Formosa Plastics Group: The beast Apple should have never awoken

Last week, in the midst of a highly publicized lawsuit against Samsung (latest info here and here), news broke that Apple was being sued by Via Technologies Inc. In question: Three patents related to microprocessors in tablets and smartphones. If Asian trade publication DigiTimes is to be believed, market watchers are upbeat about VIA prevailing in this case, with a little friendly help from Google.

Who is VIA Technologies? A Taipei-based semiconductor manufacturer, VIA files as the world’s largest independent manufacturer of motherboard chipsets. The company currently holds more than five thousand patents. But why would a second-tier x86 microprocessor maker sue Apple? Well, VIA Technologies and HTC both share the same parent company, the Formosa Plastics Group, a Taiwanese conglomerate whose diverse interests include biotechnology, petrochemical processing and production of electronics components.

One of the world’s ten biggest petrochemical producers, the Formosa Plastics Group was founded by Wang Yung-ching (regarded as Taiwan’s most influential entrepreneur) and his brother Wang Yung-tsai. The group is headed by CEO Wenchi Chen and chaired by Lee Chih-tsuen. But wait, there’s more. As observed by John Oram over at the Bright Side of News* blog, VIA and HTC also share family ties:

The wife of VIA Technologies’ CEO is Ms. Cher Wang, Chairperson and Co-Founder of HTC. In 1997, at the age of 39, Wang launched HTC along with associates HT Cho and Peter Chou. Wang is the daughter of Y.C. Wang, who co-founded the conglomerate Formosa Plastics Group. Formosa Plastics Group and the Wang Family are one of most successful family enterprises in Asia. Cher Wang is known as a highly successful business woman ranked in 20th spot on Forbes list of the 2011 World’s Most Powerful Women.

Those juicy bits were also relayed by other publications, including Webwereld.nl. Wang was instrumental in a July deal when VIA sold graphics chip maker S3 Graphics to HTC for $300 million. HTC then used patents from S3 Graphics in conjunction with the Motorola patents Google transferred to them to countersue Apple. Has Apple opened Pandora’s box by going after HTC?

More than anything, HTC’s purchase of S3 Graphics can be identified as an internal move by the Wang family. It is aimed squarely at Apple, make no mistake about it. While HTC itself is not a high-profile smartphone maker of Samsung’s stature, Apple has awakened the beast that is the Formosa Plastics Group. Should they see fit, the group could easily transfer additional patents from S3 Graphics and/or VIA Technologies to HTC in order to assist the handset maker in its legal dealings with Apple and in other ways make sure their sister company prevails.

Oram sums it up nicely:

Apple now finds themselves in lawsuits with both VIA Technology and HTC. Both Taiwan entities will draw on the expertise of nearly thirty companies in the Formosa Plastics Group. After all the attorneys have their say in court, Apple will probably duplicate Intel’s squabble with VIA Technology and simply settle out of court for an undisclosed amount of money and cross-licensing of technology. Unless the Wang family decides to use VIA as a leverage for other ventures and lawsuits. After all, Wang family recently transferred ownership of S3 Graphics from VIA Technologies to HTC.

In addition to defending itself from patent infringement claims by HTC and VIA Technologies, Apple is also waging a high-profile legal battle with Samsung. Some watchers think Apple has also set itself on a collision course with Google over Android technology, which might be a prelude to a mega-lawsuit between the two Silicon Valley tech giants. If history is an indication, Apple’s victory in those cases is anything but given.

As you know, the Nokia vs. Apple case over wireless patents ended with a settlement involving a big one-time payment to Nokia and ongoing royalties on a per-device basis. What happens if Apple gets the short end of the stick in HTC and VIA lawsuits? Consequences for the company could be far-reaching and are bound to be costly. It is interesting that Apple kicking those potentially dangerous lawsuits into motion coincides with the appointment of Bruce Sewell as Apple’s senior vice president and legal counsel in September of 2009.

Apple quoted its then CEO Steve Jobs in a statement accompanying the hire. Jobs praised Sewell’s “extensive experience in litigation, securities and intellectual property”. Sewell’s bio page at Apple notes that he “oversees all legal matters, including corporate governance, intellectual property, litigation and securities compliance, as well as government affairs”, which makes him pretty much the mastermind behind Apple’s current legal maneuvering. The problem is, Sewell lost some key lawsuits during his 19-year tenure at Intel.

For example, in May of 2009 the European Union ruled that Intel had engaged in anti-competitive practices and fined the chip maker €1.06 billion, or approximately $1.44 billion. It would be a stretch to claim that Sewell is personally responsible for the legal mess in which Apple has gotten itself into, but there’s no doubt the pressure is on him to deliver. The alternative – should Apple lose those cases – is anyone’s guess. Let’s just say the company might easily regret taking rivals to courts in the first place.