In November 2012, Apple and
Taiwan-based mobile handset maker HTC announced that they had dismissed all
current lawsuits and had entered into a 10-year license agreement covering
current and future patents held by both parties. Although the companies did not
explicitly disclose the terms of the license or the fees being paid, a report
in Forbes suggests HTC will pay $6 to
$8 to Apple for every Android-equipped handset sold.
Once described by the late Steve
Jobs as a “thermonuclear legal war against Android,” this lawsuit was the first
settlement between Apple and a maker of devices that use Android, an operating
system that has rapidly swallowed most of the smartphone market. Apple’s
settlement of an Android-related lawsuit was interpreted as a sign that Jobs’
successor at Apple, Tim Cook, was more eager to end the distraction and risks
of patent fights. In the past, Apple executives had been rather hostile in
their remarks about companies they believed were copying their innovations.
Although the suit between Apple
and Samsung filed by Apple in 2011 has been a case with much larger
implications, the HTC suit was the first one Apple filed against an Android
phone maker and a harbinger of future Apple legal challenges aimed at the
software. Apple filed patent infringement suits against HTC in March 2010 in
federal court in Delaware and before the International Trade Commission. The
suit was the start of what was widely viewed as a proxy war between Apple and
Google, the creator of the Android operating system. It is interesting to note
that lawyers say Apple has chosen not to sue Google itself because it is easier
to calculate financial damages in suits against companies that are selling
Android handsets. Google gives the Android software to phone makers and
generates revenue from advertising and other services on the phones.
In conclusion, the settlement
between Apple and HTC was a key change in legal strategy from Apple. While Tim Cook
was similarly uncompromising in his views of Android like his predecessor, Cook
has demonstrated that he has not been an enthusiastic combatant in the patent
wars.
Oh interesting! So you're saying Tim Cook isn't fond of patent litigation as corporate strategy? I wouldn't have guessed Jobs was the one to set the litigations in motion.
ReplyDeleteHey Jay!
ReplyDeleteI wasn't even aware HTC was Taiwanese before this- and I have an HTC. In any case, $6 to $8 is a lot of money and actually makes Apple seem even larger than it already is. You brought up good points about how Google doesn't actually make the phones, they just provide the software. Overall, very informative read!
Hi Jay,
ReplyDeleteI enjoyed reading this post, in particular your analysis of the various directions the two CEOs have taken regarding patent litigation. Going through the courts and subsequent appeals processes likely causes quite a bit of company time and efforts towards dealing with the lawsuits. I'm curious to know whether this counts as a settlement or an agreement when licensing and whether this was a cost effective option for both parties in the long run. Thanks for a great post!