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
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
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
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.
quote: 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.
quote: 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.