Legal Issues

by Mike Masnick


Filed Under:
apps, beer, copyright, iphone, virtual beer

Companies:
coors, hottrix



Can You Really Own The Idea Of Making Your iPhone Look Like Beer?

from the drink-up! dept

It's time to raise your glasses in a toast to ridiculous intellectual property lawsuits. Or, if you don't have a tasty beverage on hand, perhaps a virtual one, say, on your iPhone? Well, unfortunately for you, that may be a problem -- as the latest ridiculous lawsuit concerns two competing virtual beer applications, both of which make your iPhone look like the side of a full beer glass, that will "drain" the beer, as you tilt the iPhone. Cute, gimmicky app, right? Except if you're a pissed off developer who seems to think that only one person should be allowed to make such an app. A company called Hottrix that made such an app is suing the beer company Coors for an astounding $12.5 million for offering up a similar app of its own.

Hottrix's app, iPint, cost money, whereas Coors (perhaps implicitly recognizing how infinite goods -- the silly app -- can help sell more scarce goods -- beer) gave its app, iBeer, away for free. The Coors version was more involved, as it also included a "game" where you needed to guide a sliding pint across a bar into some waiting hands. Hottrix's lawyers claim that the idea of such a virtual beer glass is copyrightable -- which seems fairly questionable. Concepts can't be covered by copyright. It needs to be the exact implementation, and as long as the Coors version was different, then it's difficult to see the copyright claim. Hottrix also pulls out the bogus argument that iPint hurt iBeer's sales. That's simply incorrect. It wasn't Coors that hurt Hottrix's sales, it was Hottrix, for having a bad business model. Competition isn't illegal.

But, of course, Apple in its infinite (loop) wisdom, removed the Coors app after Hottrix complained, thus protecting Hottrix from its own business model mistake. And yet, Hottrix still wants $12.5 million from Coors for daring to come up with a similar idea. You have to hope this gets thrown out of court quickly.

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  1. icon
    Mike (profile), 16 Oct 2008 @ 11:34am

    Re: Is free just "competition" in this case?

    If a large company, knowingly undercuts a seller, actually selling below cost (I doubt their costs of development were zero), that's not competition.

    Yes, actually it is. Selling below cost only refers to marginal cost. If the marginal cost is $0, you can't sell below cost unless you're paying people to take stuff -- and even then it shouldn't be illegal.

    Undercutting a competitor is a common business move, and it's why you enjoy cheap prices.

    They were destroying their market.

    No, they properly recognized that the *actual* market that matters here is the *beer* not some silly phone application.

    Hottrix now has a product they spent time and effort creating that is now worth nothing.

    They made a bad business model choice, so that's what we should WANT to happen. As an extreme example, if I build a "fast food" restaurant where the hamburgers cost $150, it shouldn't matter how much "time and effort" I spent creating it, it's not going to be worth much because I chose a bad business model.

    However, the costs of development need to be recovered.

    That's where the business model comes in. You need to choose a business model that lets you recover the costs. That means understanding the market, which includes competitive threats. If you make a bad choice, that's your problem. Not the problem of better competitors.

    Even if he added features, you can't beat free in similar markets.

    Yes, actually, you can beat free. People do it all the time.

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