Why Apple Settled Patent Suit With HTC: Is It Due To 4G LTE Patents Threat?

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On Saturday, Apple and HTC surprised the world after announcing an end of their 32-months intellectual property battle. Interestingly, they dismissed all deliberations that had been running since 2010.  However, the condition of licensing agreement between both the companies are confidential. They are secretly held with 10 years license agreements related to their current and future patents.

Of course, the agreement is yet to be divulged, but it’s expected that HTC is thought to have paid Apple. HTC would have to pay $5-$20 for every Android running handset. However, HTC is currently considered as a small threat for Apple in terms of market share compare to Samsung. However, the reason is still unclear why they went on some sorts of agreements. Apparently, Apple and HTC’s CEO issued statements that both went to settlement because they wanted to focus on innovation rather than to spend a hoard of dollars on intellectual property legal battles.

It’s pretty-known that Apple is engaged in legal battles against Android around the world in courtrooms. Apple has filed lawsuits against Android’s main hardware partners including Motorola, HTC and Samsung for infringing some of its patents. In March 2010, Apple sued HTC, first Android-based smartphone manufacturer, over 10 patents related to user interface design.

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In March 2010, Apple found that HTC was violating its one of the patents ‘data-detecting function’ ( patented in 1996)—that is used to automatically convert URLs and phone number in e-mail and message into live links. The patent forced HTC to delay the launch of its “HTC One X” smartphone in earlier this year in the U.S..

One thing is crystal clear that neither party (Apple and HTC) had significant leverage over the other. But it’s also obvious that Apple would come to a suitable agreement with HTC. At this time, the agreement is quite important for HTC compare to Apple. The reason is that HTC’s smartphone market share plunged to 4% in Q3 2012 compared to 10.3% in the same quarter of the last year. In addition to this, HTC could ship just 7.3 million smartphone in Q3 of this year. On the other hand, Samsung and Apple shipped 56.3 million and 26.9 million smartphones in the same quarter.

In 2010, Apple’s biggest rival on Android platform was HTC, but scenario has now changed and Samsung has become its archrival in smartphone and Tablet segment. Samsung has already started counterattacking over Apple and it’s dominating on several legal cases against Apple outside the U.S.. The settlement between HTC and Apple is a big surprise and is likely due to 4G LTE patents. Apple’s hold on LTE patents is relatively weaker than Samsung, Motorola, LG and HTC.

Apple is facing stiff competition from Samsung. Besides, Google’s plan to use Motorola Mobility’s patents could be fatal for Apple especially in wireless segment. Both Apple and HTC have declined to disclose their financial terms of the deal, despite we could believe that HTC would be paying Apple as part of the agreement. But here, Apple’s would try leverage over HTC’s 4G LTE patents to combat its rivals like Samsung and Motorola down the road.

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