Bloomberg News

HTC Loses Patent Case Against Apple at Trade Agency

February 22, 2012

(Updates with analyst’s comment in fourth paragraph.)

Feb. 17 (Bloomberg) -- HTC Corp. lost a patent-infringement claim against Apple Inc. at the U.S. International Trade Commission, the first of the Taiwanese handset maker’s cases targeting the iPhone.

Apple didn’t violate an HTC patent for controlling how mobile phones manage power supply, the Washington-based commission said today. The ruling completes a review of an October finding by an agency judge, who had determined that Apple devices didn’t infringe HTC’s intellectual property.

The case is part of the global battle for the smartphone market, which grew 55 percent in the fourth quarter according to researcher IDC. Cupertino, California-based Apple and Taoyuan, Taiwan-based HTC are among device makers seeking an edge by pursuing patent claims against competitors in courts in the U.S., Europe, Asia and Australia.

“HTC is not having much luck in their cases and their performance in the market is taking a hit,” said Will Stofega, an analyst with IDC in Framingham, Massachusetts. “At the end of the day, this is an elongated battle that seems to be going a little bit better for Apple than for Android.”

HTC has fallen 37 percent in Taipei trading in the past year as competition from the iPhone and Samsung Electronics Co.’s Galaxy models cut into its market share.

“We are disappointed by the commission’s ruling, and look forward to reading the full opinion to understand its reasoning,” Grace Lei, HTC’s general counsel, said in an e- mail. “We’ll explore all options, including appeal.”

Second Case

The commission also found that HTC wasn’t using the invention at issue in the case, a requirement to have an infringement violation found against another company. The agency’s full opinion will be made available after both sides have a chance to redact confidential information.

HTC, the second-largest maker of devices that run on Google Inc.’s Android software, has a second case against Apple that is scheduled to begin Aug. 30.

Apple contends that Android devices infringe its patents. Apple filed first in March 2010, seeking to block imports of HTC’s Android phones. In that case, the commission in December found that HTC was infringing an Apple patent related to data- detection and ordered a halt to phones that used the invention. HTC said it was able to design around that feature.

Apple sold 37 million iPhones in the fourth quarter, helping the company double its profit in the period and capture 24 percent of the global market, according to IDC. Samsung accounted for 23 percent of smartphone sales, followed by Nokia Oyj, Research In Motion Ltd., and then HTC at 6.5 percent.

The HTC case against Apple is In the Matter of Portable Electronic Devices, 337-721, U.S. International Trade Commission (Washington).

--With assistance from Adam Satariano and Danielle Kucera in San Francisco and Tim Culpan in Taipei. Editors: Michael Shepard, Romaine Bostick

To contact the reporter 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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