The battle between consumer electronic giants has moved to the courts as the smartphone market is set to total $350 billion this year. Under these circumstances, ousting a rival from a major market, such as the US, or forcing it to waste time on changing its product in response to a court ruling, can be a lethal blow.
In July, a US court dismissed Apple Inc.'s (Nasdaq: APPL) patent infringement case against Google Inc. (Nasdaq: GOOG) unit Motorola Mobility. The patents (7,663,607 and 7,812828) cover touch screens. Apple asked the US International Trade Commission to ban Motorola from selling Android smartphones, which infringed on Apple patents, in the US.
The court ruled that the patent 7,663,607 was invalid for Apple. A similar patent for identifying and following multi-touch on a computer screen, had been registered several months before Apple's patent application in mid-2004. The patent that ruined Apple's case - no. 7,372,455 - was registered by inventors Dr. Meir Morag and Haim Perski through N-trig Ltd., which Morag had founded in 1999 to develop touch screens.
Thus, unintentionally, N-trig became a critical factor in the smartphone struggle. The irony is that N-trig never intended to be there. The company, which now develops active pen and touch solutions for computers and mobile phones, did not start out in the mobile business.
For most of the past ten years, N-trig's development was based on its ability to provide PC touch screens. The technology indirectly helped Motorola Mobility.
The dismissal of the Apple-Motorola patent infringement case provided a glimpse into the battle between the electronics giants, and provides an interesting perspective about an outside player - N-trig in this case - which encountered a new opportunity to leverage the company. The company has not achieved its expectations in the past few years.
According to IVC, N-trig had $90 million in sales in 2012, but this was apparently insufficient to maintain stable profitability.
The significance of "infringement" to Apple in the lawsuit is no small matter. According to Finnegan, Henderson, Farabow, Garrett & Dunner LLC partner Jeffrey Berkowitz estimates that the case cost Apple $3-5 million in legal fees. "We assume that the patent owners have the wherewithal and choose the most important claims, which will enable them to cause the most damage to their rivals, If they lose, they lose their big guns," he told "Globes".
The significance for Apple goes beyond the technical loss to Motorola Mobility. As a result of the failure, Apple cannot claim infringement of this patent, which had been considered a strong one, against other rivals.
The question is what does this testimony mean what can it contribute to the success of N-trig? Over the years, parties in huge smartphone lawsuits have strategic acquisitions on the patent side. Google acquired Motorola Mobility, emphasizing its patent portfolio; HTC Corporation (TWSE: 2498) acquired S3 Graphics for its patents, and in the latest deal, Microsoft Corporation's (Nasdaq: MSFT) acquisition of Nokia Corporation's (NYSE; OMX: NOK) mobile phone business, patents played a major role.
The fact that N-trig registered its patent before Apple could trigger an acquisition offer from either Apple or Google.
So far as is known, neither of the parties in the case have made a formal offer for N-trig, but there may have been strategic talks. Sources inform ''Globes'' that, in the past year, N-trig executives have visited Apple's headquarters in Cupertino, and Apple executives have visited N-trig's offices in Kfar Saba, although the topics on the agenda are unknown.
Apple may have considered integrating N-trig's DueSense touch pen with Apple products, which would unquestionably greatly boost N-trig's value and image.
In August, N-trig CEO Amichai Ben-David left the company and was succeeded by Dan Inbar, who previously served as general manager of SanDisk Israel. The results of the legal proceedings in the US may open new revenue options for N-trig: its innovation will give it cause for suing smartphone vendors and generate revenue.
"N-trig could file claims against Apple over this patent," says Berkowitz, though he doubts that anything would come of it. "What we know is that Apple's claims do not come into account because N-trig rendered them irrelevant, but it is not clear whether N-Trig can win a suit against Apple for the use of these patents."
N-trig declined to comment about the possibility of filing lawsuits.
Published by Globes [online], Israel business news - www.globes-online.com - on September 17, 2013
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