Apple wins patent victory over HTC, which faces looming import ban

In a limited victory for Apple, International Trade Commission rules against HTC on 1 of 10 counts of patent infringement. Now HTC faces an April 2012 deadline to invent a work-around.

Declan McCullagh Former Senior Writer
Declan McCullagh is the chief political correspondent for CNET. You can e-mail him or follow him on Twitter as declanm. Declan previously was a reporter for Time and the Washington bureau chief for Wired and wrote the Taking Liberties section and Other People's Money column for CBS News' Web site.
Declan McCullagh
3 min read

In a high-profile but strikingly limited legal victory for Apple, the U.S. International Trade Commission ruled today that HTC has violated only one of the Cupertino, Calif.-based company's patents.

The ITC--a quasi-judicial body that opponents of a Hollywood-backed copyright bill have proposed as a home for a new piracy court--said it would impose an import ban on some of HTC's products. But that won't take effect until April 19, 2012, giving HTC, Google, and other partners time to remove certain features or figure out technical work-arounds that don't infringe on the patent.

Taiwan-based HTC said today it will remove that feature from "all of our phones" soon, meaning the ITC's ruling (PDF) will have little practical effect.

Apple claims HTC's phones illegally use patented features found in the iPhone.
Apple claims HTC's phones illegally use patented features found in the iPhone. Apple

The ruling is hardly a complete victory for Apple: in March 2010, the company filed a complaint saying HTC violated 10 of its patents. In a preliminary ruling in June, an ITC administrative law judge found only two violations, and today's ruling narrows the violation to only one of the original 10 patents.

Pierre Ferragu, a senior analyst at the London-based Sanford C. Bernstein research firm, said "this ruling will represent absolutely no disruption at all to HTC's business in the U.S."

In a statement to CNET, HTC general counsel Grace Lei said: "We are gratified that the commission affirmed the judge's initial determination on the '721 and '983 patents, and reversed its decision on the '263 patent and partially on the '647 patent. We are very pleased with the determination and we respect it. However, the '647 patent is a small UI experience and HTC will completely remove it from all of our phones soon."

Another option for HTC would be to create a technical work-around that doesn't run afoul of the patent in question, which deals with "data tapping" techniques that automatically format documents to allow, for instance, a dialer program to pop up when a phone number appears.

In a post on the FOSS Patents blog, Florian Mueller, who is critical of software patents, notes:

The import ban won't relate to HTC Android products that don't implement that feature, or that implement it in ways not covered by those patent claims. If Google can implement this popular feature, which users of modern-day smartphones really expect, without infringing on the two patent claims found infringed, this import ban won't have any effect whatsoever.

The patent in question, 5,946,647 was granted in 1999 and covers identifying data "having recognizable structures," such as a "phone number, post-office address, e-mail address, and name." Then, the patent says, a "parsing process" will allow "appropriate actions" to be taken.

The latest development is nevertheless a blow to HTC, which has made strides in building market share and a brand with its line of Android-powered smartphones, many of which feature the company's own Sense user interface. HTC was the first Android supporter that Apple chose to target, signaling the growing threat of Google's software to iOS and the iPhone franchise.

Apple did not immediately respond to a request for comment. In a statement made when the complaint was originally filed, then-Apple CEO Steve Jobs, who died this fall, said: "We think competition is healthy, but competitors should create their own original technology, not steal ours."

Technology companies in recent years have increasingly used the ITC to settle their disputes because the process is seen as more efficient than the federal courts. In addition, the threat of an embargo on products typically forces companies to settle more quickly.

HTC is considered the most vulnerable legally of the Android partners because it lacks a robust portfolio of patents that act as a potential shield. HTC this year purchased S3 Graphics, largely because of a collection of patents that could be used against Apple.

In September, HTC launched its legal counterattack against Apple in Delaware federal district court, using nine patents that originally came from Palm, Motorola, and Openwave Systems. Google transferred the rights to HTC on September 1. (A separate, earlier effort before the ITC was unsuccessful, according to an initial ruling in October.)

HTC created the first Android smartphone, the G1, and has seen its profile rise over the past few years. The company was also the first target of an Apple lawsuit related to Android, and is among the most deeply entrenched in litigation over the topic.

Last updated at 4:22 p.m. PT

CNET's Roger Cheng contributed to this report.