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S3 Graphics' case against Apple collapses at ITC

The U.S. International Trade Commission says Apple is not infringing on patents held by S3 Graphics, a move that closes out a year and a half investigation.

The U.S. International Trade Commission today said that Apple is not violating patents held by S3 Graphics in its products and is terminating its investigation on the matter.

The decision follows a mixed ruling in July, where an ITC judge found Apple to be infringing on two of S3 Graphics' patents, while not infringing on two others. A final decision on the matter was due last week, with the ITC electing to postpone it (PDF) until today for reasons unknown.

"Having examined the record of this investigation, including the administrative law judge's final ID and the submissions of the parties and non-parties, the commission has determined to reverse the ALJ's finding of a violation of section 337 and find no violation," the group said in a statement.

HTC announced plans to purchase S3 Graphics and its patent portfolio in July, a move that sent the company's stock tumbling.

"We are disappointed, but respect the ITC's decision," Grace Lei, HTC's general counsel, said in a statement. "While the outcome is not what we hoped for, we will review the ruling once the commission provides it and will then consider all options, including appeal."

An Apple spokeswoman declined to comment on the decision.

S3 Graphics, a Fremont, Calif.-based graphic chipmaker, filed its complaint against Apple in May of last year, claiming that Apple's Mac desktop and laptop computers, along with the iPhone, iPod Touch, iPad, and some software were infringing on patents it holds.

Advanced Micro Devices attempted to intervene on the investigation and get it terminated in September, saying that it owned the patents S3 was citing and that it declined to use them as part of the matter. The ITC said that as part of today's decision, that motion has been denied.

S3 licenses its texture compression technology to companies such as Microsoft, Sony, and Nintendo. The company filed a separate complaint against Apple in late September, saying it was violating two of its patents on its iOS devices. The ITC agreed to begin an investigation on that case, which could wrap up by the end of next year.

A win for S3 would result in an exclusion order to keep Apple from importing and selling hardware and software that infringes on the company's patents within the United States. Apple is embroiled in similar patent-related battles with various companies in complaints with the ITC, including Samsung, Motorola Mobility, and Eastman Kodak.

Updated at 2:40 p.m. PT with comment from HTC and Apple.