Apple strikes first blow against HTC patents, likely not the last

The U.S. International Trade Commission (ITC) ruled yesterday that Apple didn't violate certain HTC patents, the first decision in a pile of such complaints that have lately come to define the highly competitive smartphone market. Had the decision gone the other way, it may have stopped or slowed imports of iPads and iPhones, already in short supply following the debut of the iPhone 4S.

The decision may have created a buyer's remorse moment for the Taiwan-based handset maker. In July, HTC purchased S3 Graphics for $300 million, expecting S3's patent portfolio to help it in its legal battles against Apple. At the time of the announcement, HTC CFO Winston Yung had said it would use the patents "defensively and offensively."

Interestingly, Bloomberg reported that S3 Graphics was part-owned by HTC Chairman Cher Wang, and according to an analyst HTC could have just licensed the patents.

"We are disappointed, but respect the ITC's decision," HTC General Counsel Grace Lei has said in a current statement sent to press members. "While the outcome is not what we hoped for, we will review the ruling once the commission provides it and will then consider all options, including appeal."

The decision hardly puts an end to the companies' disputes, as more complaints are still in the chute — though the Foss Patents blog, which links to the ruling, doesn't expect a much different decision.

"HTC's own first ITC complaint against Apple is rather unlikely to result in a finding of any violation," states the blog. "An Administrative Law Judge made an initial determination of no violation, and the ITC staff (the Office of Unfair Import Investigations) does not appear to oppose the ALJ's position."

Its site adds that the Commission is set to rule on Apple's first complaint against HTC on Dec. 6. In July, the ALJ made an "initial determination" that HTC infringed on two Apple patents.

Offering a deep-dive into the two patents, Foss Patents blogged in July, "It's hard to see how any Android device could not infringe them, or how companies could work around them."

The latter idea has kept legal teams at Android-partnering OEMs busy and stirred up criticism for Google, which in August initiated the purchase of Motorola, many say for its patent portfolio (Unfiltered: Motorola cutting 800 jobs, has its work cut out for it).

"A sliver of hope for Android OEMs is that the ruling does not invalidate S3's claims against Apple," Ken Hyers, an analyst with Technology Business Research told Connected Planet.

"The ITC ruling merely states that S3 failed to prove its claims against Apple, leaving the door open for another filing in the event that S3 believes it can make a stronger case," Hyers explained. "The dismissal also doesn't mean that Apple's competing cases against Android OEMs are valid — the ruling has no bearing on those cases. In the grand scheme of things, this is just a skirmish in what will continue to be a long series of legal battles as competing mobile patent holders battle to extract licensing fees from Google and Android OEMs."