Opinion - Apple vs HTC: justice, money and smartphones

Posted on 3 Mar 2010 at 12:59

 

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Apple's patent infringement lawsuits against Android and Windows Mobile smartphone manufacturer, HTC has elicited a small flood of commentary and speculation about Apple's motivations, what HTC's response will be, how the lawsuits will pan out and how long it will all take. What is clear, from this commentator's point of view, is that Apple isn't really concerned with patents or the law, but is using its lawsuits as a competitive tactic against HTC in particular, and Android in general, in its desire for dominance of the smartphone market.

Most patent infringement lawsuits usually end in settlements where the plaintiff tries to extract as much money from the defendant as possible in patent licensing fees. Actually going to trial rarely happens since it's an inherently risky process where judges and juries can act unpredictably – plus intellectual property lawyers don't come cheap and they charge by the hour.

If the lawsuits against HTC were brought by any other company, then maximising patent licensing fees would almost certainly be the motivation here too, but since the plaintiff is Apple this seems doubtful. Apple jealously guards its intellectual property and hasn't licensed any of its patents or other intellectual property, as far as I know, since its 1997 settlement with Microsoft in exchange for a $150m (around £100m) investment. It seems unlikely that Apple is willing to change this strategy now for a few paltry patent royalties when the entire lucrative smartphone market is up for grabs.

Apple CEO Steve Jobs' statement about the lawsuits is full of righteous indignation. Although he, and therefore Apple, probably thinks that HTC has unfairly copied his company's technology, it's unlikely he's expecting some sort of speedy legal vindication and financial damages through a favourable judgement. Trials can take years, which is an eternity as far as technology and the markets are concerned. A judgement in their favour may make Apple feel all warm and fuzzy, and may add an extra million or two to their multi-billion-dollar bank balance, but there's no guarantee it will help the iPhone against Android in the near term or if and when a favourable judgement will occur or how large the damages would be. HTC can drag the process out through appeals as long as it has the will and the money to pay its lawyers.

As I see it, Apple's lawsuits are designed to distract and undermine HTC, and therefore Android, in the marketplace. The vast majority of Android smartphones are designed and manufactured by HTC, even if they don't have HTC branding. Although Motorola also make Android phones, Google clearly has more confidence in HTC's design and manufacturing expertise than Motorola's since it chose to partner with HTC for the Nexus One. However, in terms of employees, revenue and cash reserves HTC is far smaller than most of the other major smartphone manufacturers. By targeting HTC, Apple not only hopes to distract the company's management from its strategic vision and goals with an expensive lawsuit from a major competitor but also to undermine consumer, investor and media confidence in HTC and therefore Android.

Apple is attempting to use Fear, Uncertainty and Doubt (FUD) tactics against HTC. It's all a little bit slimy and underhanded, no matter the validity or otherwise of Apple's patents. Whether Apple succeeds or not will be determined not only in the courts, but also in the share prices, market share and the tone of media coverage of the two companies. If nothing else, it'll be interesting viewing.

Author: Alan Lu