The news sent HTC's shares down 3.9 percent even though the company says it plans to appeal the ruling to the ITC and believes it has a strong case.
The ruling is now subject to review by the ITC's Commission on Dec. 6. If upheld, HTC will have to find a workaround on design issues related to the patent and its user interface. In a worst-case scenario for the company, Apple could demand a block on the import of HTC smartphones into the U.S.
Apple first filed suit against HTC in March 2010, claiming 10 patents were infringed on. At the time, the ITC made a non-binding ruling that HTC had not infringed on any of the 10, making Friday's decision somewhat surprising. (See Apple Sues HTC.)
HTC is also in the process of acquiring S3 Graphics, which has won legal battles against Apple in the past, to strengthen its patent portfolio. (See HTC Buys a Patent Power Play.)
Why this matters
The ruling is detrimental to HTC's business in the U.S., but -- on a larger scale -- it could be troubling for the entire Android ecosystem. Apple could use the precedent set in the HTC case to demand license fees from Android's other hardware partners, which all use similar designs.
HTC, for example, already reportedly pays Microsoft Corp. (Nasdaq: MSFT) $5 per Android handset it sells, owing to patent lawsuits like this one.
Google (Nasdaq: GOOG) was an active bidder in Nortel Networks Ltd. 's patent sale to bolster its intellectual property and defend itself against future lawsuits against Android. But since it lost, and a consortium including Apple won, the future could be fraught with litigation for all of Android's army. (See Nortel Sells Patents for $4.5B, Done Deal for Nortel Patents? and Google Bids $900M for Nortel's Patents.)
The Cupertino company already has lawsuits churning with Samsung Corp. and past battles with Nokia Corp. (NYSE: NOK) and Motorola Mobility LLC . Read up on its patent prowess below.
- Device Watch: HTC Updates Its Status at AT&T
- Samsung Tries to Block Apple Sales in the US
- Apple Sues Samsung for iCopying
- Apple Escalates Samsung Lawsuit
- Apple Hits Back at Nokia
- Apple Sues Moto
— Sarah Reedy, Senior Reporter, Light Reading Mobile