HTC Loses Anti-Apple Lawsuit Over S3 Patents

Apple has been cleared of infringing video patents acquired by HTC from its purchase of S3 Graphics, with the USITC overturning a preliminary ruling in HTC's favor. Despite an early decision that OS X overlapped patented technologies back in July, Apple has in fact been guilty of "no violation" the US International Trade Commission decided, sending HTC's share price into a mild downward spin as investors reacted negatively.

"The investigation is terminated" the USITC confirmed, forcing HTC to defend its purchase of S3 Graphics altogether. The deal – which cost $300m - only completed last week, and HTC had hoped its expanded patent portfolio would add to its bargaining power against mobile device rivals. "There are many [patents] that are very strong ... we think the acquisition is justified because of all the patents" HTC CFO Winston Yung insisted this week.

Meanwhile, HTC is the subject of an ITC investigation itself, with Apple claiming the company has infringed its patents in HTC Sense, its smartphones and tablets. HTC had previously lost an earlier patent infringement case against Apple, with the company's iPhone and other devices found not to overstep HTC's IP in basic functionality like phone dialing and power management.

"We are disappointed," HTC general counsel Grace Lei said of the ruling, "but respect the ITC's decision." The company is now apparently considering an appeal, among other options, with its share price down almost 6-percent.

[via WSJ]