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HTC buys S3, gathers patents to fight Apple

Summary: HTC has acquired graphics company S3 in a move that will secure patents designed to fend off Apple in an ongoing lawsuit.

Larry Dignan

By for Between the Lines |

HTC has acquired graphics company S3 in a move that will secure patents designed to fend off Apple in an ongoing lawsuit.

VIA Technologies said Wednesday that it is selling its stake in S3 Graphics to HTC in a deal valued at $300 million. VIA bought S3 in 2001 to add graphics processing to its chipsets. In 2005, VIA sold a stake to WTI Investment International to bolster S3's research and development efforts.

The HTC-S3 deal is expected to close at the end of 2011.

In the big picture, HTC is acquiring S3 to battle Apple in court. Barclays Capital Kirk Yang said in a research report that S3 will give HTC some ammunition against Apple. In March, Apple moved to sue HTC. The Apple-HTC lawsuit is largely focused on derailing Google's Android, which is the leading smartphone platform. Android, however, has a few intellectual property issues. Oracle is suing Google over Android and the search giant was prevented from acquiring Nortel patents.

Yang noted:

S3G currently licenses its texture compression technology to global IT companies including Microsoft, Sony and Nintendo. More importantly, the ITC (International Trade Commission) made a preliminary ruling on 1 July 2011 that Apple has infringed two of S3G's four patent claims on its iOS products. We think HTC's IP acquisition on S3G not only aims to enhance its own graphic technology in smartphones/tablets, but to bolster the case against Apple during the pending lawsuit between the two parties.

Given the timing, HTC is likely to close the S3 deal and then file a countersuit against Apple revolving around graphics patents.

Separately, HTC reported that its second quarter net income doubled to NT$17.5 billion ($608 million) on strong sales of devices like its Thunderbolt. Revenue for the second quarter was NT$124.4 billion ($4.3 billion).

Topics: HTC, Apple, Legal

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25 comments
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  • RE: HTC buys S3, gathers patents to fight Apple

    Geez...patent law makes it impossible to make anything these days.
    Aerowind
    Reply Vote

    • No kidding

      @Aerowind

      I realize why we have a patent system.

      However, I honestly think that if we just abolished the whole thing we would actually be far better off.
      dragosani
      Reply Vote

      • Not quite, research spendings will lower; as to this case, S3 **will not**

        @dragosani: ... help HTC since Apple's patents on multi-touch, "bumping" scolling, pinch-to-zoom and other gestures are much bolder than these purely technical local patents S3 holds.

        However, lets see what courts will decide (if we will be still alive when this happens ;)))
        DDERSSS
        Reply Vote

      • YEAH!!! DeRSSS!!! Way to edumacate him on patents!!! YEAH!!!

        Glad we have you to provide us with such an in depth and technical analysis that only an expert in patent law like you could possibly provide us. So glad you've gone through all of S3's patents and already cleared Apple of any infringement! YEAH!!

        BTW We are all really curious how your WebObjects project is going. Why won't you tell us?
        woulddie4apple
        Reply Vote

      • Troll

        @woulddie4apple
        DDERSSS
        Reply Vote

      • RE: HTC buys S3, gathers patents to fight Apple

        @dragosani
        One thing this case interesting thing that the Android makers are on their own and Google will not help them while companies like Apple and Microsoft take them to legal system to protect their valuable assest, IP. Makers of Android should have realized this by now, at least after Google lost Nortel patents.
        Ram U
        Reply Vote

      • RE: HTC buys S3, gathers patents to fight Apple

        @dragosani
        Patents are important to the stability of the economy and the rights of the inventors.
        There are time lines that allow for patents to expire.
        wileypage
        Reply Vote

      • RE: HTC buys S3, gathers patents to fight Apple

        So glad you've gone through all of S3's patents and already cleared Apple of any infringement! YEAH!! <a href="http://www.musthighschool.com/">online high school</a> |<a href="http://www.musthighschool.com/must/diploma/">high school diploma</a> | <a href="http://www.musthighschool.com/must/ged/">online ged</a>
        jordanhawk
        Reply Vote

      • RE: HTC buys S3, gathers patents to fight Apple

        BTW We are all really curious how your WebObjects project is going. Why won't you tell us? <a href="http://www.musthighschool.com/must/diploma/">online diploma</a> | <a href="http://www.musthighschool.com/must/homeschooling.asp">online homeschooling</a>
        jordanhawk
        Reply Vote

    • Right. Because we all know the iPhone, iPad, Android, etc.

      don't really exist. After all, patent law made it impossible for these products to ever get built, right?
      fr_gough
      Reply Vote

      • Excellent point!!!

        @fr_gough <br>I, like you, think it is fantastic that the only way anything can get built nowadays is if it is built by a company with a big enough patent portfolio to threaten mutual assured destruction. Ahhhh, how I miss the cold war. That was awesome! I think we need MORE nukes and MORE patents!! YEAH!!!<br><br>As long as little companies can't enter the market due to the patent barriers to entry that companies like HTC, Nokia, and M$ have erected then Apple will win even more money! YEAH!!!
        woulddie4apple
        Reply Vote

      • RE: HTC buys S3, gathers patents to fight Apple

        @fr_gough
        Patent law that allow software patents crystallized around 98. Did IT crawled before that date?
        przemoli
        Reply Vote

      • RE: HTC buys S3, gathers patents to fight Apple

        @fr_gough Oh sure, they can get BUILT.. then they get their pants sued off them after they're sold for awhile.
        jgm@...
        Reply Vote

    • RE: HTC buys S3, gathers patents to fight Apple

      I honestly think that if we just abolished the whole thing we would actually be far better off. <a href="http://www.musthighschool.com/must/diploma/">online diploma</a> | <a href="http://www.musthighschool.com/must/homeschooling.asp">online homeschooling</a>
      jordanhawk
      Reply Vote

  • Sounds like HTC is trying to become a patent troll

    They are gathering up patents with no plan to use them for any purpose other than to initiate lawsuits against Apple. If you can't innovate, litigate, and this is proof that HTC can't innovate. Apple beat you. You are a loser. Move on. Go back to making dumbphones for other, better companies. Try to compete against Apple and you will go bankrupt with your buy one get one free Android phones. YEAH!!!
    woulddie4apple
    Reply Vote

    • RE: HTC buys S3, gathers patents to fight Apple

      @woulddie4apple I have a HTC Windows Phone 7 Rocking the Mango build!! Its great!! When all the dust settles a company with vertical integration will remain a niche player!!
      jatbains
      Reply Vote

    • Troll or Idiot?????

      @woulddie4apple

      Hard to tell but probably both from that drivel you wrote.

      HTC innovate all the time... check them out. Loads of companies at war with Apple innovate, then get harrased by Apple. Thats the Apple philosophy... 'anything new is ours'.
      johnmckay
      Reply Vote

  • RE: HTC buys S3, gathers patents to fight Apple

    S3 have patent for floating point textures.<br><br>Only patent valid for OpenGL (core). Maybe HTC will allow Mesa to implement it?

    BTW Apple implement OpenGL in its MacOS. What if HTC refuse to license this one patent to them ???
    przemoli
    Reply Vote

  • RE: HTC buys S3, gathers patents to fight Apple

    __remove this comment pls
    przemoli
    Reply Vote

  • RE: HTC buys S3, gathers patents to fight Apple

    honestly, a patent on pich & zoom....are u !~@#$%ing serious.......Im going to patent how I open the car door, inturn car manufacturers are providing doors that open which inturn allows the possibility of people infringing on my patent.Patent laws need to be completely revamped simple as that.And apple need to get over themselves there one of the biggest technologies thiefs known to history lololol........
    Please argue that point :)
    baxr6
    Reply Vote
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