Patent news is back. Apple has won yet another patent infringement case, which was filed by HTC Corp. It casts doubt on the company’s decision to spend $300 million to buy S3 Graphics Co. to boost the chances of a licensing deal to end the dispute. The judgment saw Apple breathing free air as the US International Trade Commission said that S3 Graphics’s patent rights weren’t violated by Apple. HTC’s request to impose an order that could have limited imports of some Mac computers, the iPhone and iPad, was rejected. The complications rose an the commission did not give any specific reason for its decision.
This might have fumed HTC, as the company noted that they might challenge the ruling in a US appeals court, which specializes in patent law. HTC General Counsel Grace Lei said in an e-mailed statement, “We are disappointed, but respect the ITC’s decision.” However, he even added, “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.”
HTC has been running high as it sold the most smartphones in the US in the third quarter and if the ruling would have resulted in their favor, it would have only increased the sales of HTC smartphones.
However, HTC had said that it would buy Fremont, California-based S3 Graphics less than a week after a trade agency’s judge issued his findings in the case in July. Prior to that, S3 Graphics was part-owned by HTC Chairwoman Cher Wang. In addition, Citigroup Inc analyst Kevin Chang said that at the time HTC could have just licensed the patents.
Chen Fu-li, an analyst at E Sun Securities Co. in Taipei said that a decision against HTC, only “calls into question the rationale of the S3 acquisition.” Chen has even given a “buy” rating on HTC shares, but he said, “It’s the final decision so it’s quite important. A negative decision could put pressure on HTC’s shares.”
HTC has seen the efforts of their Chief Executive Peter Chou, who has leaped the company’s status from a mere contract manufacturer into a global brand by customizing its phones for carriers including Verizon Wireless and Sprint Nextel Corp. Since then, the revenue has only been rising. As compared to its last year’s revenue, this year the revenue has almost doubled.
S3 Graphics are a company, who make image-compression technology and one might notice that its Texture Compression feature is used in Nintendo Co’s Wii and Sony Corp’s PlayStation portable gaming systems. HTC’s patent purchase even includes about 235 patents, which were mostly related to graphics technology.
Shaw Wu, an analyst at Sterne Agee & Leach Inc in San Francisco, said in an interview, “S3 can be innovative and they came up with some nice products, but whether they are relevant to Apple is debatable.” He continued noting, “Apple has a lot of patents, so it’s going to be tough to beat Apple.”
There are a number of cases still pending against Apple, four out of which have been filed by S3 Graphics and two more, filed by HTC directly.