HTC Confirms Plans to Boost Patent Portfolio with S3 Graphics Acquisition

By Alexandra Burlacu , Jun 13, 2012 03:11 PM EDT

Among increased pressure from rival smartphone makers over patent infringement issues, HTC has confirmed its plans to complete the acquisition of S3 Graphics. Through this purchase, HTC aims to boost its patent portfolio with the company's intellectual property, Focus Taiwan reported.

At HTC's annual shareholders' general meeting, the company's General Counsel Grace Lei said that HTC values S3 due to the fact that the International Trade Commission (ITC) had ruled in 2011 that Apple infringed on S3 patents. "We think S3's patent portfolio is valid and strong, and we have decided to complete the purchase of S3 after cautious assessment," said Lei.

Legal Battles

HTC is currently engaged in legal battles with Apple and Nokia, and shipments of its new Android smartphones were recently blocked at U.S. Customs due to pressure from Apple and the U.S. ITC. Shipment blocks have since been lifted, but HTC recently found out that five patents it had licensed from Google have also been blocked by the U.S. agency.

S3 Graphics has a comprehensive portfolio of 270 patents, which have previously been licensed to Microsoft, Sony and Nintendo. HTC first decided to push a $300 million acquisition of the company in July 2011, when the ITC ruled Apple had infringed on two patents related to texture compression technology. In November 2011, however, HTC lost its patent-infringement case against Apple, and said it would reconsider the acquisition of S3 Graphics.

HTC vs. Apple

HTC filed patent infringement claims against the Cupertino, California-based iPhone maker, based on patents that were "transferred" from Google on September 1, 2011. The patents were considered a gift from Google to HTC, a key Android partner, in an effort to bolster the case against Apple. The nine patents mentioned in the lawsuit were from a collection of different mobile technology companies, including Motorola, Palm, and Openwave. Five of the patents, however, were thrown out, leaving HTC to bolster its patent portfolio by its own.

Apple has spent nearly three years fighting a patent war against its rivals, particularly those who use Google's Android mobile platform. Android has established its dominance as the world's most popular, best-selling mobile operating platform, increasingly threatening Apple's share of the market. Meanwhile, Apple's rivals claim the iPhone maker is trying to use its patents to avoid competition in the market.

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