HTC, Apple settle patent disputes

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Taipei (CNA) –  Taiwan’s HTC Corp. and its arch rival Apple Inc. have agreed to settle their global patent disputes through the dismissal of all current lawsuits and a 10-year license agreement, ending a legal battle that has been running since 2010.

The license extends to current and future patents held by both parties, the two smartphone makers said in a joint statement released Sunday.

“HTC is pleased to have resolved its dispute with Apple, so HTC can focus on innovation instead of litigation,” HTC CEO Peter Chou said.

Apple CEO Tim Cook, meanwhile, said his company “will continue to stay laser focused on product innovation” after the settlement.

HTC said the settlement will not affect its financial forecast for the October-to-December quarter because the company has made provisions it deems appropriate in the relevant financial reporting periods.

HTC predicted in late October a likely revenue drop of 15 percent sequentially to about NT$60 billion (US$2.07 billion) in the fourth quarter, although the current quarter is a peak season for the consumer electronics business.

The Taoyuan-based manufacturer also forecast a fourth-quarter gross profit margin of 23 percent and operating margin of 1 percent. Both projections are below the third-quarter figures of 25 percent and 7 percent, respectively.

HTC and Apple have been locked in a patent battle since the U.S. company filed its first litigation against the Taiwanese firm in March 2010. In a series of litigations, each side has accused the other of patent infringement.

On Sept. 8, HTC Chairwoman Cher Wang said she remained optimistic about HTC’s chances of winning the lawsuits against Apple.

Her comment followed foreign newswire reports that Apple may face difficulties in invalidating two HTC patents related to data transmission in wireless devices.

The reports said the United States International Trade Commission could issue bans on imports of Apple’s latest version of iPad and the next generation of iPhone after HTC accused the U.S. consumer electronics giant of infringing on two HTC patents.

In the global smartphone market, HTC has seen its share slide rapidly in the light of intensified competition from Apple and Samsung Electronics Co. of South Korea, as well as Chinese vendors that make affordable phones running on the Android system.

According to data from the research firm International Data Corp. (IDC), HTC shipped 7.3 million smartphones with a 4 percent market share in the third quarter, dropping from 8.8 million units and a 5.7 percent share in the second quarter.

Although HTC hopes to revive its sales by launching models based on Microsoft Corp.’s Windows 8, the smartphone company will have to convince consumers that the models are interesting enough to merit purchase, IDC said.

HTC may see its market share decline further in the year-end holiday shopping season due to the limited contribution to sales from new products, Morgan Stanley warned in a Nov. 5 report.

The U.S. brokerage predicted that HTC will likely ship 6.4 million smartphones during the fourth quarter, which would put it in eighth place globally with only a 2.8 percent market share. 

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