POSTED BY DAN YOUNG

Note: there is an important update at the end of this article.

Earlier in May Read Write Web reported on a company called Lodsys and their efforts to go after smaller mobile development shops who are designing in-app purchasing within their applications.

The story here is that Lodsys acquired a series of patents pertaining to in-app purchasing. Earlier in May, they began a campaign of sending "notice" letters to developers who use in-app purchasing, specifically those using the built-in function with Apple's software development kit for iOS. Lodsys bluntly states that you can either remove your app or pay us 0.575% of gross receipts on US revenue. If not, Lodsys will sue.

Companies that acquire patents for the sole purpose of using the patents for litigious purposes are known as patent trolls. In one of the more famous patent trolling cases, a company called NTP sued RIM over alleged patent infringements on wireless emails. The eventual outcome of the case was tens of millions of legal fees and an eventual settlement by RIM of $612.5 Million.

For many software companies, standing up against patent trolls presents a huge risk. Even if a patent is granted under untenable grounds, a defendant in a patent infringement case may face legal fees ranging from $50,000 to tens of millions—a huge expense without any guarantee of reward. Therefore they are faced with a conundrum: pay the troll and promote the troll's business model or take your chances and risk the fate of your company.

The business model of patent trolling may work for a few individuals and corporations in the short term, the long term consequences are profound. Development companies now need to look at risks of using various technologies before they are deployed so to avoid an unforeseen legal impediment that may threaten to undermine a product or even a startup venture. These risk, potential or real, will scare some developers away from creating novel or innovative applications. In the long run, the mobile ecosystem will be lesser for the trolls.

Patent trolls are going to exist for many years to come—as long as there have been technology patents, there have been trolls. What is needed in the development community is a defense. May it be through a trade group or other collective approach, the time is coming that the development community needs to work together to deal with these threats.

Fundamentally patents are good for innovation. They represent technical creativity, protecting those who are the inventors. Inventors have every right to enforce their patents as aggressively as they can afford to be. Trolls, however, undermine the creative inventive process as they seek to target the vulnerable rather than commercialize the underlying idea. This is what's wrong and why trolls are threatening to retard innovation within the mobile space.

Update: Apple, Inc. recently decided to act on behalf of its development community. They sent a cease and desist letter to Lodsys. You can read the text of that letter here.