The International Trade Commission just handed Apple (AAPL) a reason to celebrate the weekend and a defeat for both HTC and Google (GOOG) on the patent front. The ITC judge said that HTC infringed 2 out of the 10 patents that Apple asserted in its suit against the company. And that doesn't count five additional patents that Apple just filed suit over.
This is more than just a bitter disappointment, as the ITC staff had recommended dismissing the Apple infringement claims that the judge just gave official weight. Although HTC says it will appeal the verdict to the ITC commissioners, this is a serious blow to any company using Android.
If the commissioners uphold the judge's preliminary ruling, HTC will have to get Apple's permission -- read that as pay money, if Apple is willing -- to bring products into the U.S. or give up the market. This is exactly the sort of outcome that Google has been courting for some time, and it shows just how quickly Android could lose its dominant place in the industry.
Why patents are a key battleground
The U.S. is a key market for patent fights because it is economically important and because there are two parallel mechanisms a company can use to pursue alleged infringement. U.S. federal courts offer one approach, but ever since the landmark Supreme Court case eBay v. MercExchange, getting permanent injunctions against a competitor has become difficult.
The injunction, a form of what is called equitable relief, allows a court to instruct a company or person on what actions to take rather than simply paying money. A permanent injunction can stop a competitor in its tracks and is an enormous legal stick.
The ITC, however, is not part of the judicial system. Rather, it's a federal agency that, among other things, has statutory authority to bar products from entry into the U.S. That's what makes the ruling so dangerous for HTC and Google. If the ITC commissioners uphold the finding of the judge, Apple could have HTC products barred from coming into the country, which makes selling them here impossible.
Android in the crosshairs
The problem for Google is that many of the patents that Apple asserted were focused on the Android operating system and not the hardware. If either or both of these patents cover Android in general, and not any HTC-specific modifications or features, Apple could lock existing versions of Android out of the country. I agree with intellectual property blogger Florian Mueller that Apple isn't likely to be nice and let Google and HTC buy their way into the U.S.
Again, this is far from a done deal, but it's looking bleaker for Google and any company that makes Android-based handsets overseas and then brings them here.
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