Apple's HTC lawsuit pays off: Rival roadmaps disrupted

Apple's HTC lawsuit pays off: Rival roadmaps disrupted

Summary: Apple's high-profile patent lawsuit against HTC is already delivering returns since it is "meaningfully disrupting the development roadmaps for would-be iPhone killers," according to an Oppenheimer analyst.

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Apple's high-profile patent lawsuit against HTC is already delivering returns since it is "meaningfully disrupting the development roadmaps for would-be iPhone killers," according to an Oppenheimer analyst.

Oppenheimer's Yair Reiner pens an interesting tale of the behind-the-scenes look at Apple's effort to defend its intellectual property and then launching the HTC suit. Reiner's tale is based on "industry checks" and has garnered a good amount of buzz.

Starting in January, Reiner contends that Apple "launched a series of C-Level discussions with tier-1 handset makers to underscore its growing displeasure at seeing its iPhone-related IP infringed." The HTC lawsuit was a "lawyered-up exclamation point on a series of blunt conversations that have been occurring behind closed doors."

More: Apple's HTC lawsuit: Is it biting off more than it can sue? · HTC responds to Apple; What's the long-term hit? · How much will Apple's suit against HTC affect Android's momentum? [podcast] · Apple's HTC patent suit: Can it derail Google's Android devices?

Reiner picks up with the January launch of the Motorola Droid and HTC Eris. He writes in a research note:

Top-tier handset makers continued to avoid implementing multi-touch, but Apple could safely assume that they were hanging back to gauge Apple's response to Motorola and HTC. If there wasn't one, the OEMs would likely read the silence as a green light, especially after Google also moved to enable multi-touch on its Nexus One phone.

It was likely in order to counter that perception that Apple began reaching out to handset OEMs in January and explaining in no uncertain terms that it was now ready to do battle--and not just on multi-touch. It was ready to press its case along a number of axes that had made the iPhone experience unique, from the interpretation of touch gestures, to object-oriented OS design, to the nuts and bolts of how hardware elements were built and configured.

The message has been received loud and clear. According to Reiner, rival hardware and software teams are on the hunt for work arounds. Meanwhile, lawyers are ramping up responses. All of this results into hedged roadmaps that aren't going to move at the speed of light. With slower development and gun-shy handset makers iPhone has a much better business model moat. Simply put, Apple's return on its HTC lawsuit has already been delivered. The company took these patents (courtesy of Deutsche Bank).

And froze a market. Not bad for a few months work.

Among the key points from Reiner.

  • Apple's reaching out to rival handset manufacturers has created an oil slick. Reiner notes:

Until recently, most high-end smartphone programs were focused primarily on trying to match the iPhone's user experience, and secondarily on avoiding any egregious violations of Apple's patents.

We believe this order of priorities has temporarily changed--along with the industry's appreciation for how far Apple is willing to extend the fight. Few OEMs believe that simply staying clear of multi-touch can, on its own, avert Apple's wrath. We believe a lot of software and hardware is being sent back to engineering departments for work-arounds.

  • These handset makers are casting doubt on Google, which already suffered from wireless industry misgivings. Simply put, Google just isn't trusted, but is seen as a necessary evil.

Apple's proxy war against HTC is helping to stoke mounting concerns about the strategic danger for handset OEMs of relying too heavily on the Android operating system. In order to mitigate risk, we believe handset OEMs that can afford to support multiple platforms will do so.

  • Microsoft's Windows Phone 7 software is emerging as a viable partner and alternative to Android. Why? Microsoft has said it will join any intellectual property battle and has the patents to back it up.

Reiner:

Part of Win7's appeal is its capability as an OS. No less important, however, is its strategic value as a hedge against the risk of Android's becoming too strong--or proving too weak. Our checks indicate that Microsoft has been quick to sniff out this burgeoning opportunity and has begun to aggressively promote the strength of its own IP portfolio, as well as its willingness to join battle with customers that come under IP attack.

  • Apple's legal moves "potentially brings Apple a step closer to a head-on legal confrontation with an array of gargantuan adversaries. Now that it has made its point, Apple may want to go back to saber rattling."

Topics: HTC, Apple, Hardware, Legal, Mobile OS, Mobility, Smartphones

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263 comments
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  • Wait for retaliation from the big boys ...

    ... it should be good.

    It's MMA with lawyers and tech giants. Should
    be fun!

    Seriously, Apple has stepped on Google's toes,
    big time. They're awakening the sleeping
    giant(s) - add Microsoft, Motorola, other manufactures, as well as the OIN and the Linux
    foundation (which holds a web service patent
    which could put a injunction on iTunes).

    Apple have declared war on an entire industry.
    I'm waiting for them to get bitch-slapped.
    super_J
    • Who woke up whom?

      So Apple (market cap 203.32B) woke up Google (market cap 178.94B)?
      Isn't it rather the other way round, that Google with its shameless
      imitation of the iPhone UI forced Apple to fire a warning shot across
      Googles bow?
      financegozu
      • To be fair, Apple did the same thing...

        Talking of shameless imitation, check out this
        clip by Steve Jobs in which he admits "We have
        always been shameless about stealing great ideas."

        http://techdusts.com/2010/03/04/apple-htc/
        AllureFX
        • Payback Time

          Ask Xerox how it felt when they lost the wars on their development of the mouse and ICON based saftware.
          garyeastman@...
          • Xerox loved it ...

            ... because Jobs gave them a large number of shares in Apple in exchange for the rights to commercialize the GUI.
            de-void-21165590650301806002836337787023
          • Rotten FUD

            Xerox got a comparatively small amount of stock. When they learned they'd been ripped off they did try to sue apple but the statute of limitations has passed...
            Johnny Vegas
          • Such is life

            Live and learn. Life just isn't fair, isn't it?

            But we do have a set of laws to abide by. Thank goodness for that. Xerox
            did have its chances.
            dogbreath1
          • Not FUD

            Xerox got $1,000,000 in Apple stock, pre-IPO.

            Which started as a "penny stock", less than a buck.

            Do the math. In today's market, those shares would
            be worth over $600 million bucks.

            That's a fair price, given that Apple took Xerox's
            prototype and built it up into a full fledged operating
            system.
            Jkirk3279
          • If that is true, then Xerox was DUMB

            didnt realize what they had and settled to cheaply...
            camccarty
          • Isn't it Ironic Jobs said "We are SHAMELESS about stealing great ideas".

            And here he is complaining about others "stealing" his IP, which in most cases he did not create but stole from those who created touch screen technology, for one, and then added a few twists and patented it. That is who Stevie Wonder Jobs is, a user of people. Who would have thunk it.
            Steve Jobs is the greatest con artist in the history of IT. While never inventing anything or even being a great technologist himself, he has manufactured products by stealing ideas from others and concetrating on making something different with all of the pioneering sources, who mostly never filed for patents. Apple is basically the equivilent of a bottom feeder, only the cruise for great ideas they can use and then alter and then patent to build a patent arsenel of others work.

            Just look at how he worked the openDarwin team.
            Apple started the openDarwin project and Jobs just smiled as open source celebrated what they thought was Apple starting a cooperation with open source.
            Yeah, he opened up GCD and passed other ideas to the team, such as blocks for C and they did a great job on what Job offered, until he shut them off and would not allow anymore contact or OS code and they then realized he had played them to do his work...they were his pawns.
            They closed the doors on openDarwin. From the sounds of it, it was in disgust of Stevie Wonder Jobs.

            Sure Apple shares code with free BSD, why wouldn't they, that OS is no threat and Jobs gets tons of free labor and code he can close up and patent w/o anyone knowing who created it.

            Oh, the Steve Jobs interview where he admits they steal great ideas....

            http://www.skuggen.com/?p=1982
            xuniL_z
          • Silly....

            If the original bike was considered a great idea (and it was) then you
            can hardly blame the company that researches and develops off of
            that idea a new state of the art mountain bike and patents a great deal
            of the IP that went into said. Did they "steal" the great idea of the
            bike? Many on this post would claim so if it were the Apple Mountain
            Bike or the iBike. I can see it now there were bikes around for years
            now... Who is Apple to patent their iBike!?! SHAME!

            As for touch I don't think Apple lays claim to touch per se. I think
            they lay claim to the tech behind the way they made touch work for
            them and their products similar to my example of the bike.

            Touch is a great idea and if you want to be harsh I suppose you can
            claim that Apple stole it. However I would argue that while touch was
            and is a good idea nobody had made it work as Apple has and that is
            Apple's property. Figure another way to make touch work.. See how
            easy it is to do.

            Pagan jim
            James Quinn
          • Let's cut to the chase here Jimbo...

            <i>If the original bike was considered a great idea (and it was) then you
            can hardly blame the company that researches and develops off of
            that idea a new state of the art mountain bike and patents a great deal
            of the IP that went into said.</i>

            I guess then, based on your logic, we can hardly blame Apple or HTC for taking the original smartphones and the original touchscreen technology and making new and better products now can you. But apparently Apple thinks *it's* stolen ideas are more worthy, even in light of the idea they applaud stealing great ideas. Unless of course only if it's Apple stealing them.

            Anyway, let's not beat around the bush here, Apple could care less about HTC, it's Android they are trying to stop, or slow down. You agree?

            I believe it's obvious since Android is free and hardware makers far and wide, including PC OEMs are making android based devices, laptops, what have you. There are several working devices with Android right now with more on the way. Apple is not liking this, are they. They had a high profile job posting recently that told the story quite clearly in that they want to put the iPhone OS on other devices and they need someone to head up that group. Apple does not have a fast turnaround time between devices and counts on brand loyalty considering until Android there was no competition. MS was going nowhere with the old winmo, except the enterprise customers it has, but even WP7S is looming large to Apple with xbox live, Office, and a full blown touch interface with zune, social and with that, the best audio and video experience going on mobile devices.

            Apple clearly doesn't have the brass to go after who they really want to stop since they know it would be suicide.

            So Jobs is suddenly down on stealing ideas and making new and innovative products, which from I've seen the Android phones are only similar in the use of touch and icons. That is IP of Apple?

            It's not looking good for Apple. They can't continue to steal patent worthy ideas as their own w/o it catching up with them in a bad way.

            Right now there is speculation that while Apple is blocking Google's Latitude app from the iphone (I thought the policy had nothing to do with the ability to block competitors just because Apple wants to? I thought it was only to ensure the code is safe and so on?
            Well, as we know, Apple uses it as a means to block all competition, while it dumps every product it can on Windows. I'm sure you see all of this as ethical business practice, while I know you've pointed your finger at MS for "blocking" competition. At some point you have to either admit to double standards or come out of the closet as a full blown Apple cultist who has become intoxicated on the kool-aid and will say anything to defend the "queen".

            In any case, Apple is trying to gain a patent on a very similar product, just mentioned from google. Hmmmmm. As a cultist says in the comments of this link, let's hope Apple had filed for this app before Google put it in for the Apple app store. Yeah boy.

            Steal on, baby! <br>
            ;)
            xuniL_z
          • camccarty, not DUMB but rather.....

            an honorable company that had not encountered anyone as shameless as Steve Jobs prior to his stealing their IP.
            Even in business there is such a thing as honor and dignity and even MS has more than Apple in that regard.
            xuniL_z
          • Mouse is not XEROX

            The mouse comes from the Stanford Research Institute and was
            developed in 1963.

            It was patented as early as 1970.

            From Doug Engelbart, the inventor of the mouse:
            [i]Did you patent it and become fabulously wealthy?

            SRI patented it, but they really had no idea of its value. Some years
            later I learned that they had licensed it to Apple for something like
            $40,000.[/i]

            So you accused Apple of stealing the mouse from Xerox, when in fact
            they didn't, they licensed it from the patent holder, which was not
            Xerox.

            Now what other patents do you wish to accuse Apple of stealing
            exactly?

            And why would your argument not equally apply to Microsoft? Or do
            you think they were entitled to copy and Apple wasn't?

            I have previously been falsely told to my face that 'At least Microsoft
            invented the mouse'. I explained that the mouse was older than I was.

            It seems that anyone but Apple is able and entitled to copy technology
            as they see fit, and Apple is roasted for it.

            Then those who apply this double standard call Apple users 'Fanbois'
            for not agreeing with the obvious double standards and fallacies of
            the stone-throwers.

            Do more research please before quoting myths.

            Yes, us Apple Users realise quite a lot - and often know more than
            these stone throwers.

            We do not fail to realise half of the crap that is thrown - we just don't
            like crap.

            This is payback time for the stupid comments, such as 'Payback Time'
            richardw66
          • Wrong...

            Apple bought the rights from Xerox, there was no theft involved. Although Xerox later on was mad that they sold out so cheaply.

            And Xerox had nothing to do with the mouse. It was the user interface that Apple bought. The Mouse was aalready decades old at that point.
            Stuka
          • BTW

            Xerox didn't invent the mouse.
            Jkirk3279
        • Definition

          Do you understand the legal distinction between imitation and theft?

          Or are you trying to amass the evidence for HTC's defence from your
          unsteady bar stool?
          Graham Ellison
        • Wrong

          Stealing idea's is not the same as taking someone else's work and using it for your own.

          If I have an idea, and say "hey wouldn't it be great to have this device that I can speak into, and it transcribes my voice into a command that the computer can act on" but then fail to follow through on developing that idea, or coming up with the means, and then patenting that idea, but then someone else who either had a similar idea, or heard me speak on that idea, actually patents that idea, and brings it to market, I have no leg to stand on.

          Not to mention in that interview he was quoting Pablo Picasso, it is all relative to context.

          Now in this case, Apple has patents, regardless of what your feelings are of the nature of the patent laws, they have the right and responsibility to defend those patents. It will be up to a judge to listen to arguments on whether or not Apple can continue to hold those patents, or if these companies decide to settle with some cross licensing deals, we may see all of this get swept under the carpet quite quickly.
          Snooki_smoosh_smoosh
          • US Patents suck

            Its interesting to note that Apple haven't tried this in Europe yet. Could this be because (this my understanding anyway) you cannot patent an idea in the UK. You can only patent the way that it is implemented. So you can't say saving power by minimising voltage when the device is idle is a patent. You can only patent how you make that a reality. Can you patent ideas in the US?
            StephenInScotland
        • OK, I admit it

          I use 4 wheels on my car. The idea of using wheels wasn't mine. I stole it.

          If Apple stole something, then surely they've been held accountable.
          dogbreath1