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HTC is currently fighting for survival in U.S. court, as rival Apple looks to remove its products from the market, with lawsuits.  (Source: Reuters / Pichi Chuang)

HTC may survive the brutal attack. The company has many avenues by which it might survive Apple's litigious efforts.  (Source: The Biography Channel)

The Kyocera VP-210 "Visual Phone" was doing real-time video processing three years before Apple was granted a patent on the practice. Prior art abounds, which could invalidate Apple's overly broad claims.  (Source: Wikimedia Commons)
Apple ostensibly wants HTC's U.S. sales to die, but it's far from game over for popular Android phonemaker

Thus far almost everything has gone according to plan for gadget maker Apple, Inc. (AAPL), in the company's quest to kill U.S. sales of top Android phone maker HTC Corp. (SEO:066570) with litigation.  Apple has won a single-judge preliminary ruling from the U.S. International Trade Commission.  If that ruling upheld by the greater six judge panel, HTC's sales to the U.S. will almost certainly be blocked, pending some sort of action.

Many were very disappointed to hear this news.  After all, HTC's smart phones like the Thunderbolt and EVO 4G, are some of the most popular and iconic Android models on the market.  Many expressed outrage that Apple could remove HTC from the U.S. market, if successful.  Clearly this was an emotional issue, as HTC, a cheeky underdog, has endeared itself to many.

But it's far from game over for HTC.  The company still has a variety of viable options -- though some are less appealing than others.

I. First Line of Defense: The Final Ruling

HTC's most desirable spot to make its stand is when the full ITC panel convenes to make its final determination.  The ITC's staff gave a recommendation against Apple's infringement allegations in an early April evaluation of the case, so HTC has to think that at least some at the ITC may be on its side.

One thing HTC can argue is that the patents are overly broad and generic.  

U.S. Patent No. 6,343, 263, one of the two patents that the ITC judge found HTC to violate, was filed in 2002, but covers virtually every video and music capable mobile cell phone/tablet in existence, as well as internet television devices.

In 2002, Apple's only devices to use this kind of real-time processing were its personal computers.  Further, three years earlier in Japan, Kyocera Corp. (TYO: 6971) had deployed the Kyocera VP-210 "Visual Phone" which used signal processing similar to what Apple's patent describes to deliver video chats.  This may provide evidence of "prior art" -- even in the mobile sector -- weakening Apple's claim on this patent.

The patent also makes no mention of "cellular" or "mobile" applications, meaning that it likely also covers real-time video and audio coprocessors in personal computers of all kinds -- something there's a rich history of development of, dating decades back.  It's hard to believe Apple could claim ownership to real time video processing on PCs, which its patent appears to (attempt to) cover.

The other patent -- U.S. Patent No. 5,946,647 -- is a software patent covering interpreting text.  Specifically, it covers mechanisms to spot "special" text, like phone numbers or shipment tracking numbers inside a text communication, such as an email, text message, or instant message.

Again, this idea is very generic and does not apply specifically to smartphones.  In fact, it was granted in 1999, well before the first "smart" cell phone hit U.S. shores.  Microsoft and a variety of other companies include features in word processing software and other utilities to find and automatically add links to content such as phone numbers.  Similarly many web sites automatically link stocks to a webpage with content.  

If Apple had added the language "real time" or "handheld device" to this patent, it might have been stronger, but as it is, it merely refers to input -- this makes the patent very vulnerable in its generic nature.

What is clear from examining these patents is that they would be prophetic and novel if their cover systems were explicitly stated to be directed at mobile cellular uses.  They did not make such references, so ultimately you must consider prior art on systems such as internet-connected PCs and televisions, as well.  This, in theory greatly weakens both of the patents HTC supposedly violated.

One would think there was too much prior art to validate such a broad claim -- but then again, at least one ITC judge seemed to disagree.

II. Second Line of Defense: The Countersuit

HTC is currently suing Apple back, claiming it violated five of its patents.  Apple's IP library is significantly strong than HTC's, so many doubt that HTC will prevail in proving Apple infringed on its IP.

If it did defy the odds, though, it could force Apple into a mutual licensing agreement, similar to what Finland's Nokia (HEL:NOK1V) did.  Apple is reportedly loath to enter into such an agreement, hoping to simply block HTC's shipments and remove it from the market outright.  But if it's faced with the prospect of having its own shipments similarly cut off, it might be forced into an uneasy truce under threat of mutual destruction à la cold war era U.S. and Soviet Russia.

HTC's recent purchase of S3 Graphics could help, in that Apple was found by the ITC to have infringed on two of S3 Graphics' graphics chip patents.  However, Apple is reportedly looking either to purchase chips from someone who's already licensed the IP in question from S3 Graphics, or to switch to modified chips.  Either way, whatever legal muscle S3 Graphics gives could quickly be erased.

III. Third Line of Defense: Samsung and Motorola

Apple is using these patents to try to sue [1][2][3] Motorola Solutions Inc. (MSI) and Samsung Electronics Comp., Ltd. (SEO:005930), as well.  Both of these companies have filed countersuits [1][2], and moved to invalidate Apple's intellectual property involved.

Whereas HTC is young to world of patent litigation, Samsung, in particular, is one of the world's most prolific veterans in terms of IP.  Samsung currently holds 28,700 patents in the U.S., alone -- significantly more patents than Apple.

Even if HTC's own efforts fall flat, it may be bailed out by these fellow veterans who join it in the trifecta of the world's top three Android phone makers.

Again, Samsung should make a strong case that the patents involved were overly generic and covered applications broadly tread in prior art.

IV. The Last Resort: Redesign

Ultimately, HTC has one final option for survival -- redesigning its products.  It's unclear exactly how it could escape the broad reach of Apple's real-time video/audio processing patent, but it's possible it could carefully craft its chips and firmware to avoid the patents formal terms.

The text parsing claims would be easier to escape -- HTC could simply eliminate this code, or put it as part of an API for use on a per-app basis, which could be protected.

Google Inc. (GOOG), makers of Android OS, tried to spin the loss at the ITC as merely a loss for HTC.  They stated, "We're pleased that the ITC ruled against all of Apple’s operating system patent claims."

The statement refers to the remaining eight patents in the case, which were invalidated by the ITC.  However, Google's optimism is premature, as the OS is involved in both text parsing and media playback.  In other words, Google spin not only seems to throw HTC under the bus -- it also is inaccurate.  The ITC judge in fact upheld two of Apple's operating system-related claims.

That means that all Android manufacturers are at risk.  Even if Apple is able to take out these manufacturers one by one, Google may be able to spring into action, helping its partners modify their hardware/software, so as to escape Apple's litigious grasp.

Obviously, redesign is the worst-case scenario.  If it gets this far, it likely means the ITC has blocked HTC, Samsung, and Motorola's imports into the U.S.  In that case, Android sales would be effectively dead until the trio could scrap together new systems that ostensibly don't violate Apple's IP in the eyes of the ITC.

HTC clearly hopes that things won't get that far.

But the overall message is clear.  Apple's preliminary victory was a serious wound to the company, but it still has ample opportunity to escape its attacker and survive.  If it and its fellow Android makers can indeed survive, they will have put Apple in a very bad spot, exhausting their rival’s final desperation attempt at market supremacy.  After all, the market appears to be leaning in favor of selection and price -- globally Android is outselling the iPhone over two-to-one



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RE: Or...
By cjohnson2136 on 7/18/2011 2:59:06 PM , Rating: 5
quote:
FIRST to invent these things and invent the smart phone.


Apple first to invent smartphone. What about Blackberry and winmo before them. They were both classified as smartphones. Not very good ones in my opinion but Apple did not create the first smartphone.


RE: Or...
By macdevdude on 7/18/11, Rating: -1
RE: Or...
By cjohnson2136 on 7/18/2011 3:07:41 PM , Rating: 5
My computer ten years ago could barely do what it does now does that mean it is no longer classified as a computer.

I will concur that Apple helped push smartphones to what they are today but don't say they invented them because that is a complete and utter lie.


RE: Or...
By A11 on 7/19/2011 5:34:37 AM , Rating: 5
The truth matters not in Soviet Apple.


RE: Or...
By nolisi on 7/18/2011 3:47:39 PM , Rating: 5
quote:
Those aren't smart phones! Half them couldn't even play movies. And good luck trying to surf the web or listen to music.


Um, yes they were. Winmo and BB were on the market allowing business users to read PDFs and office Documents, recieve email, and perform all sorts of crucial smart phone tasks. While the time, the hardware could barely handle video (there wasn't the capacity or battery life), but you most certainly could surf the web and listen to music.

They didn't innovate, at best they renovated, and all they did was wait for existing hardware, carrier and battery technology to become fast enough to integrate the rest of what a PC could do into a phone. The only thing they did that was remotely different was create a centralized way to extend the functionality of your phone, and this already existed in even non smart phones (download ringtones, games, etc). It only appeared cooler because Apple waited to do it when the hardware caught up to what people expect out of a PC.


RE: Or...
By Samus on 7/19/2011 1:24:00 AM , Rating: 1
Palm should sue Apple as they have a patent for a touch screen mobile interface.

Apple clearly stole their idea and made it 'different' by throwing the stylus out. But its still a patent infringement. At least Microsoft licensed the patent for Pocket PC.

And speaking of Microsoft, guess who has the patent for a capacitive touch interface? Apple is so screwed. Opening a can of worms they is.


RE: Or...
By Bearach on 7/18/2011 3:47:59 PM , Rating: 5
My old HTC Hermes (2006), and my parents HTC Wizard (2005) were fully capable of browsing the internet (albeit the Wizard was slower compared to the Hermes).

They were also very capable of playing movies, wmv or mp4, or with Coreplayer divx/xvid video files. Playing music was very easy on them too. So how couldn't they do them things?


RE: Or...
By themaster08 on 7/18/2011 4:35:46 PM , Rating: 5
quote:
My old HTC Hermes (2006), and my parents HTC Wizard (2005) were fully capable of browsing the internet (albeit the Wizard was slower compared to the Hermes).
As was my 2004 Nokia N-Gage (a massively underrated smartphone and way ahead of its time).

This macdevdude continues to bang on about companies stealing Apple's IP, and copying Apple. As if Apple have never copied. Their very first product was inspired directly from the Altair 8800. Their Apple Lisa was inspired directly (and arguably heavily copied) from Xerox PARC. Each and every one of Apple's products were inspired from products released before them. Even up to this day. iOS 5's notification system is directly inspired from Android's notification system. If "copying" never happened, markets, competition, choice and freedom wouldn't exist.

Sorry to disappoint you, macdevdude, but ignorance just doesn't cut it in this day and age. You claim to support the free market, but that only seems to be when it benefits your beloved Apple.


RE: Or...
By Quadrillity on 7/19/2011 6:45:41 AM , Rating: 2
I agree. If your product (naming Apple) can be easily imitated, then it doesn't deserve a patent. Furthermore you can not patent ideas.

If this holds up in court, then I am applying for a patent that reads: "A circular device with spokes that rotates and allows for transport of large or heavy material when attached to a cylinder"


RE: Or...
By FITCamaro on 7/18/2011 8:22:10 PM , Rating: 1
I guess the first computers weren't computers then since they couldn't do that either. Hell they didn't have keyboards even.


RE: Or...
By dotpoz on 7/19/2011 5:24:41 AM , Rating: 2
my 2004 nokia 6600 can play mp3, surf the web with opera, and play some lo res video.....

iphone was marketed in 2007


RE: Or...
By Touche on 7/19/2011 8:20:35 AM , Rating: 2
quote:
Those aren't smart phones! Half them couldn't even play movies. And good luck trying to surf the web or listen to music. Face it, Apple innovated, the rest have been in a race to see who can copy it the fastest.


My trusty N95 plays movies, music and surfs the web, supports more formats than iPhone that came after it (maybe even the latest, haven't checked), multitasks, has GPS, 5MP camera w/ LED flash, front facing camera, video rec, full BT support, microSD slot, 3G, Office support, radio...

Yup, Apple's iPhone sure seems innovative after such a poor little limited Nokia phone I happily use to this very day...


RE: Or...
By retrospooty on 7/19/2011 8:41:03 AM , Rating: 2
"Those aren't smart phones! Half them couldn't even play movies. And good luck trying to surf the web or listen to music."

\So then Palm should be suing Apple?

Apple was NOT the first smartphone. Palm, Blackberry and many makers that used Winmobile were there first and yes, they were smartphones, and did even MORE than the fiurst iPhone did. Apple brought a great UI to the table, that is all. Your bias and typical macfanboy lack of knowledge is really showing now.

Anyhow, this was all just a blip. Once it goesw to the higher court it will all be overturned.


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