I don't think that that's true. The LAME site itself reports any number of commercial products that use LAME (one of them being Universal's copy protected CDs), and I doubt that either they would list them or Fraunhofer wouldn't go after them if it were ``illegal''.

All FhG wants you to do is pay money to license their patents. Once you license their patented algorithms, I doubt that they care much how you implement them. If your implementation happens to look just like the LAME implementation, then so be it.