HTC loses battle in Apple patent war

It is starting to look like HTC’s cunning plan to buy S3 Graphics in a bid to get enough patents to see off Apple has not paid off.

As Apple started to make it clear that it was attempting to shut down all Android competition using patents, HTC wrote a cheque for $300 million to buy S3. It counter-sued Apple in the hope to make the fruity cargo cult sling its hook.

However, the US International Trade Commission said that S3 Graphics’s patent rights weren’t violated by Apple. It also rejected a request for an order that could have limited imports of some Mac computers, the iPhone and iPad.

The commission gave no reason for its decision and HTC said it may challenge the ruling in a US appeals court that specialises in patent law.

But the question was why HTC bought S3 anyway. S3 Graphics was part-owned by HTC Chairwoman Cher Wang, and it could have just licensed the patents.

The ITC decision also has hit the company share price, falling by 6.1 percent. Since Apple began its quest to remove its competators in court rather than the marketplace, HTC stock has halved its value.

US trade Judge James Gildea found that some Apple Macs infringed two S3 Graphics patents related to graphics chips, while the mobile platform for the iPhone didn’t infringe. However the six-member commission reviewed the entire decision, including the effects of Apple’s agreements with Intel and Nvidia.

The commission is also reviewing an agency judge’s determination that HTC infringed two Apple patents so the whole HTC case could come unstuck.

Industry watcher Florian Mueller said the rulings were a huge setback for HTC which had hoped the S3 patents would give it some kind of weapon.

Writing from his bog, Mueller said that the war was not over yet, but so far it seems to be going Apple’s way.