufacturers.

Plan on patents becoming even more of an offensive weapon in the mobile industry -- and on the necessary tactics to avoid suits becoming far more convoluted ... and expensive.


Image: Flickr user Juha-Matti, CC 2.0.