Google Backs Its Handset Maker in Phone War with Apple


Apple's (AAPL) blockbuster lawsuit against phone-maker HTC is clearly aimed at Google (GOOG), which has been leaping into the mobile phone business. If Apple can hobble HTC, which manufactures Google's Nexus One phone, it could kneecap the search giant's mobile ambitions.

Now, Google has responded to Apple's lawsuit with a show of support for Android, its open-source operating system, and the companies that makes phones that run the system, most notably, Taiwan-based HTC, which also makes phones for AT&T (T), Sprint (S), T-Mobile, Verizon (VZ) and U.S. Cellular.

"We are not a party to this lawsuit," Google said in a statement. "However, we stand behind our Android operating system and the partners who have helped us to develop it."

Protracted Showdown

Google's decision to back HTC sets the stage for a protracted showdown between Apple in one corner, and HTC and Google in the other. Jonathan Zittrain, a tech expert and professor at Harvard Law School, toldThe New York Times that Apple's game plan "clearly involves some form of litigation strategy of picking off the weaker members of the herd first. They can always add Google to the suit later on."

On Tuesday, Apple sued HTC for violating 20 patents related to smartphone technology, including the touch screen and user interface technology.

"We can sit by and watch competitors steal our patented inventions, or we can do something about it," Apple CEO Steve Jobs said in a statement. "We've decided to do something about it." The suit was filed concurrently with the U.S. International Trade Commission and in U.S. District Court in Delaware.

If the ITC, which deals with international trade disputes, sides with Apple, it could bar the import of infringing devices into the United States. The Delaware court, meanwhile, could issue an injunction barring the sale of such devices in the U.S. Roughly half of the phones that HTC makes are sold in North America.

As a result, the lawsuit poses a major threat to 13-year-old HTC, which has only recently begun marketing itself more aggressively in the United States. The company has received a major boost from Google, which has worked closely with it to roll out phones using Android.

"If Apple wins the lawsuit, this may potentially affect HTC's revenues and their competitiveness in the long run," Chia-lin Lu, an analyst at Macquarie Capital Securities, told Dow Jones.

Settlement Possible

But some experts suggest that such a ban would be unlikely, and the sides will eventually work out a settlement.

"No one will be prevented from importing their phones into the country," Ezra Gottheil, an analyst at Technology Business Research, toldBusiness Week. "It's just a matter of how much money flows to which party for the rights they end up swapping."

And before the matter even reaches a courtroom, look for HTC to countersue Apple. The Taiwanese phone maker issued a statement defending itself and downplaying the impact of the lawsuit, at least in the short term.

"HTC Corporation values U.S. and international patent rights and will work within the U.S. judicial system to protect its own innovations and rights," the company said. "HTC does not believe this lawsuit poses a short-term material impact to its business, nor will it affect its Q1 2010 guidance."

This lawsuit is the latest episode in a remarkable falling out between Apple and Google. Just a year ago, Google CEO Eric Schmidt sat on Apple's board. He left last August as Google was preparing to roll out Android phones in direct competition with Apple's iPhone.

Don't be surprised to see this conflict escalate. While Google isn't a party to the lawsuit at present, there is little doubt that it is the intended target.