ITC Rules Apple Does Not Infringe on 4 HTC/S3 Patents

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The U.S. International Trade Commission ruled on Monday that Apple does not infringe on four patents owned by HTC, reversing an earlier decision by the regulatory body. The case was originally brought against Apple by S3 Graphics, the company that owned the patents, and the original victory was part of the reason that HTC agreed to buy S3 for US$300 million.

Apple vs. HTC (& S3)

The four patents specific to this case involved a method for compressing textures, and the ITC had issued a preliminary ruling earlier in the year that found Apple’s Mac product line violated two of the four patents asserted.

At the time of the S3 purchase by HTC, it was widely believed that it was Apple’s more popular iOS devices that had been found to be infringing, making S3’s patent portfolio a powerful lever in the iPhone vs. Android patent war being waged by Apple. When it turned out to be Macs that were violating the patents, many observers began questioning the $300 million purchase price of S3.

Now that even that victory has been taken away, the S3 purchase appears even more questionable, but the reality is that there are many more patents in S3’s arsenal. Earlier in November, the ITC agreed to take up a separate case from HTC based on two additional S3patents the company alleges Apple is infringing upon. That case continues apace and Monday’s ruling has no effect on it.

HTC Chief Financial Officer Winston Yung defended the purchase after Monday’s setback, telling the Dow Jones news service that, “There are many [patents] that are very strong…we think the acquisition is justified because of all the patents.”

In addition to the above-mentioned patent actions initiated by HTC, Apple has its own patent infringement cases it has brought against the firm. The ITC has already ruled that HTC’s Android devices violate two of Apple’s patents, and in October, the trade agency officially rejected any public interest concerns about an import ban on those devices.

Still, HTC still has complaints based on patents it bought from Google, the other S3-related case, and other actions, meaning this battle is far from over.

Investors expressed their disappointment in HTC after the ruling was issued with a sharp sell-off. As of this writing, the stock closed at TWD600.00, a loss of 37.00 -5.81%, on almost twice the average volume. The company traded on the Taiwan Stock Exchange.

Shares in AAPL moved higher in the opening hours of trading in the U.S. As of this writing, the stock was trading at $373.76, up $4.75 (+1.29%).

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