The Beginning of the End for the Smart Phone Patent Wars?

On Saturday, November 10, 2012, HTC and Apple announced that the two companies had reached a global settlement that includes the dismissal of all current lawsuits and a ten-year license agreement. The license extends to current and future patents held by both parties. The terms of the settlement are confidential and, therefore, not disclosed by the companies.

“HTC is pleased to have resolved its dispute with Apple, so HTC can focus on innovation instead of litigation,” said Peter Chou, CEO 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.”

These statements are extremely brief and hardly show the depth of animosity that is believed to have marked this first battle in the so-called smartphone patent wars. Although the one thing that does jump to mind immediately is the gratuitous and rather disingenuous characterization by Mr. Chou, saying that now HTC can focus on innovation instead of litigation. Is HTC an innovator or are they a copier? It would seem that the fact that they are a copier and not an innovator is why Apple sued them, and is also why HTC already has in place a patent license with Microsoft which reportedly requires the company to pay Microsoft between $5 to $10 on every Android phone sold. Add on the Apple royalty, whatever it is, and it starts to paint a picture of a taker, not a maker of innovation.

In the multitude of articles already written on this subject some are wondering whether it will be possible for Android phone makers to be able to continue to sell phones at a profit given that they now have to pay Apple an undisclosed royalty, and are already paying Microsoft a royalty. See Apple Goes for Android’s Jugular. Others, however, think that the settlement signals a softening of Apple’s stance and perhaps a sign of weakness. See Apple Softening It’s Approach to Patent Litigation? And these two varying perspectives come both from Tech Crunch. That is not to say that there is anything wrong with publishing differing view points, I have been known to do that whenever possible myself. But if different view points are expressed in the same publication it probably gives you the appropriate sense that there is not a lot of unanimity within the industry about what, if anything, the Apple/HTC smartphone patent settlement actually means long term.

Despite the fact that Apple’s battle with Samsung continues, I firmly believe this is a sign that the end is near. Apple has already won a $1 billion jury verdict against Samsung, which will be appealed, of course. While many continue to focus on Apple, the focus really should be on Samsung. It is Samsung that stands to lose big. They should want to find a way to exit this lawsuit and put the Android wars behind them.

Once the smartphone patent wars are behind the industry, which will happen at some point one way or another, lookout for rapid expansion in smartphone technology.

That previous statement begs to be dissected. First, remember that Steve Jobs once referred to the smartphone patent wars as the patent equivalent of global thermonuclear war. But will this be more like the Cold War or the Apocalypse? The only patent war that I can recall that actually approximated a patent version of the Apocalypse was the battle between Polaroid and Kodak. That saw a $909 million verdict in 1990, and ultimately settled for $925 million about a year later, but required total aggregate attorneys fees in the neighborhood of $550 million. The war lasted 15 years and didn’t achieve the $2.5 to $5 billion that once upon a time was believed possible. This was also at a time when these numbers were real money.

The Polaroid/Kodak patent war was one that really caused everyone to stand up and take notice. Despite winning, Polaroid couldn’t succeed. All the patent litigation managed to do really was wound the more dominant company – Kodak. Kodak has had many missteps over the years and it is impossible to look back on their current bankruptcy plight and say that this patent litigation against Polaroid is what caused the company to stumble. For crying out loud Kodak invented the digital camera and then allowed others to dominate the market. Still, it is worth observing that patent battles can and do cause companies to take their eye off the ball, which could have contributed to some point given the 15 year history of the Polaroid/Kodak battle perfectly coincided with the first 15 years of digital camera technology.

I don’t think Apple or Samsung will want to replay the Polaroid/Kodak patent movie. In the end it hasn’t worked out well for either company.


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Join the Discussion

6 comments so far.

  • [Avatar for Roland]
    December 6, 2012 10:59 am

    Whilst researching a related topic I came across this piece

    What is interesting about this specific piece is that it draws attention to the patent strategy (a combination of Utiltiy and design patents and registered trade dress) Apple used to protect it’s IP and then prosecute it’s case against Samsung and hence there are lessons to be learnt.

  • [Avatar for Justin]
    December 4, 2012 05:33 pm


    Obviously HTC is an innovator, or Apple would not have made a cross-licensing deal with it (your article states that “[t]he license extends to current and future patents held by both parties”).

    Still, I am not so sure that this signals a possible end to the patent wars. Apple still seems to have it bad for Samsung and Motorola, to the point it was arguing that it would never even offer licenses covering some of these same patents to Samsung as it has just done for HTC. And of course Samsung and Motorola are simply proxies for Google, which Apple hasn’t even gone after yet.

    Add to that the fact that the USPTO keeps issuing patent protection for completely ridiculous “innovations,” such as Apple’s “rubber-band” patent, a part of that $1 billion verdict you mentioned in the article that was also recently invalidated by the USPTO, I don’t see the war cooling down any time soon.

  • [Avatar for Roland]
    December 3, 2012 06:11 am

    Gene, they are ALL innovators and copiers, just that some have the good fortune to be in the right place at the right time and produce market defining products; that others, as good innovators, take and try and improve upon…

    As for treating HTC as an innovator – well it depends, it obviously has some very desireable 4G patents that Apple, prior to the settlement, was trying to invalidate. Also events have turned out the agreement between Apple and HTC does seem very favourable to HTC, particularly when set against Apple’s battle with Samsung; so I think that Apple regards HTC as more than a copier.

  • [Avatar for Gene Quinn]
    Gene Quinn
    December 2, 2012 05:25 pm


    Your logic seems rather poor as well. HTC pays licenses to both Microsoft and Apple and you want to treat them as an innovator? Interesting. Where is the logic in that?


  • [Avatar for Roland]
    December 1, 2012 05:20 pm

    Missed the last paragraph off my previous post.

    Given the wide publicity given to patents of user interface features such as “slide to unlock”, I’ll be interested to see if there is a change in the nature and quantity of software patents that are now being filed – perhaps we can expect a software patents war in circa 2020?

  • [Avatar for Roland]
    December 1, 2012 05:16 pm

    re: “Is HTC an innovator or are they a copier?”
    The logic you used in your answer to this question, is very poor – I take it therefore that because Apple and Microsoft both pay licenses for various technologies and have been successfully sued over the years that you also regard these companies as copiers? However, as we both know they are both innovators and copiers.

    Yes, I agree the battles between Apple v other smartphone vendors and hardware component manufacturers seem to be coming to an end. However, we are starting to see a new round of litigation that focuses on software used in smartphones, based on patents typically filed in 2001~2005 and given patent status by the USPTO broadly in 2005~2010. All of these effectively going for the mass market mobile software plaforms, specifically: iOS, Android and Windows, that have come to market since 2005. Although, given that many of the plantiff’s are smaller companies and/or patent portfolio holders I doubt the level of litigation will be as great as those Apple specifically has engaged in todate.