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

Posted:
in iPhone edited January 2014
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.
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Comments

  • Reply 1 of 90
    irnchrizirnchriz Posts: 1,533member
    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.
  • Reply 2 of 90
    shenshen Posts: 434member
    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!
  • Reply 3 of 90
    negafoxnegafox Posts: 480member
    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.
  • Reply 4 of 90
    cloudgazercloudgazer Posts: 2,161member
    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.
  • Reply 5 of 90
    apple ][apple ][ Posts: 8,360member
    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.
  • Reply 6 of 90
    bilbo63bilbo63 Posts: 285member
    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.
  • Reply 7 of 90
    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.
  • Reply 8 of 90
    lamewinglamewing Posts: 742member
    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.
  • Reply 9 of 90
    ahrubikahrubik Posts: 80member
    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.
  • Reply 10 of 90
    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.
  • Reply 11 of 90
    bilbo63bilbo63 Posts: 285member
    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.
  • Reply 12 of 90
    apple ][apple ][ Posts: 8,360member
    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.
  • Reply 13 of 90
    bageljoeybageljoey Posts: 1,724member
    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...
  • Reply 14 of 90
    cloudgazercloudgazer Posts: 2,161member
    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.
  • Reply 15 of 90
    addaboxaddabox Posts: 12,667member
    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?
  • Reply 16 of 90
    neiltc13neiltc13 Posts: 182member
    The two patents HTC allegedly infringes are incredibly general and describe functions that are surely not specific to mobile phones.
  • Reply 17 of 90
    apple ][apple ][ Posts: 8,360member
    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.
  • Reply 18 of 90
    welshdogwelshdog Posts: 1,537member
    Why don't people just invent their own shit instead of "borrowing" that of others?
  • Reply 19 of 90
    513513 Posts: 21member
    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...
  • Reply 20 of 90
    negafoxnegafox Posts: 480member
    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.
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