Apps, iPads and licensing issues

Since everyone else is blogging about the iPad, I thought I should too – to highlight a problem that sometimes arises from tightly drafted IP licences.

The iPad will use the same operating system as the iPhone, and will therefore run virtually all of the 100,000 or so iPhone apps already available through the app store. What happens if you are an iPhone app developer, and you discover that Apple is now selling that app to users of a different device, or you want to create an optimised iPad-specific version? “More revenue” you might say, but what about those third party licences that you have (eg for fonts, music, artwork etc), where your licence states that it is for use only in an “iPhone application”?

This is not a hypothetical question. A client (an iPhone app developer) asked me this last week. As it turns out, his licence agreements are fine, but he wondered what would happen if his third party licences referred only to the iPhone.

Well, if your licences are overly prescriptive, then you may have a problem, as any use outside that limited scope will potentially put you in breach of the licence. This is not uncommon. Software licensors use this approach all the time to drive more revenue out of their licensees (for example, where a group-wide licence lists named licensees, the licensor will often demand additional licence fees in order for a new subsidiary to use the systems used by the rest of the group).

You could try and argue that “iPhone application” is intended to cover an application which runs on the iPhone OS, and the fact that you can run it on another device running the same OS is incidental. How successful this argument is will depend on: (i) the exact terms of the licence; (ii) how important the IP is to the app; and (iii) how aggressive the licensor is in its pursuit of the matter (particularly given that it appears that there will be scope for developers to sell “premium” (more expensive) iPad versions of apps). Its unlikely that this will lead to any big court battles, but may mean that some developers have to fork out some more cash to keep their licensors happy.

The difficulty with the “but obviously” argument is that whilst you may think it obvious, they may not. Without being able to show that there was consensus of opinion when the licence was agreed, there is no agreement. This often happens when licences are not drafted in a way that is flexible enough (from the licensee’s perspective) to deal with future/changing use of technology.

Interestingly, the “scope of use” section in the current app store EULA grants users a licence to use apps on “any iPhone or iPod touch” that they own. Does that mean that the apps I have already bought for my iPhone can’t be used (legally) on an iPad? We will need to wait and see.

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