Wednesday, December 14, 2011

ITC delays ruling on Apple v. HTC again -- new date: Monday, December 19

Last week the ITC postponed its final decision on Apple's first complaint against HTC to today (from December 6 to December 14). Now Reuters and the Wall Street Journal report that HTC told reporters the ITC has delayed its decision once again, this time postponing it to Monday, December 19, 2011. [Update] The ITC has meanwhile confirmed this delay on its website. [/Update]

With no reason known, I recommend not to read anything into this. It doesn't bode well or ill for any party. The ITC has a huge workload these days, and this is a case involving four distinct patents. In July, an Administrative Law Judge found HTC to infringe two Apple patents while holding at the same time that two others were not infringed. HTC requested a review of the decision with respect to those two patents, and Apple had asked for a contingent review, asking the ITC to take a look at the other two patents as well if it grants (as it quite expectedly did) HTC's request for a review.

On Tuesday, published this highly recommended article on the state of this investigation and the likely outcome. The article quotes a Houston University law professor who thinks the ITC is likely to affirm the July findings. I'm not so sure, but Apple is rather likely to win on at least one or two patents.

In my previous blog post I commented on Google chairman Eric Schmidt's very recent statement that an Apple win in this ITC case, which he accurately described as a finding against Android in general (not just HTC's own extensions like HTC Sense), "could limit your choice". Google is apparently afraid of a ruling that could be broad enough in technical scope that HTC and Google would either not be able to work around it at all or, at the very least, couldn't keep shipping Android without reducing the appeal of HTC's products as a result of technical limitations such as a removal of features or a loss of performance. While I expect both HTC and Google to react to any ITC ruling against Android with an announcement of a workaround, Google's former CEO and now-executive chairman either doesn't believe in the viability of a workaround or at least thinks it comes with a serious toll.

That said, I think HTC is a company with a great fighting spirit (sometimes a bit too much of it, perhaps) and the dispute between Apple and HTC is going to continue no matter what the ITC decides on Apple's first complaint. The companies have many more lawsuits going against each other in the U.S. and Apple is also suing HTC in Germany, a country in which patent infringement pretty much automatically results in injunctions.

I know that some analysts hope that after the ruling there could be a settlement rather soon, but I don't think so. Many analysts get these patent matters wrong. They see that every case gets settled at some point but that's the extent to which most of them understand this. Each case is different, and Apple will either have to fend off the fundamental threat that Android represents and ensure product differentiation or its own stock price will go down the tubes.

The key for HTC to settle with Apple is to assert patents against it that it really needs to license. In that case, they can talk about a cross-license. In the absence of that, Apple is going to continue to sue HTC in order to maximize its leverage. For example, it has a second ITC complaint going. A few months ago Google gave nine patents to HTC, which in turn sued Apple over them, but it's possible that this was too little, too late. Google waited almost a year and a half after Apple's first round of lawsuits against HTC before it did this. And neither Apple nor the ITC limited Mr. Schmidt's choice at the time. He has no one to blame but himself.

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