HTC buys S3 Graphics for $300 million, gears up for patent spat with Apple, Microsoft

In case you didn’t notice, tech headlines recently are all about patents. Be it an ongoing case of patent troll Lodsys which is now suing The New York Times Company and five other firms that previously sued Lodsys (bringing the number of defendants to 33) or Microsoft going after Samsung and signing patent protection pacts with Android backers or the Apple led-consortium winning a crucial $4.5 billion bid for Nortel’s patent trove – you name it, the blogosphere is all over it.

HTC is now joining the craze with the news that they’re snapping up graphics vendor S3 Graphics from Via Technologies. The transaction valued at $300 million is about – you guessed right – patents. A total of 235 patents and pending applications will change hands once regulators approve the deal (VIA’s and HTC’s boards of directors already have). The patent agreement should help HTC protect themselves from future patent litigation from rivals. There’s also this:

On July 1, a U.S. International Trade Commission judge ruled that Apple infringed on some of the claims contained in two S3 Graphics patents. Judge E. James Gildea found that Apple infringed on U.S. Patent No. 6,658,146 directed to systems and methods for compressing images and U.S. Patent No. 6,683,978 directed to image data formats, both of which belong to S3 Graphics.

This should in turn help HTC relieve some litigation pressure coming from Apple…

HTC has been trying to escape Apple legal grip since March of last year, when they took the Taiwanese handset maker to court over an alleged breach of twenty patents pertaining to the iPhone hardware, software and user interface. With this acquisition, HTC may be out of trouble as both firms now have what the other wants – intellectual property, even with HTC bringing a lot less to the negotiating table. HTC, which has been paying five bucks per each Android handset sold to Microsoft, could leverage its strengthened patent position to escape from the clutches of Microsoft’s legal rottweilers once that deal is over. According to I, Cringley, Apple coughed up a whopping $2 billion for “outright ownership” of Nortel’s patents related to the next-generation LTE cellular networks plus “another package of patents supposedly intended to hobble Android”. With that in mind, Apple is unlikely to ever be in trouble again in the mobile race. HTC recently had crazy impressive earnings call with second-quarter income topping NT$17.5 billion (about $608 million) on strong Android sales.

Cross-posted on 9to5Google.com