Apple and HTC today announced jointly a settlement of all ongoing patent litigation between the two, in a licensing agreement with a 10-year term, any further terms of which were not released. The companies both released canned statements from execs expressing their pleasure at the arrangement and both mentioning “innovation” as key goals going forward. Many will be wondering: Might this be a sign that Apple’s hard-line stance with regards to its IP and patent litigation may be experiencing a general softening, and might we then see similar agreements coming soon in the more bitter rivalry between Apple and Samsung?
The answer to that lies in the history of the HTC/Apple legal action, and also in how HTC stacks up to Samsung as one of Apple’s competitors. First, looking at the trail of breadcrumbs detailing the back and forth litigation between Apple and HTC, you see that on the surface, Apple has indeed had some wins, delaying the release of HTC devices in the U.S. and getting phones banned from import to the country thanks to an ITC order.
The two companies were ordered by a Delaware court in May to begin discussing a potential settlement, but as early as September HTC was threatening to have the LTE iPhone and iPads banned for sale in the U.S., based on patents it holds regarding LTE technology. Meanwhile, Apple is said to have spent around $100 million on its efforts to get the import ban on HTC phones put in place, only to have it side-stepped via a relatively minor software change.
Apple also experienced a reversal in the U.K. in July, when that body ruled that HTC had not infringed four of its key patents, related to gesture-based unlocking, multitouch interfaces, multilingual keyboards and bounce-back transition animations. In other words, Apple was not seeing many definitive victories in its ongoing actions against HTC and was reportedly spending a lot on its efforts.
As for HTC, it acquired S3 Graphics specifically to provide itself with ammunition against Apple, thanks to patents S3 owns that related to graphics processing which were used to claim infringement by Macs, the iPhone and iPad. That $300 million acquisition began looking like a waste of money last November, however, when the ITC dismissed S3’s complaint against Apple. It was a costly mistake for a company that’s not exactly seen as being able to afford costly mistakes, given that HTC’s revenue and net profit have fallen for four quarters in a row, viewed against year-ago results.
Apple likely could have kept up its fight against HTC for a very long time, even with a number of reversals and $100 million expenditures on legal actions that bear no fruit. But HTC is a company that’s seen as being in an accelerating tailspin, and that’s no position from which to wage a massive, global legal battle with the wealthiest consumer electronics company in the world. If I had to guess, I’d wager that this isn’t a deal that overly favors HTC in terms of the structure of its terms.
That’s a very different picture than the one you’d paint if you were discussing Apple and Samsung. Apple has scored some significant wins in that battle, and so has Samsung. Samsung is a much more successful and profitable company, with recently quarterly performance that not only sets records but also beats analyst expectations. Apple has offered Samsung terms for settlement in the past, which Samsung found unpalatable, but unlike HTC, Samsung has the resources to avoid accepting any deals that it doesn’t fully agree with.
Apple has simple goals with its patent litigation: Make Android unattractive or untenable as a platform to handset OEMs, and shut down competitors they feel are building success on the back of their own IP. This settlement with HTC is essentially a sign that Apple considers it a competitor neutralized, and that’s far from the case with Samsung. So don’t expect a similar easing of tensions in patent litigation between those two, or between Apple and other companies where Cupertino hasn’t yet achieved one of those two goals mentioned above, statements regarding innovation notwithstanding.