Apple 2.0

Covering the business that Steve Jobs built

Apple vs. HTC: What the experts say

March 3, 2010: 10:45 AM ET

There's a lot of second-guessing in the second-day stories

On Tuesday morning, Apple (AAPL) announced that it had sued Taiwanese smartphone maker HTC for, in Steve Jobs' words, stealing Apple's patented technology. See Apple strikes back.

By Tuesday afternoon, the experts had begun to weigh in, although few seemed to have any familiarity with the 20 patents named in the complaints. We'll get to what they had to say in a moment.

For now, the closest thing we have to an expert on these particular patents is Engadget's Nilay Patel, who did a thorough teardown of No. '949 --  so-called iPhone patent -- last January. That's when Apple COO Tim Cook, referring to the Palm (PALM) Pre, first threated legal action against "people ripping off our IP [intellectual property]."

In a long Engadget post filed Tuesday, Patel walked through the 20 patents at issue in these cases and concluded, as most observers have, that Apple's real target is Google's (GOOG) Android operating system. (The company seems content to let the Pre run out of steam on its own.)

Apple has "organized its attack very carefully," Patel writes, splitting the case in two and filing it in two different courts.

Broadly speaking, the 10 patents brought before a U.S. District Court in Delaware cover the way users interact with a touchscreen -- unlocking a device by swiping the image of a lock, for example, or setting in motion a list that seems to have its own momentum and bounces a little when it hits bottom.

The 10 patents filed before the U.S. International Trade Commission in Washington are older, operating system-level patents -- some dating back to NeXT -- that cover such details as how an object-oriented programming language exchanges messages or handles multitasking.

The older, OS-level patents brought before the ITC, Patel says, would traditionally be considered stronger. But either court could issue fines or stop HTC from selling the phones named in the suits.

"The real question now," he concludes, "is how HTC is going to respond -- and whether or not Google is going to get involved."

The rest of the experts -- the ones who don't seem to have read the patents -- are more concerned with strategy and precedents.

Kevin Rivette, a patent lawyer and former vice president for intellectual property strategy at I.B.M. (IBM), told the New York Times' Brad Stone that the lawsuit "is the opening shot in a war":

"Apple is island-hopping, attacking first the Asian companies. Then it can go after Motorola, gradually whittling away at Google's base. They want to break the Android tsunami."

Jonathan Zittrain, a professor at Harvard Law School, agrees, and told the Times' Nick Bilton that it's not too late for Apple to drag Google into the case:

"It clearly involves some form of litigation strategy of picking off the weaker members of the herd first," Mr Zittrain said. "They can always add Google to the suit later on."

Several experts pointed out that these cases can go on for 5 or 10 years, which is why most of them -- estimates ranged from 90% to 95% -- are settled out of court. Ezra Gottheil, an analyst at Technology Business Research, seemed pretty sure that this one would too.

"No one will be prevented from importing their phones into the country," he told BusinessWeek's Arik Hesseldahl. "It's just a matter of how much money flows to which party for the rights they end up swapping."

But these experts may not have dealt with Steve Jobs, who can be very stubborn, or Apple legal, which as Daring Fireball's John Gruber points out, is better known as a counter puncher.

"Off the top of my head, this is the first time I can recall Apple filing a patent lawsuit against a competitor except as a counter-suit (e.g. against Nokia). I can't speak to the hardware and 'architecture' issues, but I despise the idea of 'user interface' patents."

Eric Von Hippel, a professor of technological innovation at M.I.T.'s Sloan School of Management, agrees.

"It's a bad scene right now," he told the Times' Bilton. "The social value of patents was supposed to be to encourage innovation — that's what society gets out of it," he said. "The net effect is that they decrease innovation, and in the end, the public loses out."

The text of the lawsuits are available as pdfs. Click here for District Court and here for the ITC.

[Follow Philip Elmer-DeWitt on Twitter @philiped]

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About This Author
Philip Elmer-Dewitt
Philip Elmer-DeWitt
Editor, Apple 2.0, Fortune

Philip Elmer-DeWitt has been following Apple since 1982, first for Time Magazine, and now on the Web for Fortune.com.

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