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.
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.