Post 26: HTC and Nokia Patent War: who is the winner?

HTC has raised a lot attention through its New HTC One, which uses MEMS microphone supplied by STMicroelectronics. The Rechtbank Amsterdam(Amsterdam District Court) issued a preliminary injunction on Monday against STMicroelectronics, stopping the supply of microphones to HTC that were meant to be built exclusively for Nokia until March 2014. As of now, in Germany, Nokia has 24 cases against HTC for patent infringement: 2 cases (EP 1329982 and EP 1474750) are still processing due to valid reasons; 3 cases (EP 0812120, EP 1312974 and EP 1581016) have been dismissed by the Court.

According to HTC’s statement to the media, they will not stop the HTC One delivery. In their view, they are just used the parts what are sold by the suppliers. It does not suppose to be HTC’s fault. HTC still do not have any intention to fight with Nokia around although HTC states like that. HTC said that once they use up the purchased STMicroelectronics microphones, they would enable entirely new microphone parts. HTC also states that the injunction Nokia got does not only relate to the new HTC One. From a legal point of view, the injunction only affects both Nokia and STMicroelectronics. It seems like HTC has won the patent case by staying away from the lawsuit. Nevertheless, I think HTC is the biggest loser in this war.

It seems like HTC One is a very important intelligent phone to HTC. I think it will, to a large extent, determine whether HTC can rise successfully or not. However, the injunction Nokia gets has more serious impact on the New HTC One shipment than the patent litigation based on several reasons. First of all, the ban was executed immediately and globally. Thus, when Nokia won the injunction, STMicroelectronics could not sell the product to HTC anymore globally. Second, when HTC changes their design, they will face serious problems in the field of public relations and marketing. After the New One was launched in the market, it attracted lots of consumers because of a number of unique of selling points, which also include its unique dual diaphragm design (one part grab loud radios and another group is in charge o recording requires high sensitivity sound, then combining two parts are to get a clearer and wider range).

It is no problem at all for changing the microphone design for New One, or replacing STMicroelectronics. However, it is hard to find a membrane design in MEMS microphone market that can achieve the effect as New One claimed in their advertisement. If an excellent feature cannot become true because of the injunction, how does HTC explain to its consumers? Does the price need to be fixed? Therefore, I believe the level of anxiety or even panic within HTC certainly has broken the watch.