- By
- EVA DOU
- ,
- JUHANA ROSSI
- and
- LORRAINE LUK
- CONNECT
Bloomberg News HTC's One mobile phone
An International Trade Commission judge made a preliminary ruling Sept. 23 that HTC infringed on two Nokia radio-related patents that help enhance transmission and reception of phone calls. Nokia's filings with the ITC said that the chip covered by the patents is made by Qualcomm.
While only older HTC phone models were listed in the case, the HTC One smartphone and other new devices also use the same technology that would be banned if the ITC decides in January to uphold its initial ruling, said two people familiar with the matter.
HTC is again finding itself on the back foot in the global smartphone patent wars. Nokia—which is selling its handset business to Microsoft Corp. —is suing its Taiwanese competitor over a range of patents in courts around the world, including the current case over the Qualcomm chip. U.S.-based Qualcomm didn't respond to a question about whether other customers could be affected. HTC was also the target of a string of Apple Inc. lawsuits as part of the iPhone maker's offensive against Google Inc.'s widely used Android operating system, but Apple and HTC settled the case last November.
A U.S. ban on the One would be a heavy blow to HTC, which is expecting its first quarterly loss since its initial public offering in 2002. The U.S. currently accounts for around 20% of HTC's shipments, according to Barclays analyst Dale Gai. HTC, the world's leading Android smartphone maker at its peak in 2010, has struggled to find its footing against fast-growing competitors like Samsung Electronics Co.
The Nokia case began in 2012, before HTC began selling the One. But Nokia spokesman Mark Durrant said it believes the One also violates its patents and would be included under any potential ITC ban.
As the feature in question is hardware-based, developing a workaround would be more challenging than previous software cases, such as in the 2010 ITC case between Apple and HTC, said a person familiar with the matter.
The Taiwanese smartphone maker said in a statement after the ruling that it "will keep its alternative plans ready to ensure no business disruption."
In a previous ITC case last year, sales of HTC's One X and Evo 4G LTE were delayed by U.S. customs officials for two weeks after the regulator ruled that they had violated an Apple patent. Shipments resumed after HTC removed the feature in question.
Nokia has filed a spate of lawsuits in courts around the world against competitors in recent years, an effort to protect its more than 10,000 patents in mobile communications technology. The company has estimated it will receive around 500 million euros this year in royalties.
In the current case, HTC still has time before the January final ruling to try to convince the ITC to reverse its initial judgment or to develop a technical workaround. Another option would be to come to a patent licensing agreement with Nokia, said patent law analyst Florian Mueller. Both companies declined to say if they are trying to negotiate a commercial solution to the dispute.
BlackBerry Ltd. struck a deal with Nokia last December to license its patents for an undisclosed sum.
A parallel case is ongoing in U.S. district court, which could potentially result in financial compensation for Nokia if it rules that HTC infringed on the Nokia patents.
Write to Eva Dou at [email protected], Juhana Rossi at [email protected] and Lorraine Luk at [email protected]
