The long-standing legal battle between Apple and HTC could make some real headway with the U.S. International Trade Commission set to issue a key ruling next week that could potentially ban HTC products from coming to the U.S.
For more than a year, the two companies have been tussling over the illegal use of each other's technology. The battle represents a microcosm of Apple's larger complaint against Google's Android operating system. As such, the ITC ruling could have serious ramifications on all of Google's Android partners, many of which are engaged with Apple in their own suits.
A ruling from the ITC was expected tomorrow, but has been pushed back to December 14.
With the various lawsuits flying around, it's easy to be overwhelmed. So here's a crash course on the HTC-Apple spat and what it means for you.
Why are they fighting again? Apple set off a myriad of legal battles when it filed its first lawsuit against HTC in March 2010, accusing the Taiwanese company of illegally using technology commonly used in the iPhone. HTC shortly after countersued, accusing Apple of using its technology.
Of the four patents at issue, two are leaning in Apple's direction. They involve a "system and method for performing an action on a structure in computer-generated data," which allows a user to tap a number on the touch screen to bring up a dial-pad, and a "real-time signal processing system for serially transmitted data," which is a broader patent on system architecture.
Apple has since filed suit against other Android supporters, including major players such as Samsung Electronics.
So why is Apple picking fights with everyone?
Apple believes the Android operating system has copied a lot of what makes iOS special, and it's looking to defend its turf. Late founder and CEO Steve Jobs took a hard line when it came to defending its patents, and like other technology companies, Apple has been aggressive in protecting its intellectual property.
But the lawsuits are increasingly seen as a way for Apple to halt the momentum of Android. Google's operating system already dominates the market, and there doesn't seem to be any slowdown to its growth. Because Android is free to use, any company can pick it up and use it to power one of their products. That's meant a proliferation of low-cost devices, getting smartphones into the hands of budget-conscious consumers.
It's widely believed that Apple went after HTC first because it had enjoyed a lot of early success with its quick adoption of Android. The legal action was seen as a shot across the bow of Android and a warning to other supporters. In addition, HTC's patent position was weaker than some of its larger peers, including Samsung and Motorola Mobility.
While Apple is filing traditional lawsuits in U.S. federal courts (and elsewhere), the company has increasingly used the U.S. International Trade Commission as a venue for its legal battles.
What exactly is the U.S. International Trade Commission? The ITC is a federal agency that, as its name implies, deals with trade issues and the importation of products in the U.S. It deals with unfair trade practices such as copyright and patent infringement. It doesn't have the power to levy fines or other penalties; the agency's only weapon is to bar the importation of a product into the U.S.
In recent years, the agency has been a favorite of technology companies looking to settle legal disputes quickly. That's because it moves more quickly than the traditional district court. The ITC typically takes 18 months to come up with a decision, while a district court could run past two years or longer. In addition, the threat of a ban is severe enough that it forces companies to move quickly to settle their differences.
After a series of victories at the ITC, Broadcom got Qualcomm to wave the white flag and agree to a settlement and licensing fee. Since then, companies have increasingly used the ITC.
It's worthwhile to note that no company has actually had to suffer through the ban, since a resolution has always come before it is enforced.
So what about HTC? Most of the past disputes that go to the ITC have been about royalties and licensing fees. But Florian Mueller, a legal consultant who runs the blog Foss Patents, says Apple is less interested in payments and more focused on its strategic interests.
"A quick settlement between Apple and HTC would be the biggest surprise in the smartphone patent wars to date," Mueller said. "Apple won't settle until HTC brings patents to the table that pose a threat to Apple, and so far that hasn't happened."
Apple may want to go through with a ban, which would be a significant blow to HTC.
How does it look for HTC? HTC's track record hasn't been so hot. In July, the administrative law judge for the ITC ruled that the company violated the two aforementioned Apple patents. The administrative law judge provides a preliminary decision that acts as a suggestion to the six-member panel, which can make up its own mind.
One of HTC's main defensive plays was the acquisition of S3 Graphics, which claims Apple is illegally using its technology. But the ITC recently ruled that Apple wasn't violating S3's patents, essentially squashing HTC's defense. HTC is attempting to back out of its acquisition of the company.
What can HTC do? If HTC is found violating even one of the patents, it'll face the ban. But it doesn't take effect immediately. There is a 60-day presidential review period. HTC, meanwhile, likely has an appeal ready to be filed with the Court of Appeals for the Federal Circuit. That court would decide if the ban would go into effect, or be suspended during the appeals process.
Mueller added that depending on the severity of the ruling, HTC could still import phones and tablets that remove the offending features or find some alternative way of delivering that capability, known as a technical workaround.
"It's a safe guess that whatever the ruling is, HTC and Google will jointly claim they have a workaround in place," Mueller said. "What remains to be seen is what price they have to pay for it in terms of product quality and technical compatibility.
HTC, meanwhile, will continue to keep up its legal offensive against Apple. In September, the company filed another amended lawsuit in a district court and at the ITC with patents it acquired from Google.
What impact does this have on Google's other Android partners? A ruling in Apple's favor would cause ripples across the entire wireless industry, since an indictment of HTC's capabilities is essentially an indictment on all Android partners.
Samsung is perhaps the most embroiled with Apple in legal battles, which include U.S. district courts, the ITC, and courts in different parts of the world. Apple has, in some instances, been successful in getting its Galaxy Tab banned in select markets, forcing Samsung to come out with an alternative design. But recently, Samsung scored a victory when a U.S. District Court judge denied Apple's request to impose a ban on its products. Still, a victory over the HTC would be a setback for Android partners.
Google, meanwhile, has agreed to pay $12.5 billion to acquire Motorola Mobility and its patents, providing it with a legal ammo to defend itself against Apple.
So could this mean the end of Android? No. Apple has a long way to go before it can use its patents to beat back the dominance of Android.
"A win tomorrow would be important headway for Apple, but it needs to enforce many more patents to have a huge impact on Android as a whole and HTC in particular," Mueller said.
How does this affect you? In the worst-case scenario, the ITC enforces the ban, an appeal is denied, and Apple refuses to negotiate with HTC. While highly unlikely, such an event would mean that a large chunk of HTC's products would begin disappearing from the shelves.
If you're a fan of the Sprint Nextel Evo 3D or the Verizon Wireless Rezound, you would probably have to snap one up pretty quickly. Also, the future flagship HTC phones it was planning to launch here? They could be scrapped until new designs are approved.
Still, the worst-case scenario is definitely not the most probable one. So if you're holding out for that latest and greatest HTC phone to come out, chances are it'll still be able to hit our shores when it's ready.