Bloomberg News

Apple’s Smartphone Patent Fight With HTC Awaits Trade Rulings

December 19, 2011

Dec. 13 (Bloomberg) -- A patent fight between Apple Inc. and HTC Corp. over smartphone technology awaits decisions this week from a U.S. trade agency that may lead to a ban on imports of some HTC devices.

The International Trade Commission commission is scheduled to announce tomorrow whether HTC infringed patents owned by Apple. A decision in Apple’s favor may result in limits on imports of some HTC phones that run on Google Inc.’s Android operating system. On Dec. 16, the commission is scheduled to say whether it will review a judge’s finding that cleared Apple of claims it infringed some HTC patents.

Each company has accused the other of using its technology without permission in a broader global fight over the smartphone market pitting Apple against makers of Android phones. Tomorrow’s decision, postponed from last week, would mark the first definitive ruling from a judicial entity in Apple’s patent war against HTC and fellow Android-phone makers Samsung Electronics Co. and Motorola Mobility Holdings Inc.

“From a consumer perspective, you want choice and the consequence of this ITC mechanism is that it appears if it does find against Android, it could limit your choice,” Google Chairman Eric Schmidt, whose company isn’t named in the case, said yesterday to reporters in Washington. Google contended in a filing that Apple is trying to control the U.S. smartphone market through litigation.

A ruling for Apple may derail Taoyuan, Taiwan-based HTC’s trajectory from a small contract manufacturer founded in 1997 to the biggest U.S. smartphone seller in the third quarter. A victory for HTC may help it secure favorable terms in any settlement with Apple.

Disputed Patents

HTC generated about $5 billion in U.S. sales last year, according to a separate patent complaint it filed at the trade agency against Cupertino, California-based Apple. That’s more than half of HTC’s $9.1 billion (NT$275 billion) in global 2010 sales. HTC sold 24 percent of the smartphones in the U.S. in the third quarter, ahead of Samsung’s 21 percent and Apple’s 20 percent, researcher Canalys reported Oct. 31.

Apple contends that HTC’s Android phones infringe four Apple patents, including one for a system to detect telephone numbers in e-mails so they can be stored in directories or called without dialing the numbers. The commission is reviewing an agency judge’s findings that HTC infringed that patent and one covering the transmission of multiple types of data, along with two other Apple patents that the judge said weren’t infringed.

HTC’s Claims

HTC has accused Apple of infringing four of its patents, including ones for a way to control how a phone switches between different modes of operation to manage the device’s power supply and a method for protecting data if a phone doesn’t have enough power.

The commission is an independent, quasi-judicial agency set up to protect U.S. markets from unfair trade practices. It has the power to block imports of products found to infringe intellectual property rights.

Apple’s case against is In the Matter of Certain Personal Data and Mobile Communications Devices and Related Software, 337-710; and HTC’s case against Apple is In the Matter of Portable Electronic Devices with Communication Capabilities, 337-721, both U.S. International Trade Commission (Washington).

--With assistance from Adam Satariano and Peter Burrows in San Francisco and Tim Culpan in Taipei. Editors: Steve Walsh, Michael Shepard

To contact the reporters on this story: Susan Decker in Washington at sdecker1@bloomberg.net;

To contact the editor responsible for this story: Michael Shepard at mshepard7@bloomberg.net


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