HTC Open To Cross Licensing Patent Agreement With Apple; Lot More Disputes To Come With InterDigital’s Patents Up For Sale

BY Rounak Jain

Published 27 Jul 2011

Android versus iPhone via HTC

HTC’s CFO Winston Yung has indicated that the Taiwanese company is open to talks with Apple regarding their patent dispute. Apple had recently scored a victory when the International Trade Commission had ruled in favor of Apple, and held HTC guilty of infringing two of Apple’s patents. HTC on the other hand managed to snap up a company named S3 Graphics Co. for $300 million, which owned patents (related to graphics) that Apple violated. HTC in fact purchased the not-so-successful graphics firm only with the intent of having a strong position in patent disputes.

Speaking to Bloomberg about the agreement Yung said:

“We have to sit down and figure it out. We’re open to having discussions. We are open to all sorts of solutions, as long as the solution and the terms are fair and reasonable. On and off we’ve had discussions with Apple, even before the initial determination came out.”

This isn’t the first time HTC has shown signs of having a barter deal of sorts with Apple. Yung had basically said the same thing in a rather non specific manner on July 7th while defending HTC’s purchase of S3 Graphics:

“In patent negotiations, it is difficult if the other company has patents and you don’t. If you have patents too, perhaps you can arrive at a cross-licensing agreement.”

The tone of these statements reveal the eagerness with which HTC wants to sign an agreement with Apple regarding the two sided patent infringements. Apple on the other hand hasn’t provided any sort of clue, at least to the media, about their willingness to talk to HTC about this.

GigaOm’s Ryan Kim suggests that Apple would in fact avoid the agreement and instead find ways to bypass S3 Graphic’s patents by buying chips from manufacturers that already have licensed those patents. Apple views its patents as ways to cripple its competitors, not as revenue sources and won’t be looking at petty licensing fees when it has more than $70 billion in its hand. What could compel Apple to sign an agreement with HTC is only if their workarounds as the one suggested by Ryan, somehow don’t work out.

Even if Apple does strike a deal with HTC, FOSSPatents’ Florian Mueller says that the deal could be designed in a way such that Apple gets access to all of HTC’s patents (which now includes S3’s patents) while Apple allows access to the minimal patents so as to let HTC’s Android phones survive. This may sound absurd at first, but remember that Apple’s leverage over HTC in terms of patents is huge. If Apple manages to bag InterDigital’s 8,800 patents, it will add value to its already impressive patents portfolio.

InterDigital is a company which has invented some of the technology used in high speed networks used in a lot of handsets. The company, according to Bloomberg has put itself up for sale, which has sparked up interest in companies like Apple and Google. InterDigital already has its feet in the patent battlefield, it has filed complaints against Nokia and Huawei claiming patent infringement. It is easy to guess how valuable these companies’ patents would be to smartphone makers considering the high speed networks are the future. Increasing importance of patents combined with the news of InterDigital considering a sale has led the stock of the company to jump up by 72 percent.

Google had recently lost access to Nortel’s huge patent repository when it bid in amounts of scientific constants like Pi against a consortium that included Apple and Microsoft. It sure won’t want Apple to get exclusive rights to InterDigital’s patents and would put all its strength, perhaps even team up with other companies if required, to get hold of those patents.

Meanwhile, there is a parallel patent spat going on between Lodsys, Kotool Software  and app developers. Lodsys has now sued the company behind Angry Birds – Rovio.

One company obviously cannot hold the rights to all the patents it needs to deliver a top notch product. Apple, with its $70 billion cash can come close, but not acquire all of the patents it needs. If agreements aren’t forged and licensing isn’t done when it comes to patents, it will be the end user who would be forced to use a half baked product, be it a smartphone or an app. The system clearly needs to change, but that seems to be far away. For now grab your popcorn and enjoy Apple’s strategic patent fights with rivals like Google, HTC and Samsung.

[via Bloomberg]