Apple's patent 'warning shots' prove disruptive for handset makers
Before Apple publicly sued HTC, the iPhone maker privately had "blunt conversations" with other smartphone companies, amounting to legal threats that have proven disruptive to the roadmaps of would-be iPhone killers, according to a new report.
In a note to investors Tuesday, analyst Yair Reiner with Oppenheimer Research said industry checks indicate that, starting in January, Apple launched a level of discussions with top handset makers to "underscore its growing displeasure at seeing iPhone-related IP infringed."
"The lawsuit filed against HTC thus appears to be Apple's way of putting a public, lawyered-up exclamation point on a series of blunt conversations that have been occurring behind closed doors," Reiner wrote.
He added: "Rival software and hardware teams are going back to the drawing board to look for work-arounds. Lawyers are redoubling their efforts to gauge potential defensive and offensive responses. And strategy teams are working to chart OS strategies that are better hedged."
Apple began actively protecting its patents, the note alleges, in January 2009, when a conference call took place in which the iPhone maker said it would not stand for having its intellectual property -- specifically, multi-touch functionally -- "ripped off." Apple reportedly threatened to use "whatever weapons we have at our disposal."
The threats worked, as handset manufacturers declined to add multi-touch functionality to their phones that were released soon after. But as the year progressed, a number of companies began to release multi-touch capable devices, which caught the ire of Apple.
The analyst said Apple's conversations have created "an effective oil slick" for competitors, as the Cupertino, Calif., company has clearly stated it intends to protect all of the aspects of the iPhone that make it unique, including touch gestures.
Apple's moves have caused some phone manufacturers, Reiner said, to reconsider their wholehearted embrace of the Android mobile operating system platform created by Google.
"The HTC suit, which is recognized as a proxy battle against Google, is causing OEMs to re-examine the strategy of relying overmuch on Android, lest it prove vulnerable in terms of core IP," he wrote. "This concern comes atop pre-existing misgivings about Google's end-game in wireless. (to commoditize the OEMs? To arrogate all value-added services?)"
The conflict, Reiner said, has created an opportunity for Microsoft's newly unveiled Windows Phone 7 Series, due to launch this fall. Microsoft has also told potential customers it would support them legally if they, like HTC, were hit with a lawsuit over intellectual property.
Reiner also cautioned that Apple's approach could backfire if taken too far, as entering into a legal battle with some of the biggest names in the cell phone business would be unwise.
"Apple's legal maneuvering appears to have temporarily retarded its rivals' hot pursuit of the iPhone," Reiner said. "But it also brings Apple a step closer to a head-on legal confrontation with an array of gargantuan adversaries. Now that it has made its point, Apple may want to go back to saber rattling."
Last week, Apple sued HTC over the alleged infringement of 20 patents related to the iPhone's user interface, underlying architecture and hardware. Apple cited some of HTC's most popular handsets, including the Google Nexus One, as infringing on patents it owns. The lawsuit made a clear distinction between Android phones and those powered by Windows Mobile.
Apple is also engaged in a legal battle with smartphone giant Nokia, as Nokia first sued Apple last October, while the iPhone maker countersued in December. Nokia has accused Apple of violating patents related to GSM and wireless LAN technology, while Apple has alleged that its Finnish rival has infringed on 13 patents it owns.
In a note to investors Tuesday, analyst Yair Reiner with Oppenheimer Research said industry checks indicate that, starting in January, Apple launched a level of discussions with top handset makers to "underscore its growing displeasure at seeing iPhone-related IP infringed."
"The lawsuit filed against HTC thus appears to be Apple's way of putting a public, lawyered-up exclamation point on a series of blunt conversations that have been occurring behind closed doors," Reiner wrote.
He added: "Rival software and hardware teams are going back to the drawing board to look for work-arounds. Lawyers are redoubling their efforts to gauge potential defensive and offensive responses. And strategy teams are working to chart OS strategies that are better hedged."
Apple began actively protecting its patents, the note alleges, in January 2009, when a conference call took place in which the iPhone maker said it would not stand for having its intellectual property -- specifically, multi-touch functionally -- "ripped off." Apple reportedly threatened to use "whatever weapons we have at our disposal."
The threats worked, as handset manufacturers declined to add multi-touch functionality to their phones that were released soon after. But as the year progressed, a number of companies began to release multi-touch capable devices, which caught the ire of Apple.
The analyst said Apple's conversations have created "an effective oil slick" for competitors, as the Cupertino, Calif., company has clearly stated it intends to protect all of the aspects of the iPhone that make it unique, including touch gestures.
Apple's moves have caused some phone manufacturers, Reiner said, to reconsider their wholehearted embrace of the Android mobile operating system platform created by Google.
"The HTC suit, which is recognized as a proxy battle against Google, is causing OEMs to re-examine the strategy of relying overmuch on Android, lest it prove vulnerable in terms of core IP," he wrote. "This concern comes atop pre-existing misgivings about Google's end-game in wireless. (to commoditize the OEMs? To arrogate all value-added services?)"
The conflict, Reiner said, has created an opportunity for Microsoft's newly unveiled Windows Phone 7 Series, due to launch this fall. Microsoft has also told potential customers it would support them legally if they, like HTC, were hit with a lawsuit over intellectual property.
Reiner also cautioned that Apple's approach could backfire if taken too far, as entering into a legal battle with some of the biggest names in the cell phone business would be unwise.
"Apple's legal maneuvering appears to have temporarily retarded its rivals' hot pursuit of the iPhone," Reiner said. "But it also brings Apple a step closer to a head-on legal confrontation with an array of gargantuan adversaries. Now that it has made its point, Apple may want to go back to saber rattling."
Last week, Apple sued HTC over the alleged infringement of 20 patents related to the iPhone's user interface, underlying architecture and hardware. Apple cited some of HTC's most popular handsets, including the Google Nexus One, as infringing on patents it owns. The lawsuit made a clear distinction between Android phones and those powered by Windows Mobile.
Apple is also engaged in a legal battle with smartphone giant Nokia, as Nokia first sued Apple last October, while the iPhone maker countersued in December. Nokia has accused Apple of violating patents related to GSM and wireless LAN technology, while Apple has alleged that its Finnish rival has infringed on 13 patents it owns.
Comments
"But it also brings Apple a step closer to a head-on legal confrontation with an array of gargantuan adversaries. Now that it has made its point, Apple may want to go back to saber rattling."
Nonsense. Saber-rattling is non-credible unless you can back it up with action.
'Gargantuan'? Who specificially?
Apple's cash pile alone is more than the market cap of many of these 'gargantuan adversaries.'
Apple not having a legal strategy would be ridiculous. All their work in all areas follows very precise strategies.
Nonsense. Saber-rattling is non-credible unless you can back it up with action.
'Gargantuan'? Who specificially?
Apple's cash pile alone is more than the market cap of many of these 'gargantuan adversaries.'
I can't believe they get paid to say this stuff...
Hardly surprising!
Apple not having a legal strategy would be ridiculous. All their work in all areas follows very precise strategies.
apple really doesn't want to get into a 'multitouch' legal nightmare. they will have their patent invalidated. this is just scare tactics. if they proceed this could really back fire.
I'm sure you are an expert in patent law, right
You should've been here when Apple sued Psystar. Suddenly everyone became an expert in anti-trust laws
Nonsense. Saber-rattling is non-credible unless you can back it up with action.
'Gargantuan'? Who specificially?
Apple's cash pile alone is more than the market cap of many of these 'gargantuan adversaries.'
Apple's cash is about 24B, 200B market cap.
Google about 24B (178B cap), MSFT about 33B in cash (250B cap). Nokia's cash figures I couldn't find in 3 minutes, but their market cap is 50B.
--update--
Nokia's cash seems to be 12B if I read forbes correctly (but that's not necessarily the same data as the other results from yahoo finance. Interesting is Nokia and Apple comparison from Forbes: Total current Assets: 33,8B and 33,5B respectively.
So there's a few Gargantuan "who specifically"s.
Regs, Jarkko
I keep thinking of all the things an iphone does that's common among devices that existed before it, and it seems like someone could loosely apply the same logic to Apple. For instance, copy and paste. It's handled different than in WM, but the outcome is the same. If multi-touch was handled differently, but the outcome is the same, and Apple sues, then this logic could be twisted on them. That's why I think they're confident in knowing they were directly ripped off.
I'm still fuzzy on whether or not the final outcome of code is what a company can be taken to court over, or the actual code it's self (being a complete ripoff.)
You should've been here when Apple sued Psystar. Suddenly everyone became an expert in anti-trust laws
For a company with a 40 billion dollar war chest it took them a long time to shutdown a bunch of guys in garage. No wonder HTC and Nokia aren't exactly running scared.
Chairman Mao has released his goons and cronies to lay the smackdown on those who infringe on the People's Republic of Apple technologies. Seek and destroy!
Chairman Mao has been dead for sometime now. You might be surprised to know that Apple does a lot of business in the PRC.
For a company with a 40 billion dollar war chest it took them a long time to shutdown a bunch of guys in garage. No wonder HTC and Nokia aren't exactly running scared.
Yeah.. because Apple was the one setting the court dates not the judge
Go Apple!
Seems to me that Apple learned lessons from the Mac GUI back in the 1980s and therefore they are not doomed to see history repeat itself. They've once again re-invented the UI of a major electronic device, but this time Apple will be the ones to fully monetize this valuable innovation. So you got it right: Go Apple!
apple really doesn't want to get into a 'multitouch' legal nightmare. they will have their patent invalidated. this is just scare tactics. if they proceed this could really back fire.
Only if you take them as literal "multi-touch" ability. It is more than likely, especially based on some of the patents floating around (and the ones in the war-chest from 1999+ when they bought that multi-touch company), that these patents will be related to gestures and specific interactions with the device through the use of multi-touch.
For one, I'd expect the whole keyboard "pop-up letter" thing to be one of their patents along with the concept of adaptive hit-zone resizing dependant upon previous characters typed etc.
The company Apple bought had been in the multi-touch game for a very long time, before Jeff Han (or whatever his name is) was demoing his stuff.
So I guess they're pretty confident that the multi-touch stuff was ripped off directly from their code.
That would be a copyright issue, not patent.
A patent would be on the method of doing something, and therefore enforceable should it be done the same way, but with different code to Apple's.
Yeah.. because Apple was the one setting the court dates not the judge
Liberal quoting negates the value of the ignore list.
apple really doesn't want to get into a 'multitouch' legal nightmare. they will have their patent invalidated. this is just scare tactics. if they proceed this could really back fire.
You do know that Apple bought Fingerworks and all of their patents, do you ?>
For instance, copy and paste. It's handled different than in WM, but the outcome is the same.
You further demonstrated your misunderstanding of patents. The outcome is irrelevant, it's the how it's handled (implemented) that matters.
I will also say, I am no patent lawyer, or even a lawyer for that matter.