HTC to “Reevaluate” S3 Purchase, Will Appeal ITC Ruling

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HTC is going to reevaluate its planned US$300 million purchase of S3 Graphics in the wake of an ITC decision handed down this week that said Apple is not in violation of four S3 patents. This was a rare reversal from the ITC, but it is being seen as a setback for HTC which had hoped to use S3’s patent portfolio to boost its standing in an ongoing patent battle with Apple, and HTC said that S3 will appeal the ruling.

HTC & S3 Graphics

An Artist’s Rendering of HTC’s Reevaluation Process

The company made the announcement via a statement, that said:

HTC is disappointed at the outcome of the recent ITC ruling that stated Apple did not infringe S3 Graphics’ patents. S3 Graphics will continue to appeal. HTC has made significant effort in preparing for these complicated legal proceedings, including a complete legal investigation and comprehensive report on patent and price evaluations. HTC had decided to acquire S3 Graphics based on the strong belief that evidences of patent infringement from Apple were clear and ITC ruled in its initial determination that Apple had infringed two patents from S3. In light of recent development, HTC will work closely in good faith with VIA Technologies and WTI Investment International to conduct holistic re-evaluation of the S3 Graphics acquisition. [Emphasis added]

What’s interesting about the bolded statement is that it conflicts with reality. Back in July, TMO reported that The U.S. Patent & Trademark Office had ruled that the patent claims S3 was asserting weren’t patentable due to prior art, and that this ruling had been issued some five days before HTC announced the decision to buy S3.

While the ITC is not bound to follow the USPTO’s rulings in such matters, it is common to do so, and the infringement claims being eventually dismissed was all but a foregone conclusion before the purchase was announced. It’s hard to justify that reality with the notion that HTC had a “strong believe that evidence of patent infringement from Apple were clear.”

That will be for the lawyers to figure out, though, as S3’s current owners, VIA Technologies and WTI Investment International, are likely to be keen on HTC honoring the terms of the deal as negotiated.

Then again, VIA Technologies and HTC share something in common, namely Cher Wang. Mrs. Wang is the chairperson of both HTC and VIA Technologies. Her husband, Wen Chi Chen, is the CEO of VIA Technologies, so maybe they’ll be able to work something out on this whole S3 Graphics kerfuffle.

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