Apple, HTC settle patent dispute; sign 10-year patent cross-licensing deal

Apple and HTC settled all of their ongoing litigation related to patent infringement that have lasted for almost three years, the two companies announced over the weekend. The global settlement includes dismissal of all current lawsuits and includes a 10-year license agreement. The license agreement includes all current and future patents held by both the companies, signalling a softening of stance by Apple under Tim Cook, who is more willing to settle patent infringement cases than going “thermonuclear” against Android handset vendors unlike Steve Jobs, his predecessor and the late Apple co-founder.

The financial details of the deal are confidential but HTC is expected to pay Apple a certain amount on every device. “HTC is pleased to have resolved its dispute with Apple, so HTC can focus on innovation instead of litigation,” said Peter Chou, CEO of HTC in a joint statement issued by the two companies.

“We are glad to have reached a settlement with HTC,” said Tim Cook, CEO of Apple. “We will continue to stay laser focused on product innovation.”

Apple had earlier managed to ban the import of certain HTC smartphones in the US that used some UI elements that infringed on Apple’s patents. HTC managed to sidestep the ban by pushing a minor software update that removed the infringing elements. However, HTC’s counter-suit was rejected and its $300 million acquisition of S3 Graphics to protect itself from Apple turned into a costly mistake. Apple recently also won a landmark case against Samsung, which has been asked to pay in excess of $1 billion in damages to Apple. Samsung is still pursuing the case but that must have been one of the reasons that led to such a deal between HTC and Apple.

HTC, which till last year was one of the biggest Android handset vendor, has seen its fortunes dwindle in the past four quarters with revenues dropping at alarming rates. The current litigation with HTC would be a distraction for Apple even as it trains its guns on Samsung, its closest rival and the world’s largest smartphone vendor. The 10-year cross-licensing of patents part of the deal could give HTC enough arsenal to take on Samsung and this could be a classic case of “the enemy of my enemy is my friend.” Samsung is a bigger threat to HTC than Apple as its products compete head-on with Android smartphones from Samsung.

Apart from Apple, HTC had also signed a patent deal with Microsoft earlier this year. Microsoft has managed to sign royalty related agreements with most Android smartphone vendors.

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