S3 Graphics was part of VIA Technologies, but now HTC will shell out $300 million for the graphics company. The interesting part of this whole deal? S3 licenses its S3 Texture Compression technology to a lot of companies, including Nintendo, Sony... And Microsoft. This technology is increasingly being applied to smartphones and tablets as well, so this could be an interesting IP purchase for HTC.
"In patent negotiations, it is difficult if the other company has patents and you don't. If you have patents too, perhaps you can arrive at a cross-licensing agreement," said Winston Yung, HTC's chief financial officer. And here is where it gets doubly interesting: only a few days ago, Apple has been found infringing two S3 patents.
A US International Trade Commission (the ITC) judge decided July 1 2011 that Apple is infringing upon two patents owned by S3, both related to S3 Texture Compression (patent number 6,658,146 and 6,683,978). In other words, this is a particularly brilliant move by HTC, since they now suddenly have the means to turn Apple's lawsuit against the company into a cross-licensing agreement. Since the ITC has already ruled Apple to be infringing, HTC position has suddenly become very strong.
And this is how you compete when innovation takes a back seat. Pretty much the entire software industry has been bogged down by software patents, making it virtually impossible to write any piece of code without infringing some patent in some closet somewhere in the US. So, you have to buy patent war chests.
Software patents, then, are clearly good for innovation.