HTC Corp (宏達電), the world’s fifth-largest smartphone maker, yesterday said it was “dismayed” by Apple Inc’s tactics of filing lawsuits instead of competing in the market place.
Shares of HTC tumbled by the daily limit of 7 percent to close at NT$915 (US$31.5) on the Taipei Stock Exchange yesterday. Morgan Stanley said it held a conservative view of the stock in the wake of increasing litigation risks.
The Taiwanese firm said in a statement that it strongly objected to allegations — be it past or present ones — that it is infringing on Apple’s intellectual property rights.
HTC reiterated its determination and commitment to safeguard intellectual property rights.
On Monday, Apple filed its latest complaint against HTC with the US International Trade Commission — which is already reviewing three other disputes between the two smartphone industry heavyweights — regarding five patents linked to technology used in Apple’s iPads and iPhones.
Apple has also lodged a suit against HTC in a US District Court in Delaware.
The latest suit comes as HTC said the commission is nearing its decision on the first three disputes.
Apple originally filed a suit against HTC with the commission in March last year, accusing it of violating 20 iPhone patents related to the “user interface, underlying architecture and hardware” of the iPhones.
Apple is asking for damages and an injunction to prevent HTC from making or selling products that utilize the patents in dispute.
HTC responded by launching a countersuit in May last year, asking the commission to impose an injunction on sales of the popular iPhones, iPads and iPods in the US, claiming the units infringed on five HTC patents.
HTC has underscored that it was an innovator that utilized the Windows Mobile Pocket PC Phone Edition in 2002 and the maker of the industry’s first Android smartphone in 2008.
The commission’s initial ruling regarding Apple’s first complaint was scheduled to be made on Aug, 5, but it will likely be moved up to Friday, HTC said.
“While it is difficult to quantify the impact at this point, we tend to believe that if Apple’s claim is successful, a worst case is that HTC would try to settle with Apple to lower the risk of injunction,” Morgan Stanley said in a research note yesterday.
Based on a recent patent infringement settlement between Apple and Nokia Corp, Apple paid Nokia between US$2 and US$4 per handset, according to the brokerage.
Assuming HTC were to pay Apple between US$4 and US$5 because its patent violations could be more serious than in the Apple-Nokia case, the settlement would reduce Morgan Stanley’s estimates for HTC’s earnings per share next year by between 1 percent and 1.4 percent, the note read.
Market analysts believe that HTC’s US$300 million purchase last week of S3 Graphics Co, a US-based graphic chip designer, was to enhance its negotiating position with Apple.
A ruling last week by the commission said Apple was infringing on two patents held by S3 Graphics, therefore HTC’s acquisition of all S3 patents could provide it with a bargaining chip.
The legal battle is critical for HTC as North America constituted 50.6 percent of its total revenues last year, compared with 32.3 percent from Europe and 17.1 percent from Asia and others regions.
Kelly Hsieh (謝雨珊), associate manager of Topology Research Institute (TRI, 拓墣產業研究所), said HTC’s market share would not be hurt by the case because of the firm’s strong research and development capabilities.
“The impact on HTC’s market share will be limited because the company still has some advantages in communications technology, such as the speed of launching new products and its strength in 4G smartphones with some US carriers,” Hsieh said.
ADDITIONAL REPORTING BY CNA
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