Apple, HTC Call Truce in IP Smartphone Wars

It looks like Apple Inc. CEO Tim Cook isn't all that into thermonuclear war. Unlike Steve Jobs, who famously declared he'd wage all-out war against Google's Android operating system in the courts, Cook was known to be less fond of litigation, calling Apple's smartphone and tablet battles a “pain in the ass.” (See, “Slowly But Surely, Apple's Cook Emerges from Jobs' Shadow,” GigaOM, http://bit.ly/10hgZwY.)

The pain subsided ever so slightly last month, when Apple and HTC announced the settlement of their long-running dispute over smartphone patents. In a joint-statement, the two sides announced that they'd settled all outstanding litigation in federal court and the U.S. International Trade Commission and entered into a 10-year licensing agreement. See, “HTC and Apple Settle Patent Dispute,” Apple.com, http://bit.ly/WqyjR3. Both Cook and HTC CEO Peter Chou said the deal would allow them to put their energy into innovation rather than litigation.

The deal closes a chapter in the smartphone litigation saga that began in March 2010, when Apple sued HTC at the ITC and in U.S. district court in Delaware for allegedly infringing 10 iPhone-related patents. (See, In the Matter of Certain Personal Data and Mobile Communications Devices and Related Software, ITC Investigation No. 337-TA-__, http://bit.ly/SZCf5o). Two months later, HTC struck back with its own claims, accusing Apple of infringing three patents HTC had acquired from a patent troll called Saxon Innovations. See, “HTC Sues Apple, with Help from Troll,” Litigation Daily, http://bit.ly/TMWySk.

HTC then acquired nine Google patents and used them to file additional patent infringement claims against Apple (see, “HTC Ramps UP Patent Claims Against Apple, Thanks to Google's IP,” Litigation Daily, http://bit.ly/UatNSh), only to have ITC administrative judge Thomas Pender throw out those patents in June.

Details of the settlement are confidential, but industry analysts speculate that HTC will pay Apple a hefty licensing fee. According to Apple Insider, industry analyst Shaw Wu with Sterne Agee estimated that the royalty rate would be between $6 and $8 per HTC phone sold ' higher than the $5 rate HTC pays Microsoft. Based on HTC's sales figures, Wu predicted that Apple could make up to $280 million a year as a result of the licensing agreement. See, “HTC Settlement May Pay Apple $8 Per Phone, Act As Blueprint for Samsung & Motorola,” http://bit.ly/XWNCBx. Chou, however, disputed that estimate, according to a Nov. 20 Reuters report, saying $6-$8 estimates are “baseless and very, very wrong. It's an outrageous number, but I'm not going to comment on a specific number.” See, “HTC 'Happy' with Apple Settlement, Slams Media,” http://yhoo.it/UGP9oz.

It looks like Apple Inc. CEO Tim Cook isn't all that into thermonuclear war. Unlike Steve Jobs, who famously declared he'd wage all-out war against Google's Android operating system in the courts, Cook was known to be less fond of litigation, calling Apple's smartphone and tablet battles a “pain in the ass.” (See, “Slowly But Surely, Apple's Cook Emerges from Jobs' Shadow,” GigaOM, http://bit.ly/10hgZwY.)

The pain subsided ever so slightly last month, when Apple and HTC announced the settlement of their long-running dispute over smartphone patents. In a joint-statement, the two sides announced that they'd settled all outstanding litigation in federal court and the U.S. International Trade Commission and entered into a 10-year licensing agreement. See, “HTC and Apple Settle Patent Dispute,” Apple.com, http://bit.ly/WqyjR3. Both Cook and HTC CEO Peter Chou said the deal would allow them to put their energy into innovation rather than litigation.

The deal closes a chapter in the smartphone litigation saga that began in March 2010, when Apple sued HTC at the ITC and in U.S. district court in Delaware for allegedly infringing 10 iPhone-related patents. (See, In the Matter of Certain Personal Data and Mobile Communications Devices and Related Software, ITC Investigation No. 337-TA-__, http://bit.ly/SZCf5o). Two months later, HTC struck back with its own claims, accusing Apple of infringing three patents HTC had acquired from a patent troll called Saxon Innovations. See, “HTC Sues Apple, with Help from Troll,” Litigation Daily, http://bit.ly/TMWySk.

HTC then acquired nine Google patents and used them to file additional patent infringement claims against Apple (see, “HTC Ramps UP Patent Claims Against Apple, Thanks to Google's IP,” Litigation Daily, http://bit.ly/UatNSh), only to have ITC administrative judge Thomas Pender throw out those patents in June.

Details of the settlement are confidential, but industry analysts speculate that HTC will pay Apple a hefty licensing fee. According to Apple Insider, industry analyst Shaw Wu with Sterne Agee estimated that the royalty rate would be between $6 and $8 per HTC phone sold ' higher than the $5 rate HTC pays Microsoft. Based on HTC's sales figures, Wu predicted that Apple could make up to $280 million a year as a result of the licensing agreement. See, “HTC Settlement May Pay Apple $8 Per Phone, Act As Blueprint for Samsung & Motorola,” http://bit.ly/XWNCBx. Chou, however, disputed that estimate, according to a Nov. 20 Reuters report, saying $6-$8 estimates are “baseless and very, very wrong. It's an outrageous number, but I'm not going to comment on a specific number.” See, “HTC 'Happy' with Apple Settlement, Slams Media,” http://yhoo.it/UGP9oz.