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7/27/2011
00:40 AM
Ed Hansberry
Ed Hansberry
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HTC Wants To Settle Patent Suit With Apple

A preliminary ruling in favor of Apple has HTC--and its U.S. Android phone business--in a precarious position.

The U.S. International Trade Commission ruled in Apple's favor on two patent infringement suits and that has put HTC in a precarious position. The ruling isn't final, but HTC would rather sit down with Apple and come to an agreement rather than wait for the final ruling. HTC's CFO said the company is open to discussing any reasonable proposal.

This is not a total victory for Apple, but it doesn't have to be. Apple initially sued over 10 patents. Six of the claims were dropped and two of the claims were ruled in HTC's favor. The remaining two though, have been initial victories for Apple.

That is the problem with these suits for the defendant. It has to win 100% of the individual claims to continue with business. In this case, Apple only got 20% to stick, but that is enough to put HTC's Android business in question. Its stock has taken a beating as investors took notice of the case and potential outcome.

HTC CFO Winston Yung told Bloomberg "We are open to all sorts of solutions, as long as the solution and the terms are fair and reasonable. On and off we've had discussions with Apple, even before the initial determination came out."

One of the possible outcomes is HTC is banned from importing Android phones to the United States, at least those that contain the patents in question. The final ruling is due December 6, and that is what HTC wants to avoid. Apple could demand a lump-sum payment or a price per device, similar to what Microsoft is doing with HTC.

With over $65 billion in the bank though, cash is not what Apple needs. It would love to have one less competitor in the market and taking HTC out of the equation would boost iOS share. The benefit would likely be more profound than any advertising Apple could buy with a settlement from HTC.

Apple has not responded to HTC's olive branch at this point, at least not publicly. Do you think Apple will go for a settlement? Or take it to the end and try to halt HTC's Android shipments to the United States?

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