The U.S. International Trade Commission (USITC) announced Monday it has voted to launch an investigation into the patent infringement charges against certain electronic devices produced by the Taiwan-based smartphone maker HTC.

The commission said that the investigation is based on the complaint filed by Finnish mobile maker Nokia and its U.S. subsidiary Intellisync Corp. in early May, 2012. Nokia and Intellisync Corp's complaint alleged that some of HTC's products, including mobile phones, tablet computers and components infringed their relevant technology patents.

HTC will be banned from importing and selling relevant products in the U.S. market if it is found to have violated section 337 of the US Tariff Act of 1930, which allows the USITC to investigate any unfair act in the process of importing articles into the U.S.

Nokia filed a string of lawsuits in the U.S. and Germany in May, alleging that HTC, Research In Motion (RIM) and ViewSonic used proprietary innovations without Nokia's agreement to enable hardware capabilities such as dual function antennas and enhance software features on mobile devices.

HTC refuted Nokia's allegation by saying in May that it had already obtained Nokia's authorization to use certain vital wireless technologies.

According to Wang Ying, an analyst with Analysys International, a leading Technology Media Telecom market research firm, the allegation is part of a wider war for control of market share. "Nokia is trying to create more obstacles to delay the market presence of HTC's new products and buy itself some time to bring out its own new products," Wang said. Wang believes that if the investigation's ruling goes against HTC, it may lose one of its largest markets. Statistics show that the U.S. accounted for about half of HTC's revenue in 2011, and some 40 percent of its smartphone shipments.

In the first quarter of 2012, HTC raked in NTD 4.46 billion (US$152 million) in net profits and NTD 67.8 billion (US$2.3 billion) in revenue, down by 70 percent and 35 percent, respectively, from the same period last year. HTC's CEO Peter Chou said that fierce competition from Apple's iPhone 4S has eroded the company's U.S profits over the past two quarters.

Tu Xinquan, vice director of the China Institute for WTO Studies at the University of International Business and Economics, said that he was not surprised by Nokia's move to drag its rivals into a patent war as it struggled to enhance both its own market revenue and share. "Such a dispute is actually a strategic war launched by the first-movers or leading firms to throw off their latecomer competitors and thus seize critical opportunities to occupy the market," Tu said.

Tu added that this is not HTC's first brush with a "337 investigation" and he believes that more Chinese companies will face such investigations in the future. "Seeing that the Chinese firms are catching up with them, the international leaders may feel their market position is being threatened," Tu said. "As a result, they try to dodge the resulting competition through a business investigation. However, nobody can say it's an infringement before the adjudication is made."

In April, Nokia's top management implied that the company will raise more funds through a patent war. In a previous case in 2011, Nokia settled an almost two-year long patent dispute with Apple Inc., with the latter agreeing to make a one-off payment of more than €800 million（US$999 million）for using Nokia's relevant patents, as well as further royalties of €8 (US$10) per iPhone sold in the future. Deutsche Bank analyst Kai Korschelt wrote in a research report that Nokia would net a €420 million (US$608 million) payment from Apple in the second quarter of 2011.

Go to Forum >>0 Comment(s)