Apple sues HTC (1 Viewer)

[Sam Posten]

This is going to get ugly.
http://bits.blogs.nytimes.com/2010/03/02/apple-sues-phone-maker-htc-over-patents/

Interesting that they are suing HTC and not Google.

Is a suit against Microsoft next?

 

[Sam Posten]

Scorched earth, from Bloomberg via the IP list:

From: "CONNIE GUGLIELMO, BLOOMBERG/ NEWSROOM:"
Date: March 3, 2010 4:15:45 PM EST
To: [email protected]
Subject: (BN) Apple Starts ‘Nuclear War’ in Patent Fight With HTC

fyi

+------------------------------------------------------------------------------+

Apple Starts ‘Nuclear War’ in Patent Fight With HTC (Update3)
2010-03-03 21:13:22.471 GMT


(Updates share price in 20th paragraph.)

By Susan Decker and Connie Guglielmo
March 3 (Bloomberg) -- When Steve Jobs unveiled the iPhone
in 2007, he said Apple Inc. had applied for more than 200
patents for the device and was ready to enforce them. Now, Apple
is putting those words into action.
Apple filed a patent-infringement complaint against
Taiwan’s HTC Corp. yesterday, seeking to prevent U.S. imports of
phones that run Google Inc.’s Android operating system. The
decision to take the case to the International Trade Commission
signals that Apple wants to curb HTC’s market share gains as
quickly as possible, said Lyle Vander Schaaf, a patent lawyer
with Bryan Cave LLP in Washington.
“It’s like nuclear war,” said Schaaf, who specializes in
cases before the ITC in Washington, where Apple filed complaints
over 10 patents. “If you really want to have an effective
remedy to protect your rights, you go to the ITC. Once you’re
there, there’s no going back.”
The ITC can act more quickly than a court, and its power to
ban imports is often more important in a rivalry than the cash
damages possible in a civil case. Apple also filed a patent suit
in federal court in Wilmington, Delaware, claiming infringement
of 10 additional patents, including one for technology that lets
people work the iPhone by touching the screen with two fingers.

$13 Billion Phone

HTC dropped 2 percent to close at NT$323.5 on the Taiwan
Stock Exchange, the biggest decline since Feb. 8. The island’s
benchmark stock index rose. The stock has lost 12 percent this
year, compared with the 6.8 percent drop in the Taiex index.
Apple generated $13 billion in sales from the iPhone in the
year ended in September, accounting for 30 percent of total
revenue. Industrywide smartphone shipments are expected to
increase 46 percent this year, according to market research firm
Gartner Inc. Overall handset sales will rise 11 percent to 13
percent.
“We can sit by and watch competitors steal our patented
inventions, or we can do something about it,” Jobs, 55, said
yesterday in a statement. “We’ve decided to do something about
it.”
Apple, based in Cupertino, California, isn’t commenting
beyond the statement yesterday, said Steve Dowling, a company
spokesman.
Google says it isn’t a party in either case. “However, we
stand behind our Android operating system and the partners who
have helped us to develop it,” the Mountain View, California-
based company said.

Apple vs. Nokia

Apple and Nokia Oyj, the world’s biggest handset maker,
have each filed ITC complaints seeking to block imports of the
other company’s phones. In addition, in a Delaware suit filed by
Nokia, Apple has accused Nokia of trying to strong-arm a
licensing deal for Apple patents. Apple has said it doesn’t want
to license its patents.
“We’re certainly not in the business of licensing good
ideas,” Tim Cook, Apple’s chief operating officer, said at a
shareholder meeting Feb. 25. “That’s not why we’re here. That’s
not what our business is about.”
The ITC handles a variety of patent cases, from foldable
stools made in China to a dispute over the hybrid engine in
Toyota Motor Corp. vehicles. It has also become a key venue for
high-stakes technology disputes over computer chips and
electronics.
Samsung Electronics Co. and Sharp Corp. had each won orders
to block imports of liquid-crystal display televisions made by
the other company, before they settled their dispute. Nvidia
Corp. is challenging a judge’s finding from January that its
computer-graphics chips infringe patents owned by designer
Rambus Inc.

Multitouch Feature

Yesterday’s ITC case involves how operating systems work on
mobile phones, while the Delaware suit includes the multitouch
patent. Multitouch lets people work the iPhone by touching the
screen with two fingers and making swiping motions, allowing
them to quickly enlarge or shrink photos or Web pages.
Multitouch is one of the 10 patents asserted against HTC in the
civil suit.
One of the other patents in the civil case is for a way of
using a specific gesture to unlock a touch screen as an
alternative to a password. Others are for inventions related to
the movement of icons, managing power and sensors to detect user
activity.

Validity of Claims

“We have not yet had the opportunity to investigate the
filings,” Linda Mills, a spokeswoman for Taoyuan, Taiwan-based
HTC, said in an e-mail. “Until we have had this opportunity, we
are unable to comment on the validity of the claims being
made.”
Apple was granted 289 patents in 2009, up from 186 in 2008,
according to IFI Patent Intelligence, a unit of Wolters Kluwer
NV, Europe’s biggest tax and legal publisher. That’s less than
the 648 that Nokia was awarded last year, based on an IFI
analysis. Still, quantity doesn’t always matter -- all it takes
is one patent to persuade the ITC to issue an exclusion order.
In 2007, the agency ordered a halt to tens of millions of
mobile-phone imports because Qualcomm Inc. chips inside them
infringed a Broadcom Corp. patent for a battery-saving feature.
The ban never went into effect, and was later overturned because
phone manufacturers didn’t have the chance to take part in the
legal process.
“The commission has already showed they were brave enough
to block a multimillion-dollar product from the U.S. market,”
Schaaf said. By contrast, judges in district courts often force
parties to settle because of the complexity of cases, he said.
Apple gained 48 cents to $209.33 at 4 p.m. New York time in
Nasdaq Stock Market trading. The stock has more than doubled in
the past 12 months.

Market Share

HTC’s global market share rose to 6.9 percent of smartphone
sales last year from 6 percent in 2008, according to Gartner.
That made its phones the fourth most popular. Apple, in third
place, increased its share to 16.1 percent of the market from
10.7 percent. Research In Motion Ltd.’s share was unchanged,
while Nokia, the No. 1 smartphone maker, lost ground.
Nokia started the fight with Apple, filing suit in October
when the two companies were unable to reach a licensing
agreement. Espoo, Finland-based Nokia is trying to maintain
market share amid competition from Apple and RIM, maker of the
BlackBerry.
“You’ve got the ‘smartest kids on the block’ attitude and
some of it is quite well deserved,” said Robert Yoches, a
patent lawyer with Finnegan Henderson in Washington who’s been
following the cases. “They also feel that this is the way to
hold onto market share. Even if they can’t keep someone out,
they can keep some competitive features out.”
The Delaware case is Apple Inc. v. HTC Corp., U.S. District
Court, District of Delaware (Wilmington). The ITC complaint is
In the Matter Of Certain Personal Data and Mobile Communications
Devices and Related Software, Complaint No. 2715, U.S.
International Trade Commission (Washington).

For Related News and Information:
Top legal stories: TLAW
Bloomberg legal resources: BLAW
Most read legal stories: MNI LAW
For the Bloomberg Law Digest: BBLD
For litigation issues: BLIT
Apple and litigation: AAPL US LITI

--With assistance from Amy Thomson and Steven Fromm in New York,
Brian Womack in San Francisco and Tim Culpan in Taipei. Editors:
Jonathan Thaw, Nick Turner

To contact the reporters on this story:
Susan Decker in Washington at +1-202-624-1941 or
[email protected];
Connie Guglielmo in San Francisco at +1-415-617-7134 or
[email protected]

To contact the editors responsible for this story:
David E. Rovella at +1-212-617-1092 or [email protected];
Jonathan Thaw at +1-415-617-7168 or [email protected]