When Apple (AAPL) filed its lawsuit against Taiwanese company HTC Corporation, the conventional view is that the Cupertino company was firing a shot over the bow of Google (GOOG). HTC makes smartphones using Google’s Android operating system as well as Google’s own Nexus One smartphone. That may be true, but it’s not the whole story.
Apple’s suit is just the most recent in a long, convoluted line of lawsuits over smartphone patents. Last year, a small company named Tsera filed a suit against Microsoft (MSFT), Apple, Bang & Olufsen, LG Electronics, and about 20 other companies alleging that Microsoft’s Zune and Apple’s iPod and lots of other media players violate a touch-screen patent owned by Tsera.
A year before that suit, another small company named Typhoon Touch Technologies filed suit against Apple, Fujitsu, HTC, and a slew of other smartphone makers for violating Typhoon Touch’s touch-screen technology. Apple’s suit against HTC alleges that the Taiwanese infringed 20 hardware and software patents that relate to Apple’s iPhone.
Whether or not any of the suits has merit remains to be adjudicated. For the rest of 2010, HTC is very likely to feel little or no effect from the suit unless the Delaware court or the International Trade Commission issues an injunction.
In the longer term, however, the threat of having to pay Apple a large settlement weakens HTC by casting fear, uncertainty, and doubt over HTC’s ability to continue making and selling its smartphones. The effect on Google, even if it is Apple’s real target, is neglible because Google can always find another maker for its own line of smartphones.
In many ways, the plethora of lawsuits related to smartphones resembles nothing so much as a circular firing squad. Small, unknown companies like Tsera and Typhoon Touch stand to gain a fortune if they win. And they win if the Microsofts and Apples settle, which is what nearly always happens. If the little guys lose, they disappear and no one really notices that they’re gone.
In the Apple v. HTC battle, HTC is the small guy that has been struggling to make money at the low end of the smartphone market. Apple is the 600-pound gorilla. The outcome of that fight is 90% certain.
But will Apple’s suit against HTC cast a pall over other smartphone makers. After all, if HTC is doing something wrong, what about LG, or Nokia (NOK), or Samsung, or Research in Motion (RIMM)?
Apple’s chosen target might be small, but it is also reasonably easy to hit. Going after one of the bigger players would be more costly to Apple and would be a riskier play. Depending on your point of view, Apple is being either shrewd or cynical.
Tell us what you think here.
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