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Apple's victory over HTC may set high royalty precedent for Android devices

post #1 of 91
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Apple's initial legal victory over rival HTC in a patent infringement suit could pave the way for Apple to collect high royalties from devices running Google Android, according to one analysis.

Mike Abramsky with RBC Capital Markets believes that Apple has the upper hand over HTC, which is a smaller handset maker with a limited portfolio of intellectual property. As such, Apple could potentially push for an injunction and ask the U.S. International Trade Commission to bar the import of HTC handsets.

Instead, Abramsky believes it's more likely that Apple will try to establish a high royalty precedent on Android devices. He said the iPhone maker could garner a deal that's similar to or even higher than the $5 per unit that Microsoft collects on HTC Android devices.

Microsoft's licensing deal with HTC is so lucrative, it's caused some pundits to speculate that the Redmond, Wash., software giant makes more money off of Google's Android than it does from its own Windows Phone 7 platform.

By establishing such a high precedent, Apple's hypothetical licensing fees could constrain other, larger Android device makers like Motorola and Samsung. Those companies are up to 15 times larger, and they have much deeper intellectual property portfolios.

The two patents HTC was said to be infringing upon are also part of a separate lawsuit Apple has filed against Motorola. The company is also suing Samsung for allegedly copying the look and feel of the iPhone and iPad.

An ITC judge ruled on Friday that HTC's handsets illegally violate two patented inventions owned by Apple: U.S. Patent Nos. 5,946,647 and 6,343,263. The judge's initial ruling is still subject to review by the full commission.

A settlement with large royalty payments would put Apple in a position to collect significant revenue from Android device makers. In addition to larger companies like Motorola and Samsung, Abramsky believes that Apple would also be positioned to collect royalties from smaller Asian companies like ZTE and Huawei.

HTC could request that Google revise or remove infringing features from the Android mobile operating system, but such changes would likely require significant time. Because of that, Abramsky believes HTC is more likely to reach a settlement as well.

Both parties can settle at any time, but if HTC were to continue its legal fight, the issue could drag on for years. The full six-judge commission will review the initial ruling by early December, but HTC has already vowed to appeal.

Apple and another rival, Nokia, had an ongoing legal battle with the ITC, in which the commission's staff sided with Nokia in a preliminary review. Apple and Nokia opted to settle out of court, and Apple is now a licensee of Nokia's patents for an undisclosed ongoing fee.
post #2 of 91
If these patents are upheld after appeal then a licensing deal would be put in place. Its incredibly unlikely that android devices would be taken off of the market by HTC whilst the investigated a workaround.

It would also set a precedent for Apples patents and they would then seek licensing agreements with other android manufacturers. Apple themselves pay royalties on each iPhone and would allow them to setup cross licensing deals to help counter and reduce the outgoings from current licensing. HTC themselves may find it easier to cross license parents which they recently picked up in their purchase of S3 graphics than to fight the case any further.
post #3 of 91
At this rate, in another 8-9 years, the only people not making money off of Android phones will be the manufacturers.

Sounds like a phone OS i want to sell!
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post #4 of 91
I'd be very surprised if these patents survive any challenge to invalidate them. I doubt much will come from these patents in the long-term.
post #5 of 91
Quote:
Originally Posted by Negafox View Post

I'd be very surprised if these patents survive any challenge to invalidate them. I doubt much will come from these patents in the long-term.

In the long-term as the saying goes, we are all dead. If Apple gets awarded an injunction based on these patents then it won't matter if HTC could conceivably get them invalidated years down the line - HTC will have to license just to stay in the game. Waiting years for invalidation efforts to pay off may simply not be an option.

I'm saying this as somebody who firmly believes that at least the first of these patents ought not be found valid.
post #6 of 91
Excellent! Apple should continue putting extreme pressure on all of the inferior Android copycats and the illegal copyright infringers. Keep them in a chokehold and do not release until they pay up. I want to see Apple grab all Android bastards by their puny, impotent balls and insert them into a steel vice grip. Apple has every right to protect it's intellectual properties and patents. Anybody who says otherwise is most likely a loser socialist.
post #7 of 91
It's not just Apple that is gunning for Android.

Google's Android has allegedly swiped billions of dollars of intellectual property from Oracle and Microsoft in addition to Apple. Oddly enough those companies aren't cool with that.

I'm betting that things are about to get very messy for Android.
post #8 of 91
Quote:
Originally Posted by shen View Post

At this rate, in another 8-9 years, the only people not making money off of Android phones will be the manufacturers.

Sounds like a phone OS i want to sell!

Yes, I thought this would happen to Android eventually. This is the price one pays for not being original.

I was hoping that this would be the moment that people realise WebOS is a better, more reliable alternative to iOS than Android, but sadly HP has f*cked things up (as they usually do), by not really supporting their own products.

If the TouchPad had arrived earlier and in better form we'd all be reading articles right now about how all the computer manufacturers are "dropping Android for WebOS." What a shame.
post #9 of 91
Quote:
Originally Posted by Apple ][ View Post

Excellent! Apple should continue putting extreme pressure on all of the inferior Android copycats and the illegal copyright infringers. Keep them in a chokehold and do not release until they pay up. I want to see Apple grab all Android bastards by their puny, impotent balls and insert them into a steel vice grip. Apple has every right to protect it's intellectual properties and patents. Anybody who says otherwise is most likely a loser socialist.

I guess you forget that Apple has stolen/misused others' patents and has had to pay out. Apple is NO BETTER than any of these other companies when it comes to patent infringement.

So will Apple go after MS next if they start to gain more market share?

From the anger of your post, I think you have more to worry about than a phone.
post #10 of 91
Quote:
Originally Posted by Apple ][ View Post

Excellent! Apple should continue putting extreme pressure on all of the inferior Android copycats and the illegal copyright infringers. Keep them in a chokehold and do not release until they pay up. I want to see Apple grab all Android bastards by their puny, impotent balls and insert them into a steel vice grip. Apple has every right to protect it's intellectual properties and patents. Anybody who says otherwise is most likely a loser socialist.

If that ever happens HP will come around with the Palm portfolio in hand and start doing the same to Apple. If you think Apple isn't one of the copy cats you're sorely mistaken.

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post #11 of 91
Two, four, six, eight. Against which company will Apple litigate? Apple needs to deliver a crippling blow to Android growth as soon as possible which should be able to stall it for a while if it can put a higher cost for using Android for a number of smartphone vendors which in turn my increase the cost of Android smartphones to carriers and consumers. I can't wait to see the day when the Android free ride ends. At that time we shall see if Android is actually worth using when companies have to pay for it.
post #12 of 91
Quote:
Originally Posted by lamewing View Post

I guess you forget that Apple has stolen/misused others' patents and has had to pay out. Apple is NO BETTER than any of these other companies when it comes to patent infringement.

So will Apple go after MS next if they start to gain more market share?

From the anger of your post, I think you have more to worry about than a phone.

Funny, I though the poster was just being sarcastic.

Where Apple is proven to unlawfully use another company's IP, they need to be held accountable too that's the way the game is played. People sue Apple all of the time. Sometimes it's legit and some times it's not. That is what the courts decide.
post #13 of 91
Quote:
Originally Posted by lamewing View Post

I guess you forget that Apple has stolen/misused others' patents and has had to pay out. Apple is NO BETTER than any of these other companies when it comes to patent infringement.

So will Apple go after MS next if they start to gain more market share?

From the anger of your post, I think you have more to worry about than a phone.

Apple had to recently pay Nokia because of some patents. Fair is fair and anybody is free to sue Apple if they wish, and Apple is also free to do the same.

And I am hardly angry. I don't care much for sports, and I don't have any sports team which I cheer on and I see this as sports (and war), and I am rooting for Apple. This is entertainment.
post #14 of 91
Quote:
Originally Posted by AppleInsider View Post

Microsoft's licensing deal with HTC is so lucrative, it's caused some pundits to speculate that the Redmond, Wash., software giant makes more money off of Google's Android than it does from its own Windows Phone 7 platform.

Is this really such a stretch? Much to their stockholders' dismay, MS is still in the foothold stage of the mobile market. I'd be surprised if any of their mobile division is profitable!

Meanwhile, royalty payments are pure profit--no R and D, no component costs, no assembly, no packaging...
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post #15 of 91
Quote:
Originally Posted by AHrubik View Post

If that ever happens HP will come around with the Palm portfolio in hand and start doing the same to Apple. If you think Apple isn't one of the copy cats you're sorely mistaken.

And Apple will pull out it's Newton portfolio

I suspect there is some existing cross licensing in place between Apple and Palm, possibly dating back to 2007 when Rubinstein left Apple for Palm.
post #16 of 91
Quote:
Originally Posted by AHrubik View Post

If that ever happens HP will come around with the Palm portfolio in hand and start doing the same to Apple. If you think Apple isn't one of the copy cats you're sorely mistaken.

What does Apple litigating against Android handset makers have to do with HP and Palm? And if Apple is "one of the copycats", why did the entire mobile handset industry shift to Apple's model only after the iPhone was released?
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post #17 of 91
The two patents HTC allegedly infringes are incredibly general and describe functions that are surely not specific to mobile phones.
post #18 of 91
Quote:
Originally Posted by AHrubik View Post

If that ever happens HP will come around with the Palm portfolio in hand and start doing the same to Apple. If you think Apple isn't one of the copy cats you're sorely mistaken.

I remember watching Steve Jobs standing there on stage during the iPhone introduction saying "and boy have we patented it! (audience laughing)".

As I wrote in my previous post to somebody else, if Apple is guilty of violating somebody's patents, then the people who hold those patents should sue Apple. And Apple should also do the same to anybody who has violated any of Apple's patents, and we'll see who is still standing in the end.
post #19 of 91
Why don't people just invent their own shit instead of "borrowing" that of others?
post #20 of 91
Those 2 patents are 17 years and 15 years old. So they will expire in 3 and 5 years, cool.

Don't know if you are aware of this, but writing " http://www.appleinsider.com " in this text field, and if the forum software (here vBulletin Solutions) recognize it as an URL, Apple could sue them too.

Yeah...
post #21 of 91
Quote:
Originally Posted by WelshDog View Post

Why don't people just invent their own shit instead of "borrowing" that of others?

It's not borrowing if it's obvious. The first patent is definitely obvious from a software development standpoint.
post #22 of 91
Quote:
Originally Posted by 513 View Post

Those 2 patents are 17 years and 15 years old. So they will expire in 3 and 5 years, cool.

Don't know if you are aware of this, but writing " http://www.appleinsider.com " in this text field, and if the forum software (here vBulletin Solutions) recognize it as an URL, Apple could sue them too.

Yeah...

Technically that probably doesn't infringe because the UI is running on a different computer system to the detection software - the detection is happening server side. Still breathtakingly broad though.
post #23 of 91
Apple does not license it IP as a business for income. It will license to encourage standards valuable to it, e.g., H.264, FaceTime, bonjour, etc. I think Apple will demand big penalty and force HTC Android et al to develop different OS, similar to MS Windows 7, WebOS, and RIM. Open source and free is OK, but Google was played fast and loose on IP. It is also leaving HW OEMs hanging.
post #24 of 91
Let's see. Carriers pay about $200 less for an Android device versus iPhone and average over $2400 revenue during the contract of the device.

I'm not sure how another $5 per Android device spells disaster for everyone but Apple.
post #25 of 91
Quote:
Originally Posted by Bageljoey View Post

Is this really such a stretch? Much to their stockholders' dismay, MS is still in the foothold stage of the mobile market. I'd be surprised if any of their mobile division is profitable!

Meanwhile, royalty payments are pure profit--no R and D, no component costs, no assembly, no packaging...

Uhm, I disagree. There certainly are R and D costs involved. That's what this is all about. Using your R & D to innovate and then enjoy the advantages of that innovation. The advantage can be securing your position in the marketplace or by way of a royalty payment. It's not right to scam someone's IP and that goes for Apple too.
post #26 of 91
Quote:
Originally Posted by Apple ][ View Post

As I wrote in my previous post to somebody else, if Apple is guilty of violating somebody's patents, then the people who hold those patents should sue Apple. And Apple should also do the same to anybody who has violated any of Apple's patents, and we'll see who is still standing in the end.

Obviously that's the situation, and nobody should blame Apple for patenting everything that they can legally get away with, and litigating based on any patent that they can get. It's certainly not like they're beating up on small independent software makers here.

But you can't expect to hear a lot of cheering from software developers either. It's kinda like we're back in WW-1 watching our own soldiers use poison gas on the enemy. We may hope our side wins but we also hope that the weapons get banned.
post #27 of 91
Quote:
Originally Posted by cloudgazer View Post

It's kinda like we're back in WW-1 watching our own soldiers use poison gas on the enemy. We may hope our side wins but we also hope that the weapons get banned.

Interesting thought.
post #28 of 91
Quote:
Originally Posted by shawnb View Post

Let's see. Carriers pay about $200 less for an Android device versus iPhone and average over $2400 revenue during the contract of the device.

I'm not sure how another $5 per Android device spells disaster for everyone but Apple.

$5 to the manufacture is $10 to wholesale and $20 to retail. It might not eat up a $200 delta entirely, but it puts more pressure on margins for the competitor. Loss of margins means less money for advertising, and an uphill battle to make your profit in volume.
post #29 of 91
Quote:
Originally Posted by AHrubik View Post

If that ever happens HP will come around with the Palm portfolio in hand and start doing the same to Apple. If you think Apple isn't one of the copy cats you're sorely mistaken.

Quote:
Originally Posted by cloudgazer View Post

And Apple will pull out it's Newton portfolio

Funny how folks conveniently leave out a piece of history a to suit their iHating agenda. The Android community seems to be on AI today. As much as I like competition, I personally think Android takes shortcuts with their development (copying) and is coming back to bite them in the backside. But then again, Android is made by geeks, for geeks, so they have no problem taking bits of codes and ideas from other folks without regard to IP.
post #30 of 91
At times like this I always refer back to this gorgeous web of legal action, write the whole industry off as a sorry mess and try to get on with my day.

post #31 of 91
Quote:
Originally Posted by 513 View Post

Those 2 patents are 17 years and 15 years old. So they will expire in 3 and 5 years, cool.

Don't know if you are aware of this, but writing " http://www.appleinsider.com " in this text field, and if the forum software (here vBulletin Solutions) recognize it as an URL, Apple could sue them too.

Yeah...

The issue here is the browser is a free software. There is no need for Apple to sue for monetary damages. Because Apple is not making money from the Safari browser too.

Also, if Apple sued the browser it will affect the Windows OS. Apple and Microsoft has cross licensed their patents in the 1990s.
post #32 of 91
I think everybody is trying to mak a big deal out of this when in the end it's really nothing. e.g. the $5 HTC gives MSFT per device is like 2-3% of the manufacturing cost of the device. So what if HTC ends up giving another $5 to AAPL? It's still only $10 per device, likely just 5% of manufacturing cost. I mean, the inflation of China's wage is probably a much bigger threat to HTC than these patent suits.
post #33 of 91
Quote:
Originally Posted by neiltc13 View Post

The two patents HTC allegedly infringes are incredibly general and describe functions that are surely not specific to mobile phones.

The judge in this case found otherwise. I suspect his opinion is based on the facts and knowledge of patent law.
post #34 of 91
Quote:
Originally Posted by sflocal View Post

But then again, Android is made by geeks, for geeks, so they have no problem taking bits of codes and ideas from other folks without regard to IP.

Most geeks would see a big difference between copying code (bad unless explicity licensed) and copying ideas (generally good).

All modern OSes, and most productivity apps are built on copied ideas - the entire software industry ran on copied ideas until the early 90s when it began to digest the 1980s supreme court ruling that made software patents practicable. Copied ideas are so important to software development that an entire movement built up around them in the 90s trying to identify them and calling them 'patterns'.
post #35 of 91
Quote:
Originally Posted by neiltc13 View Post

The two patents HTC allegedly infringes are incredibly general and describe functions that are surely not specific to mobile phones.

Quote:
Originally Posted by Doctor David View Post

The judge in this case found otherwise. I suspect his opinion is based on the facts and knowledge of patent law.

No he didn't because generality isn't necessarily a problem for patents. The requirements are novelty, inventive step or nonobviousness, utility and industrial applicability.

The patents arguably are extremely general and definitely are not specific to mobile phones, mobile phones aren't even mentioned in the embodiment sections.

Unfortunately all that does is open up a larger potential space of prior art, but as Apple found out recently against a patent troll - even huge amounts of prior art may not be enough to convince a judge.
post #36 of 91
Quote:
Originally Posted by lamewing View Post

I guess you forget that Apple has stolen/misused others' patents and has had to pay out. Apple is NO BETTER than any of these other companies when it comes to patent infringement.

You're missing a critical point in your comment. Violation of patent law does not require stealing or misuse. One can legitimately solve a problem and inadvertently violate a patent. That is one of several arguments against certain software patents; programmers are inventing new "machines" to solve large and small tasks all the time. Many approaches are quite obvious to us, though "novel".

The software patent system is out of whack because patents have been granted for solutions that almost any programmer could come up with, if given a particular problem to solve. Some of these patents seem to cover IP which is quite mundane and pedestrian.

I would suspect for many patented software solutions, one would find thousands of examples of existing code which performs the same or similar to the algorithm patented. These "obviousness" and "prior art" arguments that have not yet prevailed.
post #37 of 91
Quote:
Originally Posted by cloudgazer View Post

Most geeks would see a big difference between copying code (bad unless explicity licensed) and copying ideas (generally good). ...

This is partially what fuels the debate though.

Normal, (non-geeks) would argue that this is entirely backwards. Stealing other people's ideas is generally the thing that most people think should be most illegal and is what patent law is intended to protect us from. Outside of computer hackers, it's never been the case that stealing ideas has been considered "generally good."

On the other hand, most people also see "code" as just a bunch of language that describes the idea and therefore something that anyone should be able to copy any time they want. Code is generally seen as the same as a paragraph describing an idea rather than an idea or innovation itself.

If what you say is true about how geeks view things, then they are operating with opposite assumptions than those the rest of the population employs in these cases. It's also worth noting that the patent office sees things closer to the way the general population thinks than they do the way the "geeks" think.
post #38 of 91
Quote:
Originally Posted by cloudgazer View Post

No he didn't because generality isn't necessarily a problem for patents. The requirements are novelty, inventive step or nonobviousness, utility and industrial applicability.

The patents arguably are extremely general and definitely are not specific to mobile phones, mobile phones aren't even mentioned in the embodiment sections.

Unfortunately all that does is open up a larger potential space of prior art, but as Apple found out recently against a patent troll - even huge amounts of prior art may not be enough to convince a judge.

It seems general because the patents are more thant 15 years old. The idea has been implemented in the PC browsers.
post #39 of 91
Quote:
Originally Posted by Negafox View Post

... The first patent is definitely obvious from a software development standpoint.

No, it's not. The definition of "obvious" is variant over time.

At the time it was patented, it was not "obvious," or it wouldn't have been granted.
post #40 of 91
Quote:
Originally Posted by lamewing View Post

I guess you forget that Apple has stolen/misused others' patents and has had to pay out. Apple is NO BETTER than any of these other companies when it comes to patent infringement....

Such a broad and completely unsupported statement! Try leaving the hyperbole at home next time.

Apple is definitely *not* the same as other companies when it comes to borrowing ideas and primarily thinks up everything on it's own rather than even "borrowing" (let alone outright stealing) from others.

Case in point: Take a look at Samsung's latest product

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