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Much of Apple's Mac computer lineup has been found in infringement of HTC's newly acquired intellectual property. This could lead to a ban on imports -- effectively a ban on sales -- in the U.S.  (Source: Cult of Mac)

Meanwhile, Apple has filed yet another ITC complaint against HTC, this time alleging that the new HTC Flyer tablet infringes on its intellectual property.  (Source: HTC)
Apple will have to pay up -- or negotiate a settlement

Apple, Inc. (AAPL) has put Taiwan's HTC Corp. (SEO:066570) in a very bad spot.  The larger, more profitable gadget maker has hit HTC with a series of lawsuits worldwide, and recent scored a favorable preliminary ruling, which could lead to a complete ban on HTC handsets in the U.S.

But HTC appears to have some leverage, now.  In an unsealed ruling dating back to July 1, it has been declared that Apple infringed on intellectual property of recent HTC acquisition S3 Graphics.

The IP in question covers image compression techniques in software and hardware.  The U.S. International Trade Commission Judge James Gildea ruled that while Apple's popular iPad, iPhone, and iPod lines of mobile gadgets are not in violation of the IP, some of Apple's Mac OS X computers are.  

As NVIDIA Corp. (NVDA) is a licensee, units with its GPUs are not in violation.  However, models with graphics by Advanced Micro Devices, Inc. (AMD) or integrated graphics from Intel Corp.'s (INTC) (such as the newly refreshed MacBook Air lineup) are in violation.

The ruling thus clears the way for a partial ban on the import of Macs.  As virtually all Macs are manufactured outside the U.S. (mostly in Asia), this would be a major blow to Apple's booming computer lineup, which posted in $17.5B USD computer sales last year.

The judge also ruled that two of S3's patents in the case were invalid, and that some of the minor claims within the two valid patents were invalid.

While the ruling was "unsealed" (made official), it has not yet been made available to the public as the companies are reportedly quibbling about what constitutes redaction-worthy confidential information in the document. Bloomberg reported on the release, based on early information.

The ruling now goes before a full six judge ITC panel for confirmation.

While a ruling which found Apple's iPad and iPhone -- which accounted for 46 percent of its revenues last year -- would have been even better, the victory gives HTC substantial leverage to broker a cross-licensing agreement, which could save HTC from a similar import ban on its smart phones.

Meanwhile, Apple filed two weeks ago, on July 15, a new ITC complaint against the HTC Flyer tablet, which it says infringes on several of its patents.  Of course, if the companies can come to terms, HTC's tablet lineup would, in theory, be covered under a cross-licensing agreement, as well.

If the S3 IP can save HTC from Apple's litigious wrath, that $300M USD acquisition, which was blasted by investors, could just turn out to be a great deal.

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An alternative perspective
By Tony Swash on 7/27/2011 9:54:47 AM , Rating: -1
RE: An alternative perspective
By blckgrffn on 7/27/2011 10:10:15 AM , Rating: 2
That boils down to "Apple should put nvidia chips into all of their product lines and continue to pummel HTC." Well, that would have worked awesome - had Apple not just, last week, launched all new MacBook Air and Mac Mini lines that got rid of nVidia graphics - and I don't think you can even get an iMac with nVidia graphics right now.

It's lunatic fringe to think it would cost less for Apple to retool everything they just launched and put themselves into bondage with nVidia rather than sign some pieces of paper (free in comparison) and make this all go away. They've already been disruptive to HTC, so that's a win...

RE: An alternative perspective
By JasonMick on 7/27/2011 10:18:22 AM , Rating: 4
That boils down to "Apple should put nvidia chips into all of their product lines and continue to pummel HTC." Well, that would have worked awesome - had Apple not just, last week, launched all new MacBook Air and Mac Mini lines that got rid of nVidia graphics - and I don't think you can even get an iMac with nVidia graphics right now.

Exactly, Apple can certainly afford to retool its lines, but part of its whole brand image is built on periodic, high profile releases.

Having to pull a switcheroo on customers in terms of hardware -- particularly just weeks after its unveil -- would be doable for the MacBook Air line (with a few months of retooling, that is), but would hurt its polished perception, particularly when customers realize the change wasn't voluntary.

Ironically, if Apple does opt for this approach, it would be giving customers better graphics, as the MacBook Air's built in Intel integrated graphics leave much to be desired vs. a discrete NVIDIA mobile GPU.

However, history tells me Apple is likely far too arrogant to publicly admit defeat and alter its "magical" product... I think it would rather cross-license than do that.

RE: An alternative perspective
By xype on 7/27/11, Rating: -1
RE: An alternative perspective
By AssBall on 7/27/2011 11:51:24 AM , Rating: 1
Apple sells on image, Brah. They can't tarnish that by publicly caving into a legal loophole.

When you buy an Apple product, your not just buying an overpriced mediocre device, your buying a lifestyle, Brah. Where else can you buy 5000 fart apps and still not watch YouTube?

RE: An alternative perspective
By DanNeely on 7/27/2011 10:44:48 AM , Rating: 2
Apple can, ... work around the whole issue by incorporating NVIDIA graphics chips into its Macintosh computers and avoiding the distribution of Intel's allegedly infringing chips.

Your quote missed the bigger issue. The problem is in the Intel GPU, which is on the cpu die. Installing an nVidia GPU wouldn't get rid of the infringing part. Apple'd have to make the much more radical change to AMD parts, which is unlikely since AMD CPUs (especially mobile CPUs) are a major step down in performance, even if their IGPs are much faster.

RE: An alternative perspective
By Fritzr on 7/27/2011 1:24:06 PM , Rating: 2
They can continue to use the Intel part. As long as the GPU circuitry is disabled or disconnected, they are then not using the infringing tech. That Intel CPU-GPU integrated parts have patent issues with HTC becomes an Intel problem that might impact part supplies at a later date, but that is a separate issue.

RE: An alternative perspective
By Iaiken on 7/27/2011 10:49:43 AM , Rating: 2
The problem is much more complex than the authors profoundly stupid assertion that Apple can get around the issue simply by equipping their PC's with NVIDIA graphics chips.

Most of their lineup uses Socket 1155 Intel Chips that feature Intel Core i3/i5/i7 Sandybridge chips. All of these feature Intel integrated graphics. What's more, it is the plan of both Intel and AMD to move towards practically all of their consumer level chips towards this system on chip design. The fact that the Intel graphics are not being used is irrelevant as they are still physically in violation of the patent by their very presence.

The absence of a cross-licensing agreement would lock Apple into using either server-grade chips (expensive) or to use older socket 1156/1366 pretty much indefinitely.

In conclusion, the author is a simpleton and you're a fool for believing him.

RE: An alternative perspective
By Fritzr on 7/27/2011 1:27:28 PM , Rating: 2
They are in violation of the patent if they use the infringing tech. If the GPU circuits are disabled or better disconnected, then there is no use of the patented tech and thus no infringement on the part of Apple. However the supply chain is endangered as a suit filed against Intel could cut off supplies of the CPU.

RE: An alternative perspective
By Iaiken on 7/27/2011 1:35:31 PM , Rating: 2
They are in violation of the patent if they use the infringing tech.

Wrong, they are in violation of the patent if they SELL the infringing technology. Since it cannot be permanently disabled physically or removed, Apple would be in violation simply for getting payed for the silicon that makes use of the technology.

RE: An alternative perspective
By Iaiken on 7/27/2011 1:41:51 PM , Rating: 2
To further demonstrate the point from a legal perspective.

You hold a patent on how to make rope.

I make something that includes rope, but it's just there and serves no real function.

If I buy rope for my product from someone that is not licensed to make it and then I resell it, I am in violation of your patent as well. Why? Because I am making money off a product that included rope in it's manufacture and you didn't get paid for said rope.

RE: An alternative perspective
By Fritzr on 7/27/2011 2:07:34 PM , Rating: 2
Only if you are making rope a necessary part of the function of your device and takes part in the proper function of your device. Bolting a spanner onto an I-beam does not mean the spanner is doing anything more than decorate an I-beam. As long as it is not visible, it is simply there and likely has no intended function.

Real world examples of the way I suggested are:

The i386SX which was often a fully functional i386DX with the math coprocessor disconnected/disabled.

The i486SX which was often a fully functional i486DX with the math coprocessor disconnected/disabled.

More recent are the AMD X3 parts. The OC community discovered that a subset of these were in fact X4 parts that had 1 core disabled which could be reenabled by the end user. It was a lottery, but the odds were good enough that people were buying X3 parts deliberately hoping to get a cheap X4.

By physically disconnecting enough of the connections required by the GPU to prevent it's function, it is removed from the chip as far as use in the unlicensed device is concerned. Designing the socket to disable the GPU would have been an excellent defense in a case of the kind Apple is facing today :)

In this very specific case, Apple is being accused of purchasing and using the GPU in a commercial product without a license. They are not being accused of installing intel chips that have been crippled in a manner that removes the GPU from service.

Intel could, if it chose to, offer an equivalent chip with the GPU factory disabled. Intel has chosen not to up to this time. That issue is between Intel & HTC and is not a part of this court case.

RE: An alternative perspective
By DanNeely on 7/27/2011 2:25:21 PM , Rating: 2
The i386SX which was often a fully functional i386DX with the math coprocessor disconnected/disabled.

Your memory is a bit off here. No 386's had an on die FPU. The difference between the SX and DX models was that the former had a cheaper 16 bit bus instead of a 32bit bus; similar to the 8088 and 8086 chips from two generations prior.

RE: An alternative perspective
By Helbore on 7/28/2011 5:38:05 AM , Rating: 2
He's thinking of the 486, where the DX had an onboard co-processor and the SX had the co-pro disabled. I think there was also an L2 cache on the DX (actually, I think it was on the mothboard, rather than on-die) which was also not available for the SX.

RE: An alternative perspective
By bh192012 on 7/27/2011 4:23:53 PM , Rating: 2
I sure do hate paying Apple for their patents. So it's ok then if I sale an iphone case, that just so happens to have a iphone clone in it w/o a battery.

RE: An alternative perspective
By tng on 7/27/2011 2:10:07 PM , Rating: 2
I think that you are looking at this from the wrong perspective.

Regardless of what you think of Apple, Apple is not wrong here because if it's use of Intel silicon, Intel is. HTC could force the issue with Intel, but Apple bought what they could argue was technology from Intel that they did not know was in violation.

Just my 2cents...

"Spreading the rumors, it's very easy because the people who write about Apple want that story, and you can claim its credible because you spoke to someone at Apple." -- Investment guru Jim Cramer

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