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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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We are in for a long haul on this
By Tony Swash on 7/18/2011 7:14:05 PM , Rating: -1
I know the HTC ruling has got people all in a froth, particularly those who weren't keen on Apple in the first place and those who think Android is the only thing to save them from Apple but this shit is only just getting started.

Apple have been very actively filing lots of patents for a long time and have a very strong portfolio (plus of course they have the recently purchased Nortel portfolio) so I expect to see lots more legal actions and I expect Apple to win quite a few. What's even more significant is that in many cases I don't expect Apple to want to settle for the usual sort of patent swap and licensing deal that is the way things are usually resolved in cases like this.

As FOSS Patents points out,
in the sort of detailed and clear analysis that makes that site so worth visiting, HTC has a very, very light portfolio of IP with which to leverage a licensing deal with Apple.

Plus it looks like Apple doesn't want to do any sort of licensing deal, they don'y want payments from HTC or anyone else. Apple wants people to stop copying their stuff. I am sure Apple felt utterly betrayed by Google and by Eric Schmidt in particular when after sitting on Apple's board through out the iPhone development phase Google retooled Android OS late in it's development process to be a clone of iOS. Apple are out for blood.

Microsoft of course is reeling from it's monumental strategic fumble in mobile and it's main competitor in mobile is Google/Android, not Apple, as they are both chasing the same OEMs, so Microsofts settling in for a long war with Android attacking the OEMs (like Apple). And Microsoft has a very big patent portfolio like Apple. Google's IP portfolio, outside of search related stuff, is almost non-existent.

Of course the mother of all patent battles is Oracles suit against the Android mother ship Google and from what I have read at FOSS Oracle stands a very good chance of winning and winning big.

Google sure seem to have fucked up the IP stuff big time.

This time next year Android might just be the most expensive OS out there and the Android OEMs might well be jumping ship rather than face crippling legal restraints and damages.

I have to say that personally I don't care much and generally treat the whole thing as a kind of low brow insane sort of surreal entertainment. Nothing important to me is at stake so I can't work up a sweat about it. My main concern is that Apple flourishes because I just love their stuff in my life and there is no chance of Apple facing any major setback in the near future (watch the latest results as they are announced in a few hours) and Android doesn't have to lose for Apple to win.

I wonder how long this shit can go? At least it's a break from the phone hacking scandal here in the UK which is beginning to feel like our own version of Watergate (I was 23 years old at the time of Watergate and loved every minute of it as I hated Nixon with a passion).

RE: We are in for a long haul on this
By Pirks on 7/18/11, Rating: -1
RE: We are in for a long haul on this
By Pirks on 7/18/11, Rating: 0
By silverblue on 7/19/2011 5:48:19 AM , Rating: 1
Stifling innovation and reducing competition is going to result in Apple being targeted for anti-competitive practices sooner rather than later... only this time, the punishment had better fit the crime (Intel was given a mere slap on the wrists and, sadly, should Apple do this, it's unlikely they'll get anything worse). If their reasons for suing a company are well documented and specific, fine, but I don't see how that's the case here.

There's only so much Apple can sue companies over before they turn around and bury Apple in the shit it's been dishing out.

Don't get me wrong, I don't actually hate Apple, but they are going to rapidly change from the company that provides attractive devices at an arguably steep price to one that exists only to protect IP which was questionably theirs in the first place. Apple's saving grace here is that they didn't attempt to block HTC sales over a larger geographical area, because that would've drawn far too much attention to itself.

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