With the stakes this high, it’s no surprise that HTC plans to appeal Friday’s ruling by the International Trade Commission that its Android phones infringe on two patents held by Apple (NSDQ: AAPL). Investors in the company reacted strongly Monday to the news because without a successful appeal, HTC will have to forgo the vital U.S. market for phones, redesign its devices, or cough up hefty payments.
Shares in HTC fell nearly 4 percent during the trading day in Taiwan as investors reacted nervously to the ITC decision in the first full trading session since the news was released. Even though HTC promised a share buyback in hopes of stemming the run on its stock, some apparently decided that HTC, with surging revenue and profits on the back of its Android handsets, had hit a high-water mark.
It’s not clear how strong an appeal HTC will be able to mount. The decision will be reviewed by the full complement of ITC commissioners, which in a separate case involving Apple and Research in Motion gave Eastman Kodak a second chance at obtaining a finding of infringement against patents held by Kodak. But as is often the case with patent litigation, the decision could just be a stepping-stone to an eventual settlement that involves licensing fees: injunctions are a mighty scary prospect.
It could also shift the attention away from Microsoft’s patent campaign against Android vendors toward a similar one from Apple, which hasn’t cast its net quite as broadly as Microsoft (NSDQ: MSFT) but has instead targeted two Android heavyweights in HTC and Samsung.