HTC: Pressure mounts to develop workaround to avoid Apple patents

HTC: Pressure mounts to develop workaround to avoid Apple patents

Summary: The pressure will be on HTC to quickly come up with a workaround following an International Trade Commission (ITC) preliminary ruling that the Taiwan-based device maker is infringing on two Apple patents.

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TOPICS: HTC, Apple, Legal
38

The pressure will be on HTC to quickly come up with a workaround following an International Trade Commission (ITC) preliminary ruling that the Taiwan-based device maker is infringing on two Apple patents.

Apple filed an ITC complaint against HTC in March. Apple accused HTC of violating 10 patents. With a preliminary ruling in its favor, Apple is looking toward a final ruling in December. HTC, which said it will appeal the ITC preliminary ruling, announced it will buy back 2.4 percent of its outstanding shares to try and halt a stock slide. Apple also has a separate lawsuit against HTC over patents.

The two Apple patents, which date back to the mid-1990s via the L.A. Times, are the following:

So what does this patent scrum mean? Here's the short list:

  • The charade that Android is a free mobile operating system is over. The patent headache for Google means that Apple, Microsoft and potentially Oracle could collect fees on Android. Adrian Kingsley-Hughes and Florian Mueller have noted that Android is in big trouble with these Apple patents.
  • HTC is going to take an earnings hit. Analysts in Asia have noted that HTC could have to settle with Apple and pay ongoing royalty fees. Damages are also possible. Barclays Capital analyst Dale Gai said in a research note:
  • Our base case remains that HTC will seek a settlement with Apple in the next six months, by paying out a certain amount of the damages (a portion of which has been set aside from previous earnings), and/or future licensing royalties, subject to negotiations with Apple for HTC's S3 patents (which won an initial ruling against Apple's infringement on July 1, 2011). In the worst case, if HTC agrees to pay US$5 to Apple for each smartphone it sells in the US, we estimate the impact on EPS will be 4-5% in 2012.

  • The company's S3 acquisition will matter more, but HTC lacks leverage against Apple. Morgan Stanley analyst Jasmine Lu said that HTC bought S3 for patents so it could better fight Apple, but the ITC takes away negotiating leverage.
  • HTC will have to find a workaround and that could hurt the Android user interface. Without a workaround, it's possible that Apple refuses to settle and HTC devices won't be imported into the U.S.

That final point---the workaround---will be critical. If HTC can work around Apple's patents, it can pay damages in a settlement and move forward. Without a workaround, HTC could be faced with ongoing royalty payments---if Apple actually wants to license its patents. Apple could go for an importation ban against HTC. In either outcome, HTC needs a workaround pronto.

Topics: HTC, Apple, Legal

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38 comments
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  • Typo?

    HTC is from Korea?
    paddytan
    • HTC is from Korea?

      @paddytan From Taiwan. Maybe HTC has branch in Korea???
      sam0403
      • RE: HTC: Pressure mounts to develop workaround to avoid Apple patents

        @sam0403 Hehe <a href="http://www.lacarhire.net">LA Car Hire</a>
        molly83
    • RE: HTC: Pressure mounts to develop workaround to avoid Apple patents

      @paddytan
      Typo fixed. Thanks!
      David Grober
  • RE: HTC: Pressure mounts to develop workaround to avoid Apple patents

    htc is from taiwan not from korea maybe apple is made in china
    Muddest
  • HTC set aside $$$ ?

    If HTC set aside money from previous earning, it means that they expected to lose the case and knew Android was indeed infringing.

    It is very likely they hoped to find a better settlement deal by fighting.
    wackoae
    • RE: HTC: Pressure mounts to develop workaround to avoid Apple patents

      @wackoae Actually not true. Most companies that are in litigation that MAY, key word is MAY, result in judgement of significant financial size do go ahead and take a financial reserve. No big deal. Just sound management.
      mikies
  • RE: HTC: Pressure mounts to develop workaround to avoid Apple patents

    Hey Larry, How about you look up the definition of "preliminary" and rewrite the story...
    JoeBrth
  • Android will possibly be the expensive free platform

    Microsoft & Apple are both charging Android manufacturers for patent fees. Free Android seems not so cheap~~
    sam0403
    • Not the only companies in the list

      @sam0403 OEMs of Android devices are getting hit with lawsuits from Oracle, Nokia and a bunch of other patent holders.

      The issue will become WORST, once the Nortel patents are transferred to the new owners.
      wackoae
    • RE: HTC: Pressure mounts to develop workaround to avoid Apple patents

      @sam0403
      The FOSS community will fight back against the Axis of Evil Software (Apple, M$ and Oracle) and will win again.
      Android will prevail and will rule the ecosystem!
      Linux Geek
  • RE: HTC: Pressure mounts to develop workaround to avoid Apple patents

    Turns out the guy isn't even a judge but instead an arbitrator and his word isn't the final say... Even the 6 who will hear the Appeal aren't the final say and would still require the courts to enforce any ruling.

    On another note, they can still highlight the different types of links and make the user setup the action they want performed.

    Anyway, this story is worse than the one yesterday.l
    slickjim
    • It turns out that 99.9% of the time

      @Peter Perry the final result is exactly the same as found by the arbitrator.

      Stop whining because your favorite OS turned out to be a copycat.
      wackoae
    • RE: HTC: Pressure mounts to develop workaround to avoid Apple patents

      @Peter Perry
      Apple is more like a dog that barks a lot and does not bite.
      When faced with a counter suit it will back down!
      http://techrights.org/2010/01/27/apple-obsession-patents/
      Linux Geek
  • RE: HTC: Pressure mounts to develop workaround to avoid Apple patents

    @HTC<br> How do you say "There is no free lunch" in chinese?
    castanor
    • RE: HTC: Pressure mounts to develop workaround to avoid Apple patents

      @castanor
      it's ??????????

      But shouldn't you say that to Google instead, it is their code after all. HTC would simply not use Android in the future.
      kevintxu
  • RE: HTC: Pressure mounts to develop workaround to avoid Apple patents

    Not worried. My HTC is WP7 ;-)
    tonymcs@...
    • I would be worried

      @tonymcs@...
      If you look at the patents in question, they are extremely broad. In fact, any browser that displays hyperlinks on web pages violate one of these patents. Any device that places an API in front of any type of real time signal violates the second patent. And now that Apple owns the multi-touch on a capacitive screen patent, things are not looking good for any smartphone not made by Apple.

      You would have had a lot of company reading the news in 1938 about Czechoslovakia and thinking "Not worried, I live in Poland."

      Make no mistake, WP7 violates a ton of these patents as well. It would make sense to go after smaller, poorer companies like HTC first though, get your patent claims validated, and then go after the big boys like MS.
      toddybottom
    • RE: HTC: Pressure mounts to develop workaround to avoid Apple patents

      @tonymcs@... I think this is where it gets interesting. If HTC bails on Android and goes to WP7, then what will Apple do? Sue Microsoft? I don't think so. Apple may be arrogant and enjoy scamming its customer base, but Apple is not stupid.
      mikies
  • RE: HTC: Pressure mounts to develop workaround to avoid Apple patents

    Apples motto: "if you can't beat them, sue them"
    dunners6