Elan Plans to Expand Its Lawsuit Against Apple to Include iPad

Elan Microelectronics, a Taiwanese chip designer, has already filed one complaint against Apple (AAPL) with the International Trade Commission. It claims that Apple's touch-screen technology violates Elan intellectual property, and the company seeks to bar Apple from selling iPhones and certain iPods in the U.S.

Now, Elan Chairman I.H. Yeh says the legal action will include the new iPad. Yeh told the Financial Times that since the iPad uses the same technology for its touch-screen as the iPhone, Elan "will definitely bring a lawsuit again, once we see mass production and volume shipments of the iPad."

Elan says its multi-touch technology was used in products as early as the mid-1990s -- long before the iPod and iPhone were launched. Elan filed suit against Apple over the matter last year in California district court. Apple has countersued.

Tangled Up in Court

The legal actions present several difficult issues. The first is that courts have to sort out exactly which components and technologies are part of a violation. Because of the nature of tech patents, one component in a product may have intellectual property that overlaps another. There's also the issue of "prior art," in which an invention disclosed or described in public may not be covered under patent law. Information kept secret is rarely covered by this provision. Courts are left to sort out these very complicated matters.

Another issue, which is often part of intellectual property litigation against very large companies, is that legal claims are often little more than attempts to get at corporate cash hordes. Apple has settled a string of cases brought by small firms, including Klausner Technology, Management and Computer Services, and Creative Technology. The Creative settlement cost Apple $100 million in 2005. The suit was based on Creative's contention that Apple co-opted Creative's user interface for consumer electronics. Apparently, Apple settled because the suit threatened its ability to sell iPods.

Elan may have a good case against Apple and could eventually settle it. If so, the financial benefits to the Taiwanese chip designer could be substantial.