Apple Inc. (AAPL) And HTC Settle Their On-Going Patent War

Apple Inc. (NASDAQ:AAPL) settled an ongoing patent battle on Saturday, which has been going on for more than two years with the Taiwanese smartphone maker, HTC Corp (TPE:2498). Both companies announced plans to dismiss a series of lawsuits filed against each other after Apple Inc. (NASDAQ:AAPL) accused HTC Corp (TPE:2498) of improperly copying the iPhone, two years ago.

Apple Inc. (AAPL) And HTC Settle Their On-Going Patent War

In a win-win deal for both, the settlement includes a 10-year license agreement that grants rights to current and future patents held by both parties. “HTC is pleased to have resolved its dispute with Apple, so HTC can focus on innovation instead of litigation,” HTC CEO Peter Chou said in the statement.

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Apple Inc. (NASDAQ:AAPL) CEO Tim Cook said: “We are glad to have reached a settlement with HTC.”

“We will continue to stay laser focused on product innovation.”

The financial terms of the deal have not been revealed, but it is widely believed that HTC Corp (TPE:2498) might be paying a fee in return for the license.  According to Sally Julien, a spokeswoman for HTC, the company doesn’t expect the deal to have “an adverse material impact on the financials of the company”.

The peace deal with HTC marks the first settlement by Apple Inc. (NASDAQ:AAPL) and a maker of devices that use Android, an operating system that has persistently been challenging Apple’s position in the mobile business. Apple’s war against Android, Google Inc (NASDAQ:GOOG)’s mobile operating system, was so important to iPhone maker, that the company’s late chief executive once described it as a thermonuclear legal war against Android. In Walter Isaacson’s biography of Steve Jobs, he was quoted “I’m going to destroy Android, because it’s a stolen product”.

Despite the end of the patent war between Apple and HTC, other and more important lawsuits continue around the globe, between Apple and Samsung (KSE: 005930), by far the biggest maker of Android smartphones.

“It’s the first major sign of a stand-down we’ve seen in the smartphone wars,” said Christopher V. Carani, a patent lawyer with McAndrews Held & Malloy in Chicago.

According to Mr. Carani, the HTC settlement should not be seen as a sign that Apple Inc. (NASDAQ:AAPL) might resolve its disputes with Samsung, which involves more important patents. The stakes in Apple’s dispute with Samsung are far higher than they were in its battle with HTC. Those stakes have certainly increased after the latest estimates by IDC, where Samsung leads the smartphone market share during the third quarter of this year, dethroning Apple Inc. (NASDAQ:AAPL). HTC Corp (TPE:2498) was in fifth place according to IDC.

Mr. Jobs viewed the patent battle similar to a nuclear war, while his successor, Mr. Cook is more pragmatic about such matters, though he also opposes rivals’ copying of Apple products. Mr. Cook has said publicly that he is not an enthusiastic combatant in the patent wars.