United States International Trade Commission

Newsweek‘s Dan Lyons reported today that Apple’s “thermonuclear war” on Android smartphone manufacturers is fading fast, while a new rumor surfaced among the suits’ lawyers claiming the company spent $100 million on its initial set of claims against HTC.

Imagine how much Apple spent on other Android makers, such as Motorola (who is near locking Apple products out of Germany in retaliation) or Samsung (the biggest Mobile Communications patent holder in the world), if it spent so much on just HTC.

“Who knows if it’s true, but if so, Apple didn’t get a lot for its money,” wrote Lyons on his RealDanLyons’ blog Jan. 23.

Apple’s legal claims are abruptly junked left and right, and its only minor victories to date are so inconsequential that Android device makers can dance around the momentary obstacles with just a few minor tweaks to products, explained the Newsweek reporter.

The technology giant’s case against HTC with the International Trade Commission began in February 2010, when the Cupertino, Calif.-based company wanted the ITC to block HTC from importing products into the United States. The case originally had 84 claims based on 10 patents, but it was dwindled down to only four claims by the time a judge became involved, according to Lyons.

The rulings —for the most part— were a wash for Apple. One patent was invalid as Apple did not have a rightful claim to it, and HTC did not infringe upon two of the other patents due to Apple apparently not implementing them into its products. In other words, Apple did not have a right to seek an injunction, because ITC injunctions can only occur if it is provable that both parties are “practicing” the patent in question, which Apple could not demonstrate against HTC…

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Taiwanese handset maker HTC’s lawsuit against Apple over infringement of S3 Graphics’ patents has suffered a fatal blow (in addition to this one) as the United States International Trade Commission (ITC), which can block the import of products, reversed its earlier decision and ruled in favor of Apple on November 21. The Commission has officially ended its investigation of the case and HTC shares fell 4.9 percent on the news.

And now, Bloomberg reports that HTC “will reevaluate” its planned purchase of S3 Graphics following the ITC ruling.

HTC Corp. will reevaluate its planned purchase of S3 Graphics Co. after the target company lost a U.S. International Trade Commission ruling it brought against Apple Inc. over patent infringement, the Taoyuan, Taiwan-based company said in a statement today.

Just yesterday, HTC’s general counsel Grace Lei told DigiTimes yesterday his company “will consider an appeal”. But after closer inspection of the ITC ruling, the company clearly concluded the best course of action is to consider dropping the $300 million acquisition of graphics maker S3 Graphics announced back in June, which only proves this acquisition may have been planned as a leverage in HTC’s other legal dealings with the iPhone maker.

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Didn’t know this:

But another peculiarity of the ITC is that its rulings can be waived by the president. Verizon thinks it would be great if President Obama, in a blanket statement, made clear he would not let stand any decision blocking importation of consumer wireless devices. The parties then would have to recur to normal patent litigation, and whatever rights and wrongs are discovered could be settled by exchanges of cash. Mobile is a rare industry exhibiting growth, job creation and animal spirits. Who needs a paralyzing meltdown?

It will be interesting to see if the President will override if Apple wins any of the blockades it is seeking against Android devices in the ITC.  IF he does, Apple/Google/Microsoft/whoever will have to go through the longer patent dispute process.

Both iPhones and Android devices could be blocked by pending ITC rulings.

Some background:
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Shares of the Taiwanese Android phone maker HTC fell 6.5 percent this morning following the ruling by the International Trade Commission (ITC) that the company violated two patents held by Apple. The company’s shares had been pretty much in a free-fall throughout last week as well. The agency’s commissioners still have to support the ruling, but investors are already panicking over fears that the ruling will favor Apple. This, in turn, would open doors to ITC’s ban on imports of HTC’s phones into the United States. In response to the crisis, HTC announced a share buy back program worth up to $760 million in an attempt to stabilize its share price and restore investor confidence, reports Financial Times:

The attempt to prop up HTC’s share price appeared to have little effect as the stock fell below HTC’s minimum purchase price of T$900 to close down 3.9 per cent at T$871. The sell-off highlights investor fears that the legal battle could have wider implications for the competitive balance between Apple and Google Android-based phonemakers like HTC, Samsung and Motorola.

HTC is thought to have recently acquired S3 Graphics for $300 million in a bid to secure a stronger ground in its legal dealings with Apple, which filed its patent infringement complaint against the Taiwanese company back in March 2010. That’s not all HTC’s been doing lately in order to buy its way out of this mess…

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Yesterday’s victory in the ITC courts may have seemed like good news for Apple in giving it the upper hand against its Android carrying foe.  But, even if the ITC courts hold up the ruling on Apple’s two broad ranging patents from the mid-90s,

• U.S. Patent No. 5,946,647 on a “system and method for performing an action on a structure in computer-generated data.”
• U.S. Patent No. 6,343,263 on a “real-time signal processing system for serially transmitted data.”

..it likely won’t be able to stop HTC from selling its popular Android line in the US.  HTC has a recently acquired ‘Ace in the Hole’…
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CNET reports that the International Trade Commission has officially ruled that phone maker HTC has violated two of Apple’s patents related to iPhone technologies. This blow to HTC opens the door to a potential ban on imports of HTC products into the United States. Apple initially filed 10 patent violations against HTC, but increased that amount by five earlier this week. HTC obviously does not agree with the ITC ruling and provided the following statement:

HTC will vigorously fight these two remaining patents through an appeal before the ITC commissioners who make the final decision,” said Grace Lei, general counsel for HTC. “This is only one step of many in these legal proceedings.

As we know, Apple and Samsung (and Motorola too) are currently in a similar situation with Apple claiming multiple patent violations against the company. The twist in the Apple and Samsung case is that Samsung is counter-suing by claiming that Apple is violating Samsung’s patents.

There are only a few possibile endings if Apple wins HTC case. Either the two companies settle (with Apple taking home some more of HTC’s money – Microsoft already takes $5/phone and Oracle is looking for some more) or HTC stops selling Android devices. In all likelihood, if the ITC does not agree with HTC’s appeal, the two technology heavy weights will work out some settlement.  Cha Ching!

More on the patents below:

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