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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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By sprockkets on 7/18/2011 4:47:12 PM , Rating: 2
Hmmm... I wonder if that stupid video patent has more to do with quicktime than android.

But, in any case, ask yourself this: If this patent was sooooo valuable and genuine to apple's livelyhood:

1. Why did they not sue microsoft over WM?
2. Why did they not sue BB?
3. Why did they not sue palm?

And the answer is clear: Apple is full of shit and is just suing a competitor that is outdoing it.

And the saddest part is, apple is making billions and is having trouble meeting demand, yet finds that it must kill competition anyhow.

When you read the definition of meglomaniac, Steve Job's pic will be there.

RE: fun
By Avatar28 on 7/18/2011 5:44:49 PM , Rating: 2
1. Why did they not sue microsoft over WM?
2. Why did they not sue BB?
3. Why did they not sue palm?

Probably because all of those companies, especially Microsoft, have significant patent portfolios that could be turned against them. If I did it right, USPTO shows MS as having a bit over 18,000 patents ( ) vs Apple's 4700. ( ) RIM had a couple of thousand and RIM only a couple of hundred.

It's sort of a case of the bully picking on the new little kid. Of course, Apple is suing Samsung (and Motorola) too. Samsung has a LOT more patents than MS but most of them probably are in other business areas. Whereas MS, Palm, and RIM were all in the smartphone/pda biz long before Apple and likely have patents that Apple has stepped on too. I think Apple will probably think long and hard before going after them.

RE: fun
By nikon133 on 7/18/2011 5:46:06 PM , Rating: 3
I think that is because SJ's worst nightmare is to see his business taking off so nicely, just to be utterly crushed by competitors.

Apple did fine in pre-PC era, just to be annihilated by raise of IBM compatibles.

Early Macs did OK for their time, just to be almost pushed to extinction by raise of Windows.

iGadgets are doing great and, while I don't think they can be annihilated like previous Apple efforts, they can be limited to very small (albeit extremely profitable) market segment.

The only force right now capable of achieving that is Android. WP7 (which I'm cheering for) and Nokia might raise to power but then again, they might flop; too early to tell. Likewise, WebOS can get some good shares, but it is only a bet right now (and not a safe one). RIM seems to be in decline.

Right now, Android is the only force with potential to become Windows of mobile world. Both Apple and MS are well aware of that - thus unholy coalition behind Rockstar Bidco and purchase or Nortel patent portfolio.

I'm afraid that all those big moves will result in some damage for Android - hopefully not terminal, but significant. I'm also hoping that MS will benefit more than Apple - if for no other reasons, their approach to this "problem" seems to be much softer and more prone to compromise, compared to Apple's total annihilation approach. At the end of the day, if HTC/Samsung/Motorola owners end up not having option to get new phones from their favourite brands (or those phones are overpriced for all the royalties attached to them), I hope majority of them will go for WP7 and WebOS - if for no other reason, then for defiance. Plus, HTC, Samsung... will also have to move to WP7.

RE: fun
By Pirks on 7/18/11, Rating: 0
RE: fun
By Tony Swash on 7/19/11, Rating: -1
RE: fun
By Pirks on 7/19/2011 5:15:35 PM , Rating: 2
Yeah, I agree with all these customers not liking BB OS 6, but the 7 is about to be released in a month or so, which will get satisfaction rating much higher than now, I'm sure. I saw a few video reviews of BB7 and especially its new web browser, kinda impressive stuff, especially the sweet new BB Bold 9900, this is what proper competition to iPhone should look like - BB7, WebOS, QNX and WP7, not Android junk.

And transition to QNX will raise satisfaction rating even higher, so I wouldn't start to worry about RIM's future just yet. I've seen what QNX and TAT UI design is capable to achieve on Playbook, so it's kinda ok for me if people don't like BB OS 6, this is a past anyway. The future is QNX and it's gonna be bright. At least my experience with my Playbook says so.

So your daughter tried iPhone and liked it more than BB. Guess what? I've seen people trying out iPhones and getting back to BB after a while. So what? Some stay on iPhone, some come back to BB. Big deal :)

RE: fun
By Pirks on 7/19/2011 6:04:55 PM , Rating: 2

This is about how BB7 web browser pwned iOS and Android web browsers.

For Tony and everyone else who may consider buying one of the upcoming BB7 devices.

Wanna get best mobile browser on a tablet? Buy Playbook.

Wanna get best mobile browser on a phone? Buy Bold 9900 this August/September or Torch 2 or something similarly high end with BB OS 7 on board.

Confirmed by many online tests/reviews so far, link to one of them is above.

So yeah Tony is right about people not liking old slow BB6 phones, but with FIVE TIMES speed increase in web browser between old BB6 phones and the new BB7 ones I think we can lay this to rest. Right Tony? ;)

P.S. about daughters and iPhones:

"Whilst I may have tried Apple products in the past this kind of thing only serves to distance myself from them, my daughter really dislikes their methods and restrictiveness and she's 16"

from some online forum. just sayin' :P

RE: fun
By Tony Swash on 7/19/11, Rating: 0
"This is about the Internet.  Everything on the Internet is encrypted. This is not a BlackBerry-only issue. If they can't deal with the Internet, they should shut it off." -- RIM co-CEO Michael Lazaridis

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