Apple Settles With HTC on Patent Dispute

07 February 2013

Apple and HTC have reached a global patent settlement with an agreement that dismissed all patent litigation worldwide between the companies. Apple and HTC also inked a decade-long licensing agreement as part of the deal. The license agreement extends to the companies’ current and future patents. Settlement terms are confidential.
 
Apple filed its first patent infringement case against HTC in March 2010.
 
Both companies’ press releases indicate they are happy to move forward. “HTC is pleased to have resolved its dispute with Apple, so HTC can focus on innovation instead of litigation,” said Peter Chou, chief executive officer of HTC.
 
“We are glad to have reached a settlement with HTC,” said Tim Cook, CEO of Apple. “We will continue to stay laser-focused on product innovation.”
 
The settlement may improve HTC’s reputation in the Unites States by decreasing its image as a copycat, which grew as HTC lost to Apple on the patent lawsuits in the past two years. “The settlement will give HTC an advantage in its market positioning in the US,” CK Lu, a Taipei-based technology analyst at Gartner told China’s Central News Agency.
 
Good market positioning in the US is essential for HTC because good performance in the China market cannot “make up what it had lost in the US,” added Lu.
 
HTC’s future financial performance will vary depending on how it pays Apple. Lu said that if HTC pays the settlement in full this quarter, it can improve operations beginning from the first quarter of 2013. If HTC pays in product units, investors may be concerned about the long-term financial burden of the settlement, added Lu.
 
The settlement also concerns Apple, as the company may now need to strengthen its patent portfolio in the Long Term Evolution (LTE) 4G technology to compete with rivals, such as Samsung, said Jeff Pu, an equity research analyst at Fubon Securities.
 
According to the Korea Intellectual Property Office, Samsung held 819 LTE patents as of August 2012, while Apple only had 434. Apple may therefore expand its 4G LTE patent portfolio with HTC through the license agreement due to HTC’s outstanding research capability, said Pu.


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