Apple’s Claim of Android Rip-Off Awaits Trade Agency Ruling

December 06, 2011, 5:30 AM EST By Susan Decker

(Updates with closing share price in seventh paragraph.)

Dec. 5 (Bloomberg) -- For two years, Apple Inc. has told the world that phones running on Google Inc.’s Android operating system are iPhone rip-offs. Now Apple is about to learn whether a U.S. trade agency thinks its claims have merit.

The International Trade Commission is set to rule Dec. 14 in a patent complaint lodged by Apple against rival smartphone maker HTC Corp. The decision, postponed from the original date of tomorrow, would mark the first final verdict from any judicial entity in Apple’s global patent war against HTC and fellow Android-phone makers Samsung Electronics Co. and Motorola Mobility Holdings Inc.

A ruling for Apple may lead to a ban on U.S. imports of HTC devices, derailing the Taoyuan, Taiwan-based company’s trajectory from a small contract manufacturer founded in 1997 to the biggest U.S. smartphone seller in the third quarter. A victory for HTC may help it secure favorable terms in any settlement with Apple.

“In the past two years, HTC has emerged essentially from obscurity by promoting their own brand and high-end phones, and they’ve largely been able to do this by leveraging Android,” said Alex Spektor, an analyst with Strategy Analytics Inc.

HTC generated about $5 billion in U.S. sales last year, according to a separate patent complaint it filed at the trade agency against Cupertino, California-based Apple. That’s more than half of HTC’s $9.1 billion (NT$275 billion) in global 2010 sales.

HTC Shares Fall

HTC sold 24 percent of the smartphones in the U.S. during the third quarter, ahead of Samsung’s 21 percent and Apple’s 20 percent, Canalys reported Oct. 31. The Android platform accounts for almost 70 percent of the U.S. smartphone market, the Palo Alto, California-based researcher said. There were 120.4 million smartphones worldwide in the third quarter, a 49 percent jump from the year-ago period, Canalys said.

Investors, speculating that HTC might lose the case, sent HTC to a 17-month low ahead of the ruling. HTC declined by its 7 percent daily limit to close at NT$448.50 on the Taiwan Stock Exchange, the lowest since July 2010. Apple rose $3.31 to $393.01 at 4:30 p.m. in Nasdaq Stock Market trading.

HTC’s Android phones, introduced in 2008, infuriated Steve Jobs, according to Walter Isaacson’s biography of the late Apple founder. Jobs made it his mission “to destroy Android,” which he said “ripped off the iPhone, wholesale,” according to the book.

Apple Claims

Apple contends that HTC’s Android phones infringe four Apple patents, including one for a system to detect telephone numbers in e-mails so they can be stored in directories or called without dialing the numbers. The commission is reviewing an agency judge’s findings that HTC infringed that patent and one covering the transmission of multiple types of data, along with two other Apple patents that the judge said weren’t infringed.

The case is one of about a dozen before the commission related to the dispute over Android devices. Microsoft is fighting with Motorola Mobility and Barnes & Noble Inc., while Apple has legal disputes with HTC, Samsung and Motorola Mobility around the world.

A federal judge in San Francisco denied Apple’s request to halt sales of Samsung’s Infuse 4 and Galaxy S 4G phones and its Galaxy 10.1 tablet while a patent case is pending. The judge found that Apple was likely to win on some infringement claims, while Samsung had raised “substantial questions” of invalidity of two of the four patents in the case. The judge still said Apple didn’t show it would be irreparably harmed by Samsung remaining on the market until the July trial.

HTC Setback

Apple also has patent-infringement suits pending against HTC in district court, though the trade agency tends to move more quickly.

An Apple victory would mark the second setback for HTC in two weeks at the agency. On Nov. 21, the commission rejected an agency judge’s findings that Apple was violating the patent rights of HTC’s S3 Graphics unit. HTC agreed to buy S3 Graphics for $300 million in July after the judge said Apple was infringing two S3 Graphics patents for video compression.

The commission is an independent agency set up to protect U.S. markets from unfair trade practices. It has the power to block imports of products found to infringe intellectual property rights.

HTC has said it has “alternative solutions in place” to work around the patents if a violation is found.

T-Mobile USA Inc., the fourth-largest U.S. wireless provider, said in an Oct. 6 filing with the trade agency that it has much to lose should there be any limit on HTC phones.

‘Locking In Consumers’

“An ever-increasing majority of T-Mobile’s U.S. customers prefer the Android platform and would be unable to purchase adequate substitutes in the near-term if HTC’s Android smartphones were excluded,” T-Mobile, a unit of Deutsche Telekom AG, said in the filing.

T-Mobile teamed with Google and HTC to sell the first Android phone in the U.S. in September 2008, and a majority of its current smartphone sales are devices made by HTC.

Google, which denies copying the iPhone and hasn’t been named in any of the trade agency complaints, argued in a filing that Apple is trying to control the U.S. smartphone market through litigation. HTC’s Android devices “are helping prevent Apple’s iOS from becoming the sole viable mobile platform and thus ‘locking in’ consumers and software developers to that platform,” Google said in the filing.

4G Phones

Apple has argued that it’s not trying to exclude all rival smartphones, only those using Apple inventions without permission.

“Apple is an American company that has poured billions of dollars in research and development and other investments into the U.S. economy,” Apple wrote in an Oct. 17 filing with the agency. “HTC is a foreign company that is free-riding on Apple’s research and development expenditures and resulting patents rather than creating its own innovations.”

There’s no guarantee that the commission will ban the HTC phones should it find that HTC violated Apple’s patents.

Neither T-Mobile nor Google took a position on the infringement issue, focusing instead on the possible import ban. T-Mobile said an exclusion order may undermine efforts to spread the newest generation of phones, known as 4G, even as the Obama administration favors expanding wireless high-speed Internet service into rural areas.

The Bellevue, Washington-based company, which doesn’t sell the iPhone, said it operates “America’s largest 4G network.”

‘Last Thing’

The trade agency’s staff, which acts as a third party on behalf of the public in certain cases, has said that an exclusion order is “unlikely to have any significant impact on the public interest” and demand for smartphones could be met by other companies, including Apple.

It does recommend a limited exception for 4G phones. HTC accounts for more than half of all 4G sales in the U.S., so the company should be allowed to continue to bring in those phones for six months until additional competitors enter the market, the staff recommended.

HTC isn’t expected to retain its top spot in smartphone sales this quarter. On Nov. 23, the company cut its fourth- quarter revenue forecast, citing the weak global economy and competition from Apple and Samsung.

Apple has begun selling the iPhone 4, and Samsung’s newest Galaxy has become its best-selling phone ever, said Spektor of Strategy Analytics. At the same time, Sprint Nextel Corp., one of HTC’s customers, has begun selling the iPhone. Another loss at the trade agency would further undermine HTC’s position, Spektor said.

“The last thing they need is for a non-competitive factor to come into play,” said Spektor, who is based in Newton, Massachusetts. “HTC’s competitors in the Android space would be happy because the Android slice of the pie is less crowded.”

The case is In the Matter of Certain Personal Data and Mobile Communications Devices and Related Software, 337-710, U.S. International Trade Commission (Washington).

--With assistance from Adam Satariano and Peter Burrows in San Francisco and Tim Culpan in Taipei. Editors: Michael Shepard, Steve Walsh

To contact the reporters on this story: Susan Decker in Washington at sdecker1@bloomberg.net;

To contact the editor responsible for this story: Michael Shepard at mshepard7@bloomberg.net

View the original article here

Apple’s Claim of Android Rip-Off Awaits U.S. Trade Agency Ruling

December 05, 2011, 7:59 AM EST By Susan Decker

Dec. 5 (Bloomberg) -- For two years, Apple Inc. has told the world that phones running on Google Inc.’s Android operating system are iPhone rip-offs. Now Apple is about to learn whether a U.S. trade agency thinks its claims have merit.

The International Trade Commission is set to rule Dec. 6 in a patent complaint lodged by Apple against rival smartphone maker HTC Corp. The decision would mark the first final verdict from any judicial entity in Apple’s global patent war against HTC and fellow Android-phone makers Samsung Electronics Co. and Motorola Mobility Holdings Inc.

A ruling for Apple may lead to a ban on U.S. imports of HTC devices, derailing the Taoyuan, Taiwan-based company’s trajectory from a small contract manufacturer founded in 1997 to the biggest U.S. smartphone seller in the third quarter. A victory for HTC may help it secure favorable terms in any settlement with Apple.

“In the past two years, HTC has emerged essentially from obscurity by promoting their own brand and high-end phones, and they’ve largely been able to do this by leveraging Android,” said Alex Spektor, an analyst with Strategy Analytics Inc.

HTC generated about $5 billion in U.S. sales last year, according to a separate patent complaint it filed at the trade agency against Cupertino, California-based Apple. That’s more than half of HTC’s $9.1 billion (NT$275 billion) in global 2010 sales.

HTC sold 24 percent of the smartphones in the U.S. during the third quarter, ahead of Samsung’s 21 percent and Apple’s 20 percent, Canalys reported Oct. 31. The Android platform accounts for almost 70 percent of the U.S. smartphone market, the Palo Alto, California-based researcher said. There were 120.4 million smartphones worldwide in the third quarter, a 49 percent jump from the year-ago period, Canalys said.

The Wrath of Jobs

HTC’s Android phones, introduced in 2008, infuriated Steve Jobs, according to Walter Isaacson’s biography of the late Apple founder. Jobs made it his mission “to destroy Android,” which he said “ripped off the iPhone, wholesale,” according to the book.

Apple contends that HTC’s Android phones infringe four Apple patents, including one for a system to detect telephone numbers in e-mails so they can be stored in directories or called without dialing the numbers. The commission is reviewing an agency judge’s findings that HTC infringed that patent and one covering the transmission of multiple types of data, along with two other Apple patents that the judge said weren’t infringed.

Dozen Cases

The case is one of about a dozen before the commission related to the dispute over Android devices. Microsoft is fighting with Motorola Mobility and Barnes & Noble Inc., while Apple has legal fights with HTC, Samsung and Motorola Mobility.

An Apple victory would mark the second setback for HTC in two weeks at the agency. On Nov. 21, the commission rejected an agency judge’s findings that Apple was violating the patent rights of HTC’s S3 Graphics unit. HTC agreed to buy S3 Graphics for $300 million in July after the judge said Apple was infringing two S3 Graphics patents for video compression.

The commission is an independent agency set up to protect U.S. markets from unfair trade practices. It has the power to block imports of products found to infringe intellectual property rights.

HTC has said it has “alternative solutions in place” to work around the patents if a violation is found.

T-Mobile USA Inc., the fourth-largest U.S. wireless provider, said in an Oct. 6 filing with the trade agency that it has much to lose should there be any limit on HTC phones.

‘Locking In Consumers’

“An ever-increasing majority of T-Mobile’s U.S. customers prefer the Android platform and would be unable to purchase adequate substitutes in the near-term if HTC’s Android smartphones were excluded,” T-Mobile, a unit of Deutsche Telekom AG, said in the filing.

T-Mobile teamed with Google and HTC to sell the first Android phone in the U.S. in September 2008, and a majority of its current smartphone sales are devices made by HTC.

Google, which denies copying the iPhone and hasn’t been named in any of the trade agency complaints, argued in a filing that Apple is trying to control the U.S. smartphone market through litigation. HTC’s Android devices “are helping prevent Apple’s iOS from becoming the sole viable mobile platform and thus ‘locking in’ consumers and software developers to that platform,” Google said in the filing.

Apple has argued that it’s not trying to exclude all rival smartphones, only those using Apple inventions without permission.

4G Phones

“Apple is an American company that has poured billions of dollars in research and development and other investments into the U.S. economy,” Apple wrote in an Oct. 17 filing with the agency. “HTC is a foreign company that is free-riding on Apple’s research and development expenditures and resulting patents rather than creating its own innovations.”

There’s no guarantee that the commission will ban the HTC phones should it find that HTC violated Apple’s patents.

Neither T-Mobile nor Google took a position on the infringement issue, focusing instead on the possible import ban. T-Mobile said an exclusion order may undermine efforts to spread the newest generation of phones, known as 4G, even as the Obama administration favors expanding wireless high-speed Internet service into rural areas.

The Bellevue, Washington-based company, which doesn’t sell the iPhone, said it operates “America’s largest 4G network.”

‘Last Thing’

The trade agency’s staff, which acts as a third party on behalf of the public in certain cases, has said that an exclusion order is “unlikely to have any significant impact on the public interest” and demand for smartphones could be met by other companies, including Apple.

It does recommend a limited exception for 4G phones. HTC accounts for more than half of all 4G sales in the U.S., so the company should be allowed to continue to bring in those phones for six months until additional competitors enter the market, the staff recommended.

HTC isn’t expected to retain its top spot in smartphone sales this quarter. On Nov. 23, the company cut its fourth- quarter revenue forecast, citing the weak global economy and competition from Apple and Samsung.

Apple has begun selling the iPhone 4, and Samsung’s newest Galaxy has become its best-selling phone ever, said Spektor of Strategy Analytics. At the same time, Sprint Nextel Corp., one of HTC’s customers, has begun selling the iPhone. Another loss at the trade agency would further undermine HTC’s position, Spektor said.

“The last thing they need is for a non-competitive factor to come into play,” said Spektor, who is based in Newton, Massachusetts. “HTC’s competitors in the Android space would be happy because the Android slice of the pie is less crowded.”

The case is In the Matter of Certain Personal Data and Mobile Communications Devices and Related Software, 337-710, U.S. International Trade Commission (Washington).

--With assistance from Adam Satariano and Peter Burrows in San Francisco and Tim Culpan in Taipei. Editors: Michael Shepard, Joe Winski

To contact the reporters on this story: Susan Decker in Washington at sdecker1@bloomberg.net;

To contact the editor responsible for this story: Michael Shepard at mshepard7@bloomberg.net

View the original article here

Flipboard Stakes Its Claim as the Newsstand of the Future

By Mathew Ingram

Flipboard, one of the first iPad applications to take real advantage of the new device’s touch interface to create a kind of digital magazine, released a series of updates and new features Thursday that turn the app into even more of a tablet newsstand. As newspapers and magazines continue to try to capture readers with their own site-specific apps, Flipboard is making it easier for users to create their own constantly changing iPad magazine—one that pulls from hundreds of sources and has social feeds and signals built in. As we’ve argued before, this looks a lot like the future (or one version of the future) of digital publishing.

Among the new features in the updated version of the Flipboard app is the ability to pull in an unlimited number of RSS feeds from websites or content publishers you want to follow through the app (readers were previously limited to 21 feeds). When you can aggregate and then browse hundreds or even thousands of sources—from RSS feeds to such magazines as The Economist, one of Flipboard’s new partners in this version—one of the big issues is finding content, so there’s a new "content guide" built into the app that allows users to search across all their sources and that also recommends content from Flipboard partners.

In addition to the content guide, Flipboard has added a number of enhancements aimed at using social signals to filter content—including a new tag or banner that says "popular on Flipboard" to highlight articles that have been read or shared by a lot of app users (popular articles will also be featured in the content sections that Flipboard sets up, such as Art & Design, Technology, etc.). And the way tweets with links appear has also changed: The article that’s linked now shows up expanded with the tweet in a small strip at the bottom, which highlights the content being linked to rather than the tweet itself.

The content guide—which isn’t driven by an algorithm but involves Flipboard staff highlighting content from various sources—is obviously the kind of editorial function that newspaper and magazine editors used to perform. But they did it within their own publications, whereas Flipboard is doing it by drawing from a vast and growing selection of digital sources (content from LinkedIn and its LinkedIn Today social news platform is also included in the new update).

In an era when anyone can become a publisher—thanks to what Om calls the "democracy of distribution" phenomenon created by social-publishing tools like blogs and Twitter and Facebook—the ability to search, aggregate, and filter hundreds of sources from different platforms is a crucial function for a media outlet. It’s one that Flipboard and similar apps, such as News.me from Betaworks and Pulse, are currently doing a lot better than any existing mainstream media entity. In fact, they’re doing it better than Google News, too.

While Flipboard’s new features add a lot of utility to the app, they still don’t include one of the big elements a digital-content service should theoretically allow, which is personalization—in other words, recommendations and filtering based on a user’s actions and social graph. While some apps, such as Zite (and services such as the Washington Post’s Trove) have made steps toward what some call "The Daily Me," no one has come up with a killer offering.

If anyone is well-positioned to do this, it’s Flipboard, since one of the company’s earliest acquisitions was The Ellerdale Project, which was working on exactly that kind of smart recommendation technology. According to comments by Chief Executive Mike McCue after the latest release, Flipboard is close to releasing a new version with personalization built in. Having recently landed a $50 million funding round, the company certainly has the runway to move forward with it—and that will extend the gap between Flipboard and the majority of the mainstream media even further.

Also from GigaOM:

A Modern Media Manifesto for the Digital-First Era (subscription required)

Simplee Brings Mint-Like Management to Health Info

First Solar Wins the Fed’s Largest Solar Support: Almost $4 Billion

Skype Brings Video Calls to Select Android Devices

A Peek Inside the New Apple Thunderbolt Cable

View the original article here

Apple Denies Amazon’s Claim That ‘App Store’ Is Generic Term

May 20, 2011, 12:23 AM EDT By Karen Gullo

May 20 (Bloomberg) -- Apple Inc., suing Amazon.com Inc. for trademark infringement, denied the retailer’s claims that “app store” is a generic term and that the words together stand for a store for application programs.

“Apple denies that, based on their common meaning, the words ‘app store’ together denote a store for apps,” the company said in a filing yesterday in federal court in Oakland, California.

The term isn’t commonly used by businesses to describe download services and, because the mark “app store” isn’t generic, Amazon’s Appstore for Android service isn’t an “app store,” Apple said in the filing.

Apple is seeking a court order to prevent Amazon from using “App Store” to sell software applications for mobile devices, according to a March 18 complaint. Amazon countered in an April 26 court filing that the words together are a generic term that Cupertino, California-based Apple doesn’t have exclusive rights to use.

The online retailer asked a federal judge to throw out Apple’s lawsuit and provide an order allowing it to use the term to sell programs for Android devices. Apple said Seattle-based Amazon isn’t entitled to an order allowing it to use the phrase.

Mary Osaka, a spokeswoman for Amazon, didn’t return a voice-mail seeking comment.

Amazon’s Appstore offering downloads of software for Android devices opened March 22.

The case is Apple v. Amazon, 11-01327, U.S. District Court, Northern District of California (Oakland).

--Editors: Peter Blumberg, Michael Hytha

To contact the reporter on this story: Karen Gullo in San Francisco at kgullo@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

View the original article here