Monday, November 21, 2011

ITC dismisses S3 Graphics complaint against Apple: no violation

The US International Trade Commission has dismissed S3 Graphics' first complaint against Apple in its entirety.

The official notice states that "no violation [...] has been shown [...] and that the investigation is terminated". Today's notice does not specify for which reason the ITC overruled the Administrative Law Judge and found no violation. This could be based on a finding of invalidity of the asserted patent claims (from four different but somewhat related patents) and/or a finding of non-infringement and/or patent exhaustion (i.e., Apple not infringing because it uses graphics chips that are properly licensed to the asserted patent claims). More information should become available in the near term, but probably not today.

In early September I analyzed the questions raised by the Commission, the six-member body at the top of the ITC, at the outset of its review and concluded that Apple's iOS devices were very unlikely to be found to infringe any valid S3 Graphics patent claim, and I said that things could get better or worse for Apple's Macintosh computers. This is now the best possible outcome for Apple.

It's a setback for HTC, which is in the process of acquiring S3 Graphics and was hoping to gain leverage against Apple. HTC's own first ITC complaint against Apple is rather unlikely to result in a finding of any violation. An Administrative Law Judge made an initial determination of no violation, and the ITC staff (the Office of Unfair Import Investigations) does not appear to oppose the ALJ's position.

The Commission has a target date of December 6, 2011 for its ruling on Apple's first complaint against HTC. An Administrative Law Judge made an initial determination in July, according to which HTC was found to infringe two valid Apple patents.

This summer, Apple brought a second ITC complaint against HTC, and HTC and S3 Graphics brought second complaints against Apple.

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