Apple's HTC patent lawsuit is a bluff

Now that buzz about Apple's patent lawsuit against HTC has quieted a bit, I'm ready to pipe in with some contrarian analysis. I agree with other pundits suggesting that the lawsuit is competition by litigation, where Apple hopes to scare off mobile manufacturers from licensing Android. Surely some handset manufacturers will pull back, but they would be foolish to do so. For other existing and potential Android licensees, the lawsuit is a get out of jail free card. Apple's patent case should embolden, not restrain them. There may never be a better time to license Android than now.

Apple claims infringement of 20 patents related to iPhone's user interface. Engadget's March 2nd patent breakdown is a must-read clinical analysis. But there's more to competition by litigation than the actual patents. Lawsuits often aren't so much about what's right but what lawyers think they can prove; often the winner tells the more believable story, even in patent cases. Similarly, much strategy goes into lawsuits -- how they're presented, where they're filed and when. Then, of course, there is whom. In this case, Apple took on HTC and not Google. Now why is that?

Apple's initial goals have little to do with protecting intellectual property as much as scaring away competitors. I hone in on this because Apple chose not to sue Google, Android's major developer, but instead the largest licensee of the mobile operating system. HTC's Sense UI gives Apple a bit more range to single out the one manufacturer, but based on various analyses of the patents that's more bark than bite.

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Why HTC and not Google?

Why not sue Google? Eight primary reasons:

1) Apple potentially gains more by scaring off potential Android licensees than engaging in a protracted patent lawsuit. It's easier and more effective to raise bluster (and loads of free press) by engaging HTC than Google. Meanwhile, Apple can drag out the lawsuit as a distraction for HTC and other (frightened) Android licensees -- for years.

2) Apple doesn't want to take on Google, which already has come to HTC's defense. Google would fiercely fight Apple, understanding that mobile devices are the future of search and advertising.

3) Apple needs Google more than Google needs Apple. Unless Apple is willing to switch to Bing -- not a good idea considering iPhone buyer demographics -- Google search and maps are a necessary evil. If Google is willing to play tough with China, Apple is easy enough for Google to snuff off. Apple won't take on Google from a weaker position.

4) HTC is somewhat disadvantaged, being a Taiwan-based company. Google has home-court advantage (like Apple), making it a much more formidable opponent than HTC.

5) Patent lawsuits take years to resolve, hence Apple's separate complaint with the International Trade Commission. Again, Apple is using scare tactics to psychologically attack existing and potential Android licensees. So, this is quite similar to No. 1.

6) The patent claims are likely not as sure as they appear. Since most of the claims are really about Android, Google is the more sensible target of any lawsuit. If Apple lawyers were truly confident of winning against Google -- and in reasonable timeframe, they would file lawsuit against the search giant.

7) Android's open-source status creates all kinds of logistical and legal problems for Apple. The company really doesn't want to be labeled with a big Scarlet Letter as an open-source opponent. Apple has benefitted from open-source community development. It's a vocal group Apple doesn't want to piss off. Then there are all the nasty legal issues and potentially damaging precedents should Apple make a frontal open-source assault.

8) The iPhone-Android phone market looks much like the Mac-Windows PC market did in the 1980s and 1990s. Apple unsuccessfully sued Microsoft for infringing on Macintosh user-interface intellectual property. The lawsuit dragged on for years, ending in settlement in 1997. But what if in the early days of the Windows PC, Apple had sued clone king Compaq instead? Compaq was more vulnerable to a UI copyright claim than Microsoft, and other DOS/Windows licensees would have received the message to back off. By attacking HTC, Apple hopes to prevent a repeat "us against everyone else" scenario.

What Apple Fears

Apple has good reasons to fear Android. In the three months from December to February, Android's US smartphone subscriber share shot up from 2.8 percent to 7.1 percent. Worldwide, in 2009, Android smartphone market share -- based on sales -- rose from 0.5 percent to 3.9 percent, according to Gartner (The first Android phone, the T-Mobile G1, shipped in late 2008). Last month, Google CEO Eric Schmidt asserted that 60,000 Android handsets are shipping by the day.

All this circles back to my claim that the patent lawsuit is a bluff. My reasoning:

1) Apple chose HTC, not Google. There is no immediate risk to any patent claims against HTC. Since the real claims are against Google, Apple may find the court -- or even the ITC -- reluctant to rule against an Android licensee in good faith. There is perceived risk, but none in the short term, which is long enough for a united Android front to do market damage against iPhone -- particularly in emerging markets.

2) Apple filed against HTC and not other licensees. Apple had its chance to take on Android licensees, choosing instead to go after one. HTC is enough:

  • If the claims are shaky.
  • If Apple is looking for one case to establish precedent.
  • If the more immediate objective is to scare off existing or would-be Android licensees.

HTC being enough for this lawsuit isn't enough to legally or even logistically hurt other Android licensees.

3) Apple is unlikely to sue other Android licensees anytime soon. A good legal strategy -- from cost and logistical perspectives -- is to make a single case. Rather than being afraid, existing and would-be Android licensees should feel emboldened by the HTC lawsuit. Behind the bluster, Apple has really given the all clear -- it's safe to go ahead; that's Apple's tell. Apple's bluff is meant to convince other licensees that they can't win; so they lay down their Android hands. Yes, Apple could file against other Android licensees, but the only immediate benefit would be to create more fear -- that licensees should fold their hands. Hardware manufacturers should look at Google's backing HTC; there is a heavy-sitting ally at the table across from Apple.

27 Responses to Apple's HTC patent lawsuit is a bluff

  1. rainydayinterns says:

    Easy for the author to say when it is not his money on the line. Companies behave differently when the treat is real and directed at them.

    A bluff works only if you are willing to throw a punch soon or later. It's pretty clear Apple just threw a punch. We would be surprise if anyone else would be interested in picking another fight with them any time soon.

    • joewilcox says:

      @rainydayinterns Are you suggesting that licensing Android is "picking another fight"?

      • mamdooh says:

        Nokia last week asked a federal judge to toss out Apple's antitrust claims, saying the iPhone maker indulged in "legal alchemy" when it tried to divert attention from its "free-riding" of Nokia's intellectual property.

        The filing last Thursday was the latest salvo in a battle that began in October 2009 when Finnish handset maker Nokia sued Apple, saying the iPhone infringed on 10 of its patents and that the U.S. company was trying "to get a free ride on the back of Nokia's innovation." Nokia demanded royalties on all iPhones sold since Apple introduced the smartphone in June 2007.

        http://www.computerworld.com/s/article/9170378/Apple_practices_legal_alchemy_to_mask_IP_theft_claims_Nokia?taxonomyId=13

  2. martemipp says:

    I think Apple needs to fear Android's growth only if it's coming at the iPhone's success. That does not appear to be the case yet.

  3. pureosmosis says:

    The truth is not necessarily exactly what happened at a given moment in time. The truth is what a reasonable group (jury) agree is the most plausable chain of events as presented by the most convincing entity. Facts have very little bearing on the actual truth as the facts can be manipulated toward an expected outcome. The money on the line is not about todays or yesterdays dollars, its about the entire future of some companies existance and products of the future.

  4. DrClue says:

    It's interesting in reading various
    Apple related news items of late, that
    they are starting to look a lot like a
    certain firm in Redmond , Washington
    did , just about the time the government
    took a big bite out their hind side.

    I would wonder , does Apple notice this
    change in their appearance , and with
    $52 billion laying around , is the extra
    bit of chump change worth it?

    Could this lead to an apple logo eventually
    once again meaning The Beetles?

    • dmitrismyslov says:

      Well, they both play hardball, but that is what the big companies do. Other than trying to use a monopoly to bar competion's operating systems from the full web experience, I do not think Microsoft's behavior has been so different from the competition. I know this meme, "Apple is the new Microsoft" is a favorite talking point for Apple's detractors, but I have not seen convincing evidence to give it substance. On the other hand, I think I could make a good case for Microsoft being (or trying to be) the "new Apple," even though really I think the two companies remain very different from each other.

  5. cgallaway says:

    Another angle you forgot....Of all the other people putting Android on their phones, HTC is the only one not tangled with the other carriers. Verizon is the partner behind putting Android on their own network, as is ATT and Sprint. The carriers are telling the phone manufacturers (Samsung, Motorola, SonyEricsson, et al.) to make a phone with Android for their customers. And all those manufacturers make phones for all carriers. So, if Apple were to go after the traditional US and Japan phone makers, they would piss off all the carriers that could carry the Iphone. Meaning, that while people are pissed at ATT, Verizon and Sprint may not be clamoring to carry the Iphone should Apple be wanting to play them against ATT when the contract is up soon. Business....requires competition and a market. If Verizon and Sprint don't want the Iphone, then ATT is in a better position to make demands. If none of them want the Iphone, no matter how unlikely, then Apple won't be able to sell the Iphone.

    I would like to see Verizon, Sprint and ATT wade into this, because if the court rules against HTC, then they would be at Apple's whims and fancy. I would also like to see the other phone manufacturers wade into this, because if the court rules against HTC, then they are next for having the same operating system. I would also like to see RIM, Palm, etc., get involved and sue Apple for the same things. Just because you get a patent in this country, doesn't mean that the patent wasn't applied for before. That is the job of Your patent attorney, not the patent office. I would also like to see Google get involved with various detailed "friend of the court" briefs, detailing how "Android" is open source, and showing how the patents involve are overly vague or don't apply.

    • DotNet_Coder says:

      "HTC is the only one not tangled with the other carriers"

      Huh? HTC produces devices for almost every major carrier in the world and has done so for years now.

  6. MarkKB says:

    Interestingly enough, it was actually Digital Research, Inc they sued first, for it's Graphical Environment Manager (GEM). It's probably how they were able to get a license out of Microsoft for the similar GUI elements in Windows 1.0 and the Mac.

    In fact, the license is what got Apple v. Microsoft/HP rolling - Apple claimed that the license did not cover Windows 2.0, only 1.0, and even if it did, Microsoft (and HP with NewWave) had violated the agreement by including other features not covered by the license in Win2.0, such as omg overlapping windows!

  7. Parv says:

    joe,

    u haven't said whether it was a good/bad decision by apple to sue.

  8. therealbillybob says:

    I don't think anyone realizes how personally affected Steve Jobs was by Windows 3.1 and Microsoft.

    Speaking as a business owner, your business is an extension of yourself and you take success and failure personally. Bill Gates allegedly was friendly with him before ripping of his software, and he obviously felt very betrayed.

    I think this law suit shows that he thinks it can happen all over again and this time he is not going to sit back and do nothing.

    As for Joe's reasons why this is a bluff, I don't agree with any of them. The first point does not mean anything. HTC are the ones that actually distribute the hardware that Apple want to remove so they are the natural target, Google is NOT the direct target at all. The second and third points are essentially the same point, but just because nobody else has been sued does not mean at all that nobody else will be in the future.

    Joe, please write another post as to why you think the patent claims are shaky. I can't see how any patent claim could be more obvious than the FAT patent, yet Microsoft won that one. My guess is that Google will quickly remove the offending features but I don't know exactly what Apple are claiming.

    Either way, Google needs to resolve this quickly or it could seriously affect adoption of Android. Since it is Linux and open source, I wonder if the Open Patent (or whatever they are called) people will step in. They offer to defend claims against open source and this sort of problem is exactly what they were set up for.

    • DotNet_Coder says:

      "Bill Gates allegedly was friendly with him before ripping of his software, and he obviously felt very betrayed."

      Yes, yes, very betrayed... let's also not forget that the person who felt betrayed also stole the idea himself. If anything, to me, it seems to be more of a "hey, I stole it first" scenario.

      "The first point does not mean anything. HTC are the ones that actually distribute the hardware that Apple want to remove so they are the natural target, Google is NOT the direct target at all." && "My guess is that Google will quickly remove the offending features but I don't know exactly what Apple are claiming."

      First off, without actually reading any of the patent claims at all, how can you say what this means? Almost every patent claim is against the operating system and not the hardware. HTC does not produce the operating system. Going after HTC was a move that does exactly as Joe suggests. Google is, and shall continue to be, the direct target as Android, while being open source, essentially belongs (for lack of a better term) to Google. Since Apple cannot and will not attack Google in the open, the only thing that they can do is go after the hardware manufacturers and use scare tactics. Google probably will not do anything to remove the "offending" features as they can win this easily without having to lift a finger. All it takes is Google to pull support for it's applications from Apple's platform. Imagine not having access to GMaps or GMail (or any of the other Google apps) on the iPhone and/or Apple O/S. Believe me, Google can be just as underhanded and sneaky as Apple can be and is not someone that typically can be pushed around. What Apple has done has essentially put themselves into a very bad position with Google.

      "The second and third points are essentially the same point, but just because nobody else has been sued does not mean at all that nobody else will be in the future."
      You are right on this one... however, it's doubtful at this point UNLESS Apple looses against HTC on some technicality (or reality and logic in the legal system actually triumphs). Then, they will probably pursue Archos, or some of the other smaller manufacturers.

      • therealbillybob says:

        I am not trying to argue for or against Steve Jobs, all I am saying is that HE feels cheated. Even if he is in the wrong it will not change how he feels.

        "HTC does not produce the operating system."

        No, but they sell a phone with the features included. Suing Google is not likely to achieve anything if they do not sell the OS itself. They could try to prevent distribution but that would not stop the Nexus One, they could sue for damages but if the retail price of Android is zero then how much will they get?

        In both cases it only makes sense to sue the manufacturer of the actual phone.

      • ghokie says:

        Contrary to popular (mis)understanding, Jobs did not steal (in the traditional sense of the word) the GUI form Xerox/PARC. Apple staff were allowed access to PARC with Xerox' blessing. Xerox sold Apple three days access to the campus in return for 1,000,000 shares of the new company @ 10/share (http://en.wikipedia.org/wiki/Apple_Computer).

        The "steal" came in the form of Jobs' recognition of the value of what he saw, his negotiation of the deal, and his ability to apply the technology to his product - well, actually developing a whole new class of product.

        therealbillybob's assessment of Gates' theft is accurate - as Microsoft did not pay PARC, Jobs or Apple for the GUI. He just ripped it off. Personally, I'm happy he did. I think Apple's a better company for it.

      • lucidthinker says:

        Another clarification. Apple paid for the right to "see" a demo of the GUI interface the Xerox was working on. Apple still had to create their own version WITHOUT having access to one bit of code. It's like being able to "see" an internal combustion engine but not get to see the blue-prints. They did hire some people away from Xerox to work on what to become the mac. But, what finally became the Mac GUI exceeded what the Xerox Star system in many ways. Here is a quote from Bruce Horn who worked at Xerox and then Apple:
        Bruce Horn, one of the main designers of the Macintosh software who worked at Xerox for years before he worked at Apple, discusses the substantial differences between the Apple interface and the various interfaces on Xerox systems:

        “There is a significant difference between using the Mac and Smalltalk. [Xerox PARC Alto Workstation] Smalltalk has no Finder, and no need for one, really. Drag-and- drop file manipulation came from the Mac group, along with many other unique concepts: resources and dual-fork files for storing layout and international information apart from code; definition procedures; drag-and-drop system extension and configuration; types and creators for files; direct manipulation editing of document, disk, and application names; redundant typed data for the clipboard; multiple views of the file system; desk accessories; and control panels, among others. The [Apple] Lisa group invented some fundamental concepts as well: pull down menus, the imaging and windowing models based on QuickDraw, the clipboard, and cleanly internationalizable software… The Mac and Lisa designers had to invent their own architectures.” [5]

        In short, did Apple take Xerox PARC Alto computer Smalltalk and reverse engineered it to make a copy? No, besides compensating PARC for the demo (with pre-IPO Apple stock deal), Apple took the basic concepts demonstrated by PARC and invented the architecture that is now used by modern computers.

        This false meme of how Apple "stole" the Xerox Star system diminishes the hard work and contributions and innovations that the original Mac team put in.

        On the other hand, Microsoft was given an early prototype of the Macintosh to facilitate the creation of Word and Multiplan (to become Excel) for the Mac OS. They were also given some source code to help optimize Word and Multiplan for the Mac OS. When Windows 1.0 and Sculley threatened to sue Microsoft Microsoft theatened to stop development of Word and Multiplan for the Mac. No suit was ever filed as Apple and Microsoft came to an agreement where Microsoft promised to continue to develop Word and Multiplan/Excel for the Mac (sound familiar?) while licensing "visual displays" for Microsoft to use in Windows 1.0. When Windows 2.0 came out it brought even more mac gui elements to the Windows world. Apple's reading of the agreement was that the "visual displays" only covered what was currently in Windows 1.0 not the further changes that Windows 2.0 brought. This brought about the gui suit everyone is familar with.

        Suffice it to say, two VERY different scenarios as to how each company came to have a GUI-based OS.

      • bornonjuly4 says:

        Bill Gates didn't steal it either. Get your facts straight. He spend $100,000 and bought a STAR workstation so his engineers can play with it. Source: http://en.wikipedia.org/wiki/Xerox_Star

        Here is an early history of windows of how Apple sued microsoft and failed because they idiotically gave aways the license to use their UI styles (and still microsoft did not use it). Source: http://technologizer.com/2010/03/08/the-secret-origin-of-windows/1/

  9. chinch987 says:

    More drivel in Joe's repetitive "blog for dollars" series. LOL.

    "Bluffing" is an attention grabbing but foolish word to use as it implies that Apple is faking it's patents and will soon drop litigation. LOL.

    While Apple is indeed out of control, Google is more so. You whack out the pawns (HTC) on way to King. It's called strategy.Taking on Google at this time is pointless.

    PS - regardless of the "default" search engine Bing/Google both do maps & search. Apple doesn't need google at all Joe.

    • Nanban Jim says:

      Bluffing doesn't imply a dropping of charges. You don't bluff if you don't think you can win by doing it.

  10. reets says:

    It is basicly Apple v HTC/Google. I can imagine that Google will be helping out with money and/or attorneys in this case. I really do hope this gets more companies to start using Android on their phones. I'm hoping i can get the Nexus One in Canada by this summer :)

  11. the_hammer says:

    I just have to say it because no one else is.

    How can Apple worry about market share when with the iphone:

    1) They have one product

    2) They have one carrier AT&T

    3 Other countries same senerio one carrier still one product.

    How can Apple be so arrogant or just stupid to continue to be exclusive with AT&T (or their counterparts in different countries) have one product and expect to pick up more market share?

    You would think by now with ALL the negative press with AT&T they would drop the exclusivity and expand to Verizon and T-mobile Even come out with a new version for them.

    Would they limit iPod sales to just Best Buy or Wal-Mart or Sears NO so why limit the iphone to just one carrier?

    Think how they are just loosing sales on their apps store literally million upon millions lost in potential sales.

    As successful as Apple has been some times they are just flat out stupid!

    • lucidthinker says:

      Hate to break it to you my friend. But, you assertion about the iphone only being available from one carrier EVERYWHERE (#3 above) couldn't be more wrong. Do a little research before making such a grand statements like that. http://support.apple.com/kb/HT1937 -- google is you friend. As far as the states, it COULD be that Apple didn't want to bother with making a unique phone JUST for the US and just for Verizon and another version just for Sprint. Unlike the rest of the world we have many different and incompatible wireless standards here.

      • the_hammer says:

        lucidthinker
        What the hell are you talking about my friend Apple didn't want to bother with making a unique phone JUST for the US and just for Verizon and another version just for Sprint. Unlike the rest of the world we have many different and incompatible wireless standards here.

        Manufactures make different versions all the time. Apple is cutting their own throats and whining about it in typical Apple fashion.

  12. lucidthinker says:

    To call the current Apple suit a bluff is stupid beyond belief. You don't spend millions, potentially tens of millions of dollars on lawyers, ignite the ire of the blogsphere, and suffer potential bad pr for a bluff!!! Also, Apple does run the risk with the suit that has not been highlighted enough pretty much everywhere among the tech press. By filing suit, Apple runs the risk of having their patents INVALIDATED! I would think that the Apple-haters would be cheering right now. If the patents are truly bogus as many people (who for most part aren't patent lawyers) have said, they would get invalidated. Then Google, Microsoft, and others can copy to their hearts content.

    • DotNet_Coder says:

      "To call the current Apple suit a bluff is stupid beyond belief. You don't spend millions, potentially tens of millions of dollars on lawyers, ignite the ire of the blogsphere, and suffer potential bad pr for a bluff!!!"

      Seriously? That has been typical Apple behavior for over a decade now! Apple has never cared who they offend anywhere nor have they really cared about bad PR. If they did (or more importantly, if Steve Jobs cared), we wouldn't see such horrible behavior and business practices from them. I guarantee you that if you asked any typical Apple user (who doesn't follow tech news as we do (the soccer mom pseudonym comes to mind, no offense to any soccer moms here)) about this lawsuit, they would scratch their heads and wonder exactly what you were talking about. Apple is not concerned about PR in their community of users because their users typically do not follow tech. They use their and move on with their lives.

      As for spending millions on a bogus suit; When you are sitting on over 50 billion dollars post-revenue, throwing a few million into a scare-tactic lawsuit is nothing. Especially considering that Apple has always had the "We can't lose" mentality.

      "I would think that the Apple-haters would be cheering right now."
      We are. :-D

  13. splamco says:

    Apple has decided that it can't compete with Android phones on merit so it's going to try to stop them legally. It's desperate, pathetic and will fail. Anyone who thinks Apple is not in violation of many more patents than they are going after HTC for is awfully naive. If Apple really felt they had a case they would have gone after Google to snuff out Android once and for all. They don't so this is obviously a stunt to try to scare licensees off of Android as the author said.

    Another example of Apple's pitiful willingness to actually compete on merit is the banning of anything from the app store that is remotely competitive with Apple. Apple has certainly built some nice products but iPhone/iPad is headed for the same niche as Mac.

  14. mamdooh says:

    http://www.computerworld.com/s/article/9170378/Apple_practices_legal_alchemy_to_mask_IP_theft_claims_Nokia?taxonomyId=13

    Apple practices 'legal alchemy' to mask IP theft, claims Nokia
    Apple trying to divert attention from patent dispute with antitrust charges, Nokia argues in federal court

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