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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: fun
By Tony Swash on 7/19/2011 6:59:04 AM , Rating: 0
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 Apple is Doomed Meme

Definition: The belief that no matter what is the actual reality of Apple's financial, business or sales performance the company is destined to soon suffer a severe set back to both it's business and market share.

Origins: The origin of the the Apple is Doomed Meme (AIDM) lies in the transformation that has occurred in the fortunes of Apple since 2000 and the shock this has caused to the world view of a small but vocal minority. This minority is composed mostly of those who are financially or emotionally attached to either the Windows/Microsoft, Google/Android, or Open Source ecosystems or those who consider themselves 'techies' and who therefore prefer their technology to be complex and arcane (which is thus empowering for those who can 'master' it).

The general structure of the belief system that underlies the AIDM is archaic in that it is firmly rooted in the technologies and market conditions of the 1990s, thus AIDM is related closely to the broader 'Techie Luddite' syndrome (the obsessive clinging onto the technological certainties of yesterday).

For a brief period in the 1990s the market for information technology devices was dominated by the following unusual characteristics:

a) The total domination of the personal computer market by PCs running Microsoft software such as Windows and Office.

b) A small market share for Apple products (at it's lowest the Macintosh only had 3% of the PC market) and an almost continual decline in Apple's financial performance (this led to the widely held but erroneous view that the two phenomena were connected).

c) The domination of the PC market by a model based on a single OS standard straddling many different competing OEMs producing a wide range of different and swiftly evolving hardware platforms and add-ons.

d) The dominant position of enterprise and corporate IT in driving the broader consumer PC market and standards.

This historically fleeting juxtaposition of characteristics is fixed in a minority of people's minds as being somehow the 'natural order of things' and therefore this leads to the belief that this natural order is bound to remerge some day soon. When it does Apple is doomed.


"The Mac still has a tiny market share of only [insert a percentage figure that has to be adjusted upwards every quarter]"

"Microsoft/Google has been slow to get started in [insert any of the wide range of markets and product categories the company has been failing in] but once it gets started it will give crush Apple"

"Android will crush Apple" [a statement which only ever connects to market share and never connects to the most successful business model, in the 1990 the two were synonymous so, for those transfixed by AIDM, the two must always equate]

"Apple has no profile in the enterprise market and that is the dominant market" (implying that the demands of enterprise technology will always trump the demands of the consumer market, something which historically has only ever happened for a brief period in the 1990s]

"Open beats closed" [Note this usually refers to the model of one OS straddling different hardware OEMs. It is a misnomer, what is actually meant is that fragmented beats integrated]

"Soon Apple will pushed back into being a niche player in [insert any market or product sector in which Apple is growing rapidly]

"Apple's success is transitory because it is all based on advertising, media hype and the stupidity of consumers" [whose ability to make rational decisions uninfluenced by ads or hype about what is best to buy to meet their needs has suffered some sort of mysterious collapse since the golden age of the 1990s when their purchases were far more rational]


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