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HTC has bought US graphics chipmaker S3 graphics in a move that will add a collection of more than 200 patents to the Taiwanese mobile phone company’s portfolio. This purchase - which was first considered last year - may be followed by further deals, as CEO Peter Chou told Reuters: "HTC as a company needs to invest in patents, so this is a very good deal. Many companies spend a lot of money to buy patents. We'll stay open-minded for future similar purchases. If there's something right and there's a good opportunity then we'll consider it."
HTC is currently embroiled in patent disputes with Apple and Nokia, so bolstering its IP holdings is an essential move for a company that is viewed by many commentators as having a weak portfolio. Florian Mueller on the Foss Patents blog said last year that Apple and HTC cannot be considered as being on an equal footing in this regard: “In terms of patents, what [HTC] brings to the table is light guerrilla warfare.” Since then, however, HTC has attempted to improve its position by ‘renting’ a number of patents from its Android partner Google – however this strategy hit a major hurdle last week when a US judge declared that HTC cannot sue Apple with patents that it does not own.
HTC has been having problems in other areas, marking a disappointing turnaround for a company that looked, for a while, to be one of Asia’s great tech success stories. HTC’s sales rocketed in 2010 and for much of 2011; but it has not been able to maintain this momentum and sales are expected to decline sharply this year. This slump has also allegedly led to HTC being ‘locked out’ from the new version of Windows by Microsoft: HTC has denied this, but the story has been widely covered and may damage its credibility as a serious player in the smartphone sphere.
But while it has been a rocky few months for HTC, the company is still broadening its horizons. It has just signed letters of intent with two of China’s biggest internet companies, Tencent and Sina, with plans to introduce smartphones customised for the Chinese market, as well as co-operating on apps and cloud computing. This optimistic outlook is reflected in the attitude of CEO Chao, who has apparently remained unruffled by the smartphone disputes, telling Reuters: “Patent lawsuits haven’t caused any actual damage to HTC.” But despite this confidence, if HTC is to continue to be a significant name in the smartphone market, its IP portfolio needs to be strengthened. The purchase of S3 Graphics and its patents is a much-needed move in the right direction.
IP litigation, Patents