U.S. Backs Apple In Patent Ruling That Hits Google
The New York Times
By NICK WINGFIELD
December 19, 2011
A federal agency ruled on Monday that a set of important features commonly found in smartphones are protected by an Apple patent, a decision that could force changes in how Google’s Android phones function.
The Sensation XL from HTC, on display at a store in Taipei, Taiwan.
Photo: Ashley Pon/Bloomberg News
The ruling, by the United States International Trade Commission, is one of the most significant so far in a growing array of closely watched patent battles being waged around the globe by nearly all of the major players in the mobile industry. These fights reflect the heated competition among the companies, especially as Android phones gain market share.
At the heart of the disputes are the kind of small but convenient features that would cause many people to complain if they were not in their smartphones. For example, the case decided Monday involves the technology that lets you tap your finger once on the touch screen to call a phone number that is written inside an e-mail or text message. It also involves the technology that allows you to schedule a calendar appointment, again with a single tap of the finger, for a date mentioned in an e-mail.
HTC, the defendant in the case and a Taiwan-based mobile phone maker using the Android system, said in a statement after the ruling that it would adapt its features to comply with the court’s decision. The company called them “small” parts of the user’s experience.
The ruling was only a partial victory for Apple because the commission overruled an earlier decision in Apple’s favor in the case, involving a different, more technical patent related to how software is organized internally on mobile devices. It would have been hard for HTC to adapt its devices to avoid infringing that patent, legal experts said.
The decision could potentially affect far more phones than those made by HTC because the underlying target of the suit is Google, creator of the Android system that now powers more than half of all smartphones sold worldwide. Apple is suing several other makers of Android devices, as is Microsoft, and companies that make Android products are returning the favor in most instances through countersuits.
“It’s an important victory for Apple, but it’s just one of many battles,” said Alexander Poltorak, chief executive of the General Patent Corporation, an intellectual property strategy firm.
The ruling by the six-member commission, which can take action against unfair trade practices by companies whose products are imported into the United States, will prevent HTC from selling phones in the United States that infringe the patent starting April 19.
To take effect, President Obama’s trade representative must sign the order. He could decide to overrule the commission’s finding, though such actions are rare. It also can be appealed.
Apple has also sued HTC in federal court accusing it of patent infringement, while HTC has filed suits of its own against Apple with the trade commission and in federal court.
The patent battles reflect the intense competition in the smartphone market. In the third quarter of 2011, phones running the Android system accounted for 52.5 percent of devices sold worldwide, up from 25.3 percent in the period of 2010. Apple’s share of this market fell to 15 percent, from 16.6 percent, in the same period.
Apple’s late chief executive, Steven P. Jobs, was outspoken in saying that Google had improperly copied many of the iPhone’s innovations, telling his biographer that he was going to “destroy Android, because it’s a stolen product.”
After the ruling on Monday, Kristin Huguet, an Apple spokeswoman, said, “We think competition is healthy, but competitors should create their own original technology, not steal ours.”
Grace Lei, HTC’s general counsel, said in a statement that the company was happy the commission ruled against Apple on other patents involved in the case. “We are very pleased with the determination and we respect it,” Ms. Lei said.
A Google spokesman did not respond to a request for comment.
The growing complexity of mobile devices has greatly expanded the range of patents that can be used as weapons in the business, and their robust sales have made them a lucrative target.
Florian Mueller, an intellectual property analyst in Germany and author of a popular blog on patents estimates that the number of patent lawsuits related to the mobile business worldwide is approaching 100.
In addition to antenna designs and other traditional patents that are held by cellular companies, relative newcomers to the business, like Apple and Microsoft, are using patents that originated from computer products. Apple applied for one of the patents at issue in the HTC case — for detecting phone numbers and other forms of data — in 1996, 11 years before the iPhone was released.
“Convergence threw them all together and opened up new product opportunities,” said James E. Bessen, an economist and lecturer at the Boston University School of Law.
The HTC Corporation sold more than 12 million cellphones in the third quarter, according to Gartner. That made the company the world’s seventh-largest seller of cellphones, ahead of Motorola and just behind Research in Motion, the maker of the BlackBerry. Its Android phones include the Droid Incredible and HTC Titan, sold by Verizon Wireless and AT&T, respectively.
HTC said it would comply with the commission’s ruling by removing a feature that currently gives users a list of options whenever they receive, say, a phone number in a message on their smartphones. The users will no longer get a menu giving them the choice to save the phone number in their contact lists, dial the number or send a text message to it. Instead, HTC said it would give them only the option of dialing the number.
United States Customs and Border Protection will determine whether HTC’s changes are sufficient to comply with the ruling.
Apple is thought to have sued HTC, along with Samsung, another maker of Android phones and tablets, rather than Google itself because those companies profit directly from the sale of Android products. Patent lawyers say a frontal assault on Google would be a tougher legal challenge because the company gives away its Android operating system to hardware makers, making money instead through advertising from Internet services on Android phones.
Oracle has sued Google directly, accusing it of patent infringement through Android. The British telecom provider BT on Monday said it also sued Google, in part over alleged patent infringements in Android.
Patent lawsuits among technology companies typically end up being settled or avoided entirely through cross-licensing deals, with the weaker party often agreeing to pay a licensing royalty on every product sold containing the technology in question. Microsoft, for example, signed licensing agreements with HTC, Samsung and other companies in which Microsoft receives an undisclosed royalty from the sale of their Android devices.
Apple appears less motivated by getting royalties from the companies it is suing, though some patent experts believe that could be posturing on its part. Mr. Jobs’s criticisms took on more urgency as Android began to gain a bigger share of the smartphone market during the last two years.
But when he expressed those criticisms to his biographer, Walter Isaacson, he said he told Eric E. Schmidt, now the executive chairman of Google and a former Apple board member, that he didn’t want money from Google.
“If you offer me $5 billion, I won’t want it,” Mr. Jobs told Mr. Schmidt, according to the book, “Steve Jobs.” “I’ve got plenty of money. I want you to stop using our ideas in Android, that’s all.”
Mr. Mueller, the patent analyst, says he believes Apple is unlikely to settle with its Android rivals because it has the most of any company to lose from the rise of Android. “The Apple rhetoric from the beginning was about theft of intellectual property,” said Mr. Mueller, who has done research work for Microsoft, a Google competitor. “That’s a lot more combative.”
Google has amped up its own rhetoric as well. In early August, David Drummond, the company’s senior vice president and chief legal officer, decried “a hostile, organized campaign against Android by Microsoft, Oracle, Apple and other companies, waged through bogus patents.”
Less than two weeks later, though, Google announced a plan to acquire the cellphone maker Motorola Mobility Holdings for $12.5 billion, a move that was viewed partly as an effort to bolster Google’s weak patent portfolio in the mobile business. That deal is still pending.
While the subject of Android was clearly an emotional issue for Mr. Jobs, there’s no evidence yet that his death in October has altered Apple’s willingness to reach a compromise with makers of Android products.