German HTC retailers are threatened with patent lawsuit

HTC's chief executive, Peter Chou, shows off its new Rezound smartphone

German retailers have been caught up in HTC's battle with patent owner Ipcom.

Ipcom has threatened the stores with legal action if they continue to sell the Taiwanese firm's smartphones and other 3G devices.

Ipcom said HTC had refused to pay a licence to use its intellectual property, adding that the manufacturer was subject to an injunction by a German court.

However, HTC claimed the patent claim in question was invalid.

Dispute

The case relates to a wireless patent originally developed by the German conglomerate Bosch for use in a car telephone system.

After exiting the sector, the firm sold the rights to Ipcom in 2007.

Ipcom challenged HTC in the courts over its use of the technology in 2009 and won.

HTC appealed, but dropped the case just as it was about to come to court last month.

Ipcom said it had given HTC every chance to pay a "fair" fee, but now felt it had no choice but to act to defend its property.

"First, Ipcom has written to retailers and wholesalers demanding they stop selling HTC's 3G mobile devices," a statement said.

"If they continue, they are effectively making themselves accessory to HTC's patent infringement, and face legal action themselves.

"Second, Ipcom has asked the Mannheim District Court to initiate penalty proceedings and contempt of court against HTC."

'Legal tricks'

However, HTC claimed that Ipcom was trying to misapply the original court ruling.

"[The] case relates to only one, now-obsolete, handset, which is no longer being sold in Germany," the company said.

"It is regrettable that Ipcom has demonstrated that it is prepared to go to any lengths, including contacting our customers, to advance what we consider to be disproportionate and unjustifiable claims."

Ipcom's co-founder, Bernhard Frohwitter, claimed in turn that HTC was "playing legal tricks", adding that there would have been a clear ruling on whether the original patent ruling applied to all HTC's devices had the firm not dropped its appeal.

"These wilful infringers need a lesson," said Mr Frohwitter.

Risks

Consultant Florian Mueller, who writes a widely-read patents blog, said that German retailers would now have to decide whether to risk becoming embroiled in the dispute.

"The agreements retailers conclude with vendors usually contain hold-harmless clauses under which HTC would have to bear the costs and risks of any such legal issues,"he wrote.

"While there's strong demand for HTC's products in the German market, the legal departments of some retailers might be uncomfortable with this situation and prefer not to be drawn onto litigation."

The research firm IDC estimated that HTC shipped 1.43 million devices to Germany in the first nine months of 2011, representing a 14% share of the country's smartphone market.

The Taiwanese firm also faces the prospect of a sales ban in the US.

The US International Trade Commission plans to announce its final ruling in a patent dispute between Apple and HTC on 14 December. The decision was postponed from its original date this week.

In June the court issued a preliminary judgement that HTC had infringed two of the 10 patents that Apple had complained about.