HTC's Chou says company happy with Apple patent settlement

HTC CEO Peter Chou said that the Taiwanese smartphone maker is happy with the terms of the patent litigation settlement it inked with Apple (NASDAQ:AAPL) earlier this month, and he called media speculation about the terms of the deal "outrageous."

Peter Chou HTC


HTC and Apple announced the settlement Nov. 10, and the deal includes a 10-year licensing agreement. The terms of the deal are confidential, but media reports have suggested HTC will pay licensing fees to Apple, with some reports suggesting a figure of $6 to $8 per Android smartphone it sells. HTC has said it doesn't expect the license agreement to have an adverse material impact on the company's results.

Speaking to reporters at a product launch in Tokyo for Japanese operator KDDI, Chou said that media reports about the deal were wildly off the mark. "I think that these estimates are baseless and very, very wrong," he said. "It is [an] outrageous number, but I'm not going to comment anything on a specific number. I believe we have a very, very happy settlement and a good ending" to the issue.

Apple first sued HTC in March 2010 as part of an ever-widening patent-infringement battle between Apple and other handset vendors, including Nokia (NYSE:NOK), and Samsung Electronics and Google's (NASDAQ:GOOG) Motorola Mobility unit. The suit against HTC, first filed with the U.S. International Trade Commission, was seen as a proxy battle against Google. Since then, HTC and Apple had filed suits against each other at the ITC and in federal court as well as in courts around the world.

Samsung, meanwhile, has said it doesn't plan to settle with Apple. In August Samsung was found guilty of infringing on Apple's patents and liable for $1.05 billion in damages by a jury in a U.S. federal court case. Samsung has appealed that verdict and has also asked a U.S. court to give it access to Apple's settlement with HTC, arguing it is "almost certain" that the HTC deal covers some of the patents involved in Samsung's case with Apple. 

The settlement with Apple came against the backdrop of HTC's struggles in the smartphone market, as it tries to fend of Apple and Samsung at the high end and the likes of ZTE and Huawei at the low end of the market. HTC's One series of phones have not sold as well as the company would have liked, and it is banking on a renewed focus on Microsoft's (NASDAQ:MSFT) Windows Phone 8 to help propel sales in the fourth quarter. HTC reported a 79 percent decline in third- quarter profit and a 48 percent drop in revenue.

HTC Chairwoman Cher Wang felt compelled to voice public support for Chou after a Taiwanese non-financial publication, Next Weekly magazine, published an article that, citing unnamed sources, said Wang "has grown dissatisfied with Mr. Chou's recent performance" and "has given him six months to prove that he is still fit for the position."

According to the Wall Street Journal, Wang said that Chou has her "full trust, authorization and support. His achievement and ability are beyond questioning." Wang also said that it was Chou who carried out the negotiations with Apple for the patent settlement, and that HTC was going to take legal action against the magazine.

For more:
- see this Reuters article
- see this CNET article
- see this WSJ article (sub. req.)
- see this FT article (sub. req.)

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