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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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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 (blog) 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.

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