Bloomberg News

Apple Loses Bid for Emergency Ban on HTC Phone Imports

July 02, 2012

HTC Can Continue U.S. Imports in Apple Fight

Members of the media try HTC J smartphones at its unveiling held by HTC in Tokyo, Japan. Photographer: Tomohiro Ohsumi/Bloomberg

HTC Corp. (2498) can continue to bring its newest smartphones into the U.S. while a trade agency investigates whether the phones violate an order that the Taiwanese company stop infringing an Apple Inc. (AAPL:US) patent.

The U.S. International Trade Commission yesterday instituted an investigation into Apple’s claim that HTC continues to infringe a patent in violation of an order issued in December. The agency denied an emergency request to have the HTC phones, including the One X and EVO 4G LTE, detained at the U.S. border. Notice was posted on the agency’s electronic docket.

HTC’s phones were held up at the border in May, delaying plans by Sprint Nextel Corp. (S:US) to sell the HTC EVO 4G. The phones, made in Taiwan, were allowed into the U.S. after HTC assured U.S. Customs and Border Protection that it had worked around the Apple patent.

Shares of the Taiwanese company added 0.8 percent to NT$393.50 as of 9:18 a.m. in Taipei, heading for its highest close in almost four weeks. The benchmark Taiex (TWSE) index climbed 0.3 percent.

The patent covers a system to detect telephone numbers in e-mails so, when the number on the screen is tapped, they can be stored in directories or called without dialing.

Apple Complaint

Apple filed a complaint last month, accusing HTC of making inaccurate representations to customs officials to bypass the import ban, known as an exclusion order.

“The commission finds that Apple has not demonstrated the propriety of temporary emergency action here,” the Washington- based agency wrote. “The commission will not direct Customs to detain all subject HTC products because the commission does not have the information necessary to determine whether the respondents are currently violating the commission’s limited exclusion order.”

HTC said its mobile devices and software were redesigned, and that Apple was making legal arguments regarding infringement it hadn’t made in the original case.

Apple, based in Cupertino, California, had asked that all HTC phones that run on Google Inc. (GOOG:US)’s Android operating system be stopped at the border.

One Series

“HTC confirmed that the notice was received, as an expected matter of process, and will vigorously defend its case,” the company said in an e-mailed statement to Bloomberg News today. Kristin Huguet, a spokeswoman for Apple, didn’t immediately return messages seeking comment.

HTC, Asia’s second-largest smartphone maker, is counting on its One series of phones to improve its share of a market that reached $312 billion last year, according to Bloomberg Industries data.

The Taoyuan, Taiwan-based company had 4.5 percent of the global smartphone market in the first quarter, down from a peak of 10.7 percent in the second quarter of 2011, as it lost to competition from Apple’s iPhone and Samsung Electronics Co. (005930)’s Galaxy line.

The case is In the Matter of Certain Personal Data and Mobile Communications Devices and Related Software, 337-710, U.S. International Trade Commission (Washington).

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

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net


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