Posted By Greg Mills

Recently it came out that HTC won one in the legal mega-spat with Apple. HTC had just paid $300,000,000 to S3 for five patents, two of which, had been just found to be infringed by Apple in a separate infringement complaint by the US International Trade Commission. Eager to have something to hold over Apple, HTC bought the patents, apparently not knowing they had just been found to be invalid by the US Patent Office in a re-examination of the patents.

See: While this article mixes legal terms incorrectly, the basic information is sound. The correct term for issued patents that are later found to be “invalid” is not that they are “unpatentable”. The term “unpatentable” refers to patents that are applied for, but the patent denied by the Patent Office as the invention is “unpatentable”. If an invention is already patented by someone else or is obvious, the invention is unpatentable.

The ruling in favor of HTC, which cleared Apple iOS devices but found Mac OS X infringed two of the patents related to graphic compression, will be vacated. Rulings by the US International Trade Commission are based upon valid patents. No matter what the finding by the ITC, the US Patent Office and the US Federal Courts are the only ones with the power to “invalidate” a patent issued in error. An invalid patent is no patent at all.

So, HTC is out $300 Million US, unless there was an out in the terms of the patent purchase agreement that insured against later invalidation by the PTO. But that also means, HTC has nothing to trade Apple to induce a patent cross-license agreement. That means a “read my lips, no HTC Android Phones that infringe on Apple Patents will be sold in the US”!

This is very bad news specifically for HTC and actually, the entire Android platform in general. The way patents work is that only one inventor can patent an exact technology. If any other Android handset maker has a patent that allows it to get around Apple’s Patents they are all off the hook.

The normal result of a court finding of patent infringement is for the companies to license patents for an agreed royalty rate. It is all about money. With this spat, it is about market share and I don’t think Apple is likely to allow infringing Android phones to be imported. Apple will continue to sue any infringement of iPhone and iPad technology and own the smartphone market and the touch screen tablet market.

Look for HTC’s stock to continue to fall and a number of HTC Android handsets to be withdrawn from the market. The parallel litigation against Samsung and the other Android handset makers will likely have similar results. The only hope for any of the other Android handset makers is that they have enough patented technology that Apple absolutely has to have, that they can trade rights to.

Yesterday it came out that 35% of people surveyed intend to buy an iPhone 5, despite it having not even been announced. Apple, in my opinion, has a hammer lock on the smartphone and touch screen tablet market that the competition can’t break. Watch for iPhone 5 and iPad 3 to sell out no matter how many they can make. That’s Greg’s Bite