Apple, Android Vendor HTC Settle Patent-Infringement Fights

By Todd R. Weiss  |  Posted 2012-11-12

Apple, Android Vendor HTC Settle Patent-Infringement Fights

Apple and HTC have settled their two-and-a-half-year-old legal fight over charges that HTC's smartphone designs infringed on about 20 Apple patents for its iPhones.

The settlement, which also dismisses all current lawsuits between the two companies and includes a 10-year licensing agreement between Apple and HTC for all current and future patents, was announced Nov. 10 by the companies in a joint statement.

"We are glad to have reached a settlement with HTC," Tim Cook, CEO of Apple, said in prepared remarks. "We will continue to stay laser-focused on product innovation."

HTC CEO Peter Chou was also supportive of the settlement. "HTC is pleased to have resolved its dispute with Apple, so HTC can focus on innovation instead of litigation,” said Chou.

The terms of the settlement are not being announced by either side.

Apple originally sued HTC in March 2010, alleging that HTC violated 20 of its patents surrounding the iPhone's interface, architecture and hardware.

That patent-infringement lawsuit against HTC arrived just as Google's Android operating system started to be incorporated into more and more HTC devices and as the smartphone wars were beginning to really pick up steam.

Carl Howe, an IT analyst with Yankee Group, said the settlement between Apple and HTC is evidence of a "new kinder, gentler Apple."

"I've been saying for quite a while that for as long as Tim Cook has been CEO, Apple has been less interested in pursuing legal assaults against competitors, choosing increasingly to find ways to settle differences out of court," said Howe. "With only a few exceptions for core technologies, notably Samsung, Apple has instigated no new IP lawsuits since Tim Cook has become CEO. Almost all of the litigation going on was filed when Steve Jobs was CEO or has been in response to other companies suing Apple first."

What that means, he said, is that "Cook has been focusing more on winning in the market, not in court."

In fact, he said, cross-licensing activity has increased recently for Apple patents, including with companies such as Nokia and the Swiss Railroad Co.

On the other hand, there are still patent lawsuits out there involving Apple, and the company continues to pursue them, said Howe. "Apple still intends to defend its core IP through existing filings which are already years old. When Apple introduced the iPhone in 2007, Jobs claimed that it had filed more than 200 patents to protect its innovations in its touch-screen interface, and that it intended to defend those UI and iPhone technology patents to prohibit outright copying of this technology."

Apple, Android Vendor HTC Settle Patent-Infringement Fights

The Apple-HTC agreement ending their legal fights is significant, Howe said. "I think this settlement indicates a softening of Apple's legal thrusts, but it's one that started more than a year ago. Most just haven't noticed it until now."

Dan Maycock, an analyst with Slalom Consulting, said the latest settlement "is a sign that the 'smartphone wars' are winding down and that Tim Cook is eager to end the patent fights. I imagine HTC is paying Apple as part of the [undisclosed] settlement, and is a sign that OEMs may try and avoid going to court in the future for patent conflicts. I'm not sure what this means for Samsung and Apple, but I imagine that legal situation isn't going to wind down there any time soon."

On Nov. 5, Apple's patent-infringement lawsuit against another rival, Google's Motorola Mobility unit, was thrown out of court by a federal judge in Madison, Wis, in a royalties dispute.

The new Apple HTC agreement comes as Android use has been going through the roof worldwide. Android hit 500 million device activations overall in mid-September, just as Apple's latest iPhone 5 was about to launch.

The U.S. market for feature-rich smartphones is still expanding at a rapid clip, with two-thirds of new mobile phone buyers opting for devices that can do far more than their old-style flip phones, according to a study from Nielsen released in July. Google's Android operating system is the beneficiary of this surge, although the iPhone still holds sway.

A recent IDC research study on Nov. 1 showed that Android was the operating system of choice on 75 percent of the 181.1 million smartphones that shipped around the world in the third quarter. That number is five times the 14.9 percent market share of Apple's iOS for the same period.

The IDC report shows remarkable progress for the four-year-old Android OS against competition that includes the widely popular Apple iOS, a drastically smaller BlackBerry market, Microsoft's multiple Windows Phone efforts and the rest of a straggling field.

Android was on 136 million smartphones shipped in the quarter, compared with 26.9 million smartphones shipped by Apple, according to the report. For Android, that was a 91.5 percent year-over-year jump from the 71 million Android smartphones shipped in the same quarter one year ago. Apple's iOS was the only other mobile operating system to have a double-digit market share for the quarter. Research In Motion's BlackBerry OS shipped on 7.7 million smartphones in the quarter, while Symbian shipped on 4.1 million units, according to IDC. Windows Phone 7 or Windows Mobile shipped on 3.6 million devices, while Linux shipped on 2.8 million units.

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