Apple and HTC are finished fighting in court. The two companies say they have a confidential settlement that will allow each of them to license current and future patents from the other for the next ten years. They are also dropping all current lawsuits against one another.
Analyst Shaw Wu of Sterne Agee says Apple has the stronger patent portfolio by far, and is almost certainly the winner in this settlement. He estimates that HTC will pay Apple $6-$8 in licensing fees for every Android phone sold. Based on current sales projections, that would come to as much as $280 million a year. That’s between 2% and 3% of HTC’s annual revenue, but it’s less than 0.002% of Apple’s revenue. Wu also thinks the deal could be a blueprint for future Apple settlements with Samsung and Motorola (Google.)
“HTC is pleased to have resolved its dispute with Apple, so HTC can focus on innovation instead of litigation,” said Peter Chou, CEO of HTC. During the past several years, the Taiwanese company has transformed itself from a maker of “white label” consumer devices into a leading maker of Android smartphones. But patent lawsuits have been an obstacle for HTC. Earlier this year, it’s Evo 4G LTE phone was temporarily kept off the market by US Customs agents because of HTC’s patent disputes with Apple.
“We are glad to have reached a settlement with HTC,” said Apple CEO Tim Cook. “We will continue to stay laser focused on product innovation.” And today rumors are swirling that Apple’s latest innovation may be ready sooner than expected. China’s Commercial Times is reporting that trial production of the newest iPhone will begin next month. The report was translated by DigiTimes, which says that manufacturers are not producing the iPhone 5 as quickly as Apple had hoped they would. By focusing on certification of “related parts and components” for the next generation iPhone, Apple may be trying to avoid a similar problem the next time around by producing parts for both the iPhone 5 and the iPhone 5S at the same time.
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