Apple v. HTC: Who's on First, Who's at Risk?

Lora Bentley
Slide Show

Smartphones That Work for Business

With the flack over Apple's claims that much of the sexiest smartphone tech falls under its patents, our Carl Weinschenk looks at the best mobile tech on the market today.

Apple's patent infringement suit against HTC is getting a lot of ink these days. We all have opinions on Apple's real motives, who the actual stakeholders are, what the outcome will be, and how that will affect the mobile phone industry. It's a lot of information to digest, so I thought a round-up of sorts might be helpful.

 

Though I won't be so naive as to predict how the court will rule, if it goes the way Apple hopes it does, the Cupertino, Calif.-based company could very well be untouchable in the mobile phone world.

 

Apple filed suit against the Tawainese handset maker at the beginning of March. The suit, filed in both a federal district court in Delaware and the International Trade Commission, alleges that HTC products infringe 20 different hardware and software patents on technology related to the iPhone.

 


The action came roughly a year after Apple COO Tim Cook told reporters, "We will not stand for having our [intellectual property] ripped off.." At the time, most thought the comment was directed at Palm's Pre, but obviously it was intended for a wider audience. When the suit was filed, CEO Steve Jobs essentially echoed Cook's earlier comment. Jobs said:

We think competition is healthy, but competitors should create their own original technology and not steal ours.

Though the pleadings do not specify which HTC products infringe which Apple patents, the general consensus is that the HTC-Google collaboration Nexus One is the target. A day after the lawsuit was filed, statistics indicated that the iPhone has lost mobile market share to Android-based phones like the Nexus One.

 

The fact that Google issued a statement in support of HTC before HTC even commented on the lawsuit also lends credence to the idea that Apple is actually gunning for Google here. On the same day the news of the lawsuit broke, Engadget's Nilay Patel relayed this "short but sweet statement" from Google:

We are not a party to this lawsuit. However, we stand behind our Android operating system and the partners who have helped us to develop it.

Patel wondered whether that meant Google might help bankroll HTC's defense.

 

Just this week, HTC issued its own response to the suit. In a statement on the company Web site, CEO Peter Chou vowed the handset maker will fight back. He said:

HTC disagrees with Apple's actions and will fully defend itself. HTC strongly advocates intellectual property protection and will continue to respect other innovators and their technologies as we have always done, but we will continue to embrace competition through our own innovation as a healthy way for consumers to get the best mobile experience possible.

Whether or not Apple is aiming for a precedent it can use to systematically go after other players in the mobile phone space, the lawsuit and its possible outcomes are already impacting the market. Oppenheimer's Yair Reiner told clients recently that several top mobile phone makers have sent their device designs back to engineering as a result of the litigation.

 

In terms of possible outcomes, there are, of course, two extremes. One one hand, Apple could prevail on none of its claims. If that were to happen, other mobile phone hardware and software makers would no doubt see the iPhone and all of its underlying software and hardware as fair game for cloning. On the other, Apple could win on all of its claims. This would serve to stop Apple's competitors in their tracks, and force all of them to come to some sort of agreement with Apple or take their competing devices off the market.

 

The actual outcome is likely to fall somewhere between the two extremes, but eWEEK's Don Reisinger says even if Apple prevails on some of its claims, the mobile phone industry will be forever changed -- and not for the better.

 

He says an Apple victory will give the company the legal precedent it needs to go after any other company whose designs might possibly infringe these patents. Everyone from Google to Microsoft and Research in Motion would be at risk, Resinger says.

 

Moreover, highly desirable features, such as touch screen unlock, browser interaction, and screen shutoff, could conceivably be beyond the reach of Apple competitors if its patents are upheld. Such a decision, in Reisinger's view, would set back the entire mobile phone industry.



Add Comment      Leave a comment on this blog post
Mar 22, 2010 1:54 AM Geoff Kovarik Geoff Kovarik  says:

Steve Jobs: "We think competition is healthy, but competitors should create their own original technology and not steal ours."

And how did Apple "create" the bitmapped GUI long ago? After seeing it at Xerox PARC (home of "copier heads") and not being required to sign an NDA...

http://www.dcbabrief.org/vol211008art4.html

http://en.wikipedia.org/wiki/Xerox_Alto#Diffusion_and_evolution

And see page 11 of this: http://www.coburnventures.com/About_CHANGE/asset_upload_file866_1310.pdf

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Mar 22, 2010 2:03 AM Cleth Shirestock Cleth Shirestock  says: in response to Alan Smith

"Innovation is not simply copying.  Everyone agrees that the Android system is a copy.  If HTC and consequently Google need to go back to the drawing board, then true innovation will occur."

I wonder who this "everyone" is, and whether they have even a basic understanding of the issues.

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Mar 22, 2010 2:11 AM Medcop Medcop  says:

I just got an I phone and have had problems with it ever since I got it.  Same with my iMac and Mac Mini.  I think apple should look at getting their quality control and products closure.  I am going to save money and time, I am going back to Linux and blackberry.  Apple should just let it be when people start hearing that companies are suing other companies for unspecified patent infringements.  We don't want to deal with thoise companies.  It would be alot better if everyone could work together and stop being so greedy.

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Mar 22, 2010 5:26 AM Brandon Brandon  says: in response to PJS

Steve Jobs made the statement that "good companies copy, great companies steal!" after they were accused of copying Xerox. It seems pretty childish that the same things they did to get where they are they expect no one to do. Furthermore, apple has been given far more patients than any other company. I dont know what group you hang out with but I have never herd anyone marvel over the swipe unlock on the iphone. They are suing HTC for making a smart phone. Instead of bettering their phones and competing, they have to tear down other companies. Its obvious fear that someone else has done better than them!! The suite will not change anything, and if it does, google is not going to fail, they will make sure it succeeds and take it to the next step that will put the iphone in its shadows

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Mar 22, 2010 6:00 AM Aaron A Aaron A  says:

Is it possible the no-winningness of this situation will cause what to me is the most obvious fact, that is, in this "age of software" the original spirit of patent legislation with respect to basic economic principals is NOT SUFFICIENT.  The landscape changed but the law stayed the same - this happens all the time and leads to new law often so I don't see why it should not in this case.

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Mar 22, 2010 8:34 AM Frac Frac  says: in response to Brandon

@Brandon

'Steve Jobs made the statement that "good companies copy, great companies steal!" after they were accused of copying Xerox.' Source? Apple actually paid Xerox for the rights to use the technology. Microsoft did not pay, but used it anyway.

'Furthermore, apple has been given far more patients than any other company.' Ridiculous FUD - see here:

http://www.businessinsider.com/microsoft-not-apple-will-sue-you-to-death-msft-2010-3?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3Atypepad%2Falleyinsider%2Fsilicon_alley_insider%28SiliconAlleyInsider%29

'They are suing HTC for making a smart phone.' No, they are suing HTC for stealing Apple's IP

The rest of your post is pure Google fanboy rubbish.

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Mar 22, 2010 11:02 AM Tom B Tom B  says:

Reisinger is entitled to his, in my view, shortsighted opinion, but most people understand that it is important for companies, like Apple, to protect their intellectual property. The patent system fosters innovation, rather than impeding it, by punishing pirates who seek a free ride on others' R&D.

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Mar 22, 2010 11:32 AM TJ TJ  says: in response to Tom B

@TOm B - Yes and No.  The patent system is designed to work as you stated, but is currently being heavily abused.  Patents are supposed to be issued only for "novel and non-obvious" things ...

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Mar 22, 2010 12:03 PM Alan Smith Alan Smith  says:

The obvious is being missed here:

1. If the patent was granted, then this is what the legal system recognizes.  It does not matter if the patent system is right, wrong, misused, etc.  It is what the legal system represents.

2. If HTC violated Apple's patents, then they are in violation. 

3.  Innovation is not simply copying.  Everyone agrees that the Android system is a copy.  If HTC and consequently Google need to go back to the drawing board, then true innovation will occur.

4. Innovation comes from original ideas.  Google should implement their own take on the smartphone.

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Mar 22, 2010 12:05 PM PJS PJS  says: in response to TJ

@TJ - The best inventions are not obvious, but often seem obvious once they are demonstrated.  Often these ingenious inventions are quite easy to copy.  These are precisely the inventions that the patent system is designed to protect.  For example, the iPhone's unlock screen seems obvious now, but when unveiled was met with oohs and ahhs of surprise and delight. The iPhone is packed with hundreds of such ideas, ideas that Microsoft and Google should not be permitted to rip off.

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Mar 23, 2010 1:36 AM Frac Frac  says: in response to Medcop

Well that's as maybe. The capitalist economy which we adhere to in western business circles encompasses and encourages the use of the patent system to allow companies some measure of protection so that all businesses can operate by the same rules. It's mutually advantageous. That being so, it's Apple's duty to protect it's IP so that their business model can continue to the benefit of it's investors, workers and consumers of it's products. It encourages companies to spend their earnings on R&D which is an investment in the future; this R&D is a protection for the future ensuring continual employment for company workers and support for consumers so that the technology they buy is not left high and dry. I really can't see it as greed to want a company to succeed. The level of success is a function of product price, value, component costs, company probity, the established market and a host of other factors, not all of which are under the control of any one company. It's not all down to greed. Having worked in Eastern Block countries before the communist system came crashing to earth, I can tell you that more state control over it's industries does not equal cheaper products - just cheaply made products that actually cost more in terms of actual wages. And the quality - meh.

I'm somewhat confused as to what other system you could come up with that would ensure company independence without too much state interference. Perhaps you could enlighten me?

Executive pay, employment remuneration and job benefits along with state and national funding are part and parcel of the same system in that they depend on tax contributions from said profits. Without them we have no life since there is no back-up system.

Your favoured choices of linux and Blackberry are not in any way an alternative, being as intricately woven into the same system as the one you decry. Indeed, it is arguable that linux would not exist without the paid model of other companies - and certainly not RIM.

Re education. The standard of education and welfare support you receive in any country is a function of the amount you are willing to devote to that section of society - pay more taxes or divert funding from other areas like defence? The choice is yours, but to call out one section of industry or one section of workers (via the unions) does not make sense. And if you want to impose a minimum wage to promote jobs without redressing the imbalances in society throughout every industry and employment area, you will rapidly find that the only ones who benefit are migrant workers not the established workforce who are already finding it hard to make ends meet.

You say the patent system is engendering 'greed', well I can quote you many companies who would not have survived without it's protective measures and neither would their workforce have jobs.

We all have a choice... but have we got anything better to replace it?

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Mar 23, 2010 2:34 AM Frac Frac  says: in response to thorn

I won't argue that the patent system is broken(to an extent) but the fact remains that Apple are duty bound to use the same system as other companies use 'against' them. If I were an investor and Apple didn't protect their IP, I would go elsewhere with my money and so would many other investors. The result would be a failing company, a loss in value, less products, less jobs supported and even worse, imported goods to replace them. Regarding 'frivolous' patent claims - that's just par for the course, but, again, I would be hopping mad if an opportunity was missed and someone else took it away from my investment, or even worse, took it abroad.

It is naive to think that your best interests are served by being wholly honourable or sensible in today's business world. Self destruction would be a better definition. It's good that some claims are rejected, it shows that the system works to some degree.

Of course Apple has an army of lawyers, perhaps more than most, but they are operating in the 'innovation arena' with huge investments to protect and as previously stated, scavengers would take them apart without such protection.

To be honest, I think your argument is more with the litigious nature of modern society rather than the choices companies make to protect themselves or Apple in particular and that your criticisms are misplaced. I also feel you fail to recognise that Apple holds many more patents in multitouch implementation given their buy-out of Fingerworks who were involved from the start of the technology, than you realise. Many more. Again multitouch is a broad concept and I see no evidence that Apple is claiming the whole of that technology as you state. Sources?

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Mar 23, 2010 3:28 AM AdamC AdamC  says: in response to Medcop

You are either a troll or just love to diss Apple.

My son's iPhone performs better than his costly nokia and he heavily max out its usage everyday and needs to charge it twice a day and it still performs as advertised. It just work under all circumstances and conditions.

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Mar 23, 2010 8:50 AM Frac Frac  says: in response to thorn

@thorn

'"Everybody" does not see Android as a copy. It's an on-screen GUI with icons - no more, no less. The fact that Apple offers a popular product with that feature has no relation to whether or not they own the concept. Apple controls every aspect of app development and marketing, as well as the hardware - Android is a completely open platform. If anything, it takes the idea of "here's a ball" and then turns it into the Superbowl.'

Not my post but let's run with this since it seems you are a good example of the type of ignorance that pervades these discussions. First if you had done any research or background reading or heaven forbid - thinking, you might have comprehended that these lawsuits are about specific implementations of technology. Not one of these suits are 'general' but relate 'precisely' to certain innovations that Apple considers they own AND have been allowed to patent. The fact that they have been granted a patent gives them the right(or duty to their shareholders), to protect. If you invented say a better light-bulb which lasted fifty years and swallowed only twenty-five percent of the power of all other light-bulbs, by the simple implementation of some element or process not previously seen in a light-bulb, you would be entitled to patent it as a 'new' process and the protection of your IP is thus ensured. You would not per se get a patent on all light-bulbs or all production methods, just that new process/implementation. Apple is not claiming ownership of all aspects of phone technology or touch-screens or gestures or buttons or whatever wild accusation you can come up with, just those elements(technology implementations) they invented.

For you to wildly claim otherwise shows either a deliberate attempt to dissemble or childish failure of comprehension.

'If they succeed in these litigations, the photo industry will become more and more like the land of desktop publishing.' Apart from the typos and confused grammar and sentence content, you are also hopelessly wrong in your conclusions. IF Apple DON'T succeed in these suits, innovation will suffer, in that everyone will just take the best features and produce an amalgam with no differentiating features and no incentive to do their own R&D.

I'll leave you with one further thought. If you will HTC to succeed, ie to take Apple's IP and run with it, you are damaging both Americas' future prospects  and your own. At the highest level, Americas' foreign trade balance will suffer, since for every HTC phone(replete with stolen IP)sold in the American market, you(the country), will have to buy Taiwan dollars. Now, if Apple succeeds, HTC will have to either come up with it's own technology by spending in R&D OR pay Apple licensing fees(buy American dollars) if it wishes to continue using that technology owned by Apple. At the lowest level - jobs on the street, every dollar spent paying foreign companies for their products means less jobs for Americans and every dollar paid into the economy means more jobs for Americans.

WTF are they teaching these days?

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Mar 23, 2010 11:07 AM Medcop Medcop  says: in response to Frac

First of all If the executives of these companies weren't so greedy and overpaid.  They wouldn't have to rely on these Legal tactics to sell products and try to control everything.  That is the problem with America we revolve around greed.  It controls us.  The reason why the educational system here in the USA is so poor and we come in 29th on international test scores even behind third world countries.  Is because of greed in the form of unions.

Executive and Union greed is driving up the cost of living in America.  That is why Jobs are going over seas.  Only ignorant people don't see that.  If you want to create Jobs in the USA then Minimum wage should be Lowered to $4.59 per hour Executive compensation should be no more then  $1million plus a percentage of the companies profit.

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Mar 23, 2010 12:20 PM thorn thorn  says: in response to Frac

@Frac :

"Not one of these suits are 'general' but relate 'precisely' to certain innovations that Apple considers they own AND have been allowed to patent. The fact that they have been granted a patent gives them the right(or duty to their shareholders), to protect. "

My point is that Apple shouldn't have been granted some of these patents in the first place. There are times that it certainly seems as if Apple has an army of lawyers poring over various features, to determine if it's been patented yet... and if not, file the application - whether it's something truly they truly invented or not.

For hell's sake - Apple filed a patent for ADDING A CONTACT TO A HOME SCREEN. In any other computer medium, this is called "creating a shortcut/alias". Thankfully, this one got rejected, as their competition was able to quickly point out that they'd already done this on their own products.

You imply that I'm clueless about the core issues, but I assure that I've actually read some of the background and seen several Apple patent descriptions. One example is multi-touch: Apple did NOT invent this technology, yet they claim it is their innovation. Microsoft's patent on the tech predates Apple. The pinch concept itself was first implemented around 1991 - and again, not invented by Apple.

The US patent system used to protect IP and innovation. It's now merely just abused as a basis to claim ownership of minutiae.

And to the crowd at large - I don't own an iphone, an android phone, or any other smart phone for that matter. So hold the fanboy accusations.

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Mar 23, 2010 12:41 PM thorn thorn  says: in response to Frac

"Everybody" does not see Android as a copy. It's an on-screen GUI with icons - no more, no less. The fact that Apple offers a popular product with that feature has no relation to whether or not they own the concept. Apple controls every aspect of app development and marketing, as well as the hardware - Android is a completely open platform. If anything, it takes the idea of "here's a ball" and then turns it into the Superbowl.

Furthermore, Apple did not invent gestures in software, nor were they first to implement it on a touch-screen. The "drag to unlock" patent is absurd; at the core level, it's a gesture that does "something" - and not something that's particularly revolutionary. My computer at home does the same thing - when the screen is blank, i swipe the mouse - and voila, the screen goes back to the desktop.

Apple is very good at taking a lot of existing phone tech, and wrapping it up in a very consumer-friendly package. But despite Jobs' claims of innovation, most of the iPhone wasn't invested at One Infinite Loop. Apple didn't invent the phone, the touchscreen, the headphone jack, the button, the plastic, the battery, the memory chips, the processor, or the colored icon.

If they succeed in these litigations, the photo industry will become more and more like the land of desktop publishing. There used to be many choices for photo manipulation and vector graphics - that is, until Adobe sued various companies to the brink of bankruptcy, and then seized the remains in a buyout.

Autodesk hasn't bothered with as many lawsuits; instead, they've bought every competing company they could afford to. The end result? Lack of innovation as a whole, and an angry userbase.

The courts will do well to look at Apple's lawsuit and deem it frivolous.

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Mar 24, 2010 12:27 PM thorn thorn  says: in response to Frac

Here's a link which summarizes the overall issue much better than I can:

http://daringfireball.net/2010/03/this_apple_htc_patent_thing

While not getting into all the details of multitouch, the point is that patent wars are doing little for the consumer. The "one click purchase" example (Amazon's patent) is a classic example. Is it convenient? Yes. Should it be able to be legally defined as IP? I don't think so.

If filing a patent on tech really should have such a low threshold for acceptance, then you'll have to excuse me, as I need to file a new patent. I've just conceived of/invented a new tool for tablet computers - a small camera, attached and/or integrated into the shell of the tablet computer, which allows the pad computer to take photos or videos.

Apple hasn't released such a product yet; hopefully my revolutionary patent will be granted, so that I can sue them once they add a 5mp camera to the iPad.

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Mar 25, 2010 1:53 AM Don Don  says: in response to thorn

I like this line of logic.  There is a certain maturity of technology (hardware, software, communications) that determines, or at least influences, the human thinking process at any particular time in history.  I mean, how many millions of "entrepreneurs" can come up with various ways to efficiently use a device that can be carried in your hand and used to talk, compute, and pretty much do anything a mainframe computer could do 50 years ago?  If one can really prove, I mean prove, that specific hardware circuitry was stolen and reversed engineered, or digital processing algorithms that were maximized for cell phone used were pirated, or any thing similar to these acts occurred, then I support Apple.  However, something has to be done with the notion that just because you were first with something that would inevitably be thought of by someone else, that somehow you reap all the rewards, just does not seem right.  If this is what Patent Law is all about, then it needs to be changed.  I used a laptop computer for this made by Dell operated under Windows XP.  And yes "windows" on a screen would have been thought of by a million people (independently) given the right environment.  Another perfect example of being in the right garage at the right time with lots of time on your hands.

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Apr 5, 2011 3:53 AM alex alex  says:

i used to like apple, but recently with the arrogant behavior, i start to dislike it, even though apple's products are no match...

however i don't think that apple is able to pose real threat to Microsoft. For example, here in Greece, and except US, apple doesn't exist!

if you want to buy a laptop etc, it comes preinstalled with windows, so they gain a large amount of money from laptops and other services that come preinstalled with other hardware.

Apple will pose real threat when they begin to expand in other countries of europe and asia. That's my opinion at least.

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