generation phone* HTC Takes a Blow in Apple Fight

TAIPEI—The International Trade Commission said Apple Inc. didn't violate HTC Corp.'s patents for technology used in its mobile devices, a setback in the Taiwanese company's patent fight with the iPhone maker.

But analysts said coming rulings were likely more important in determining whether HTC could face an injunction against certain imports into the U.S. market.

The ITC issued its "initial determination" on Monday, saying that Cupertino, California-based Apple's devices didn't violate four of HTC's patents, which cover technology for looking up and quickly dialing phone numbers and different techniques for managing power consumption on portable electronic devices.

HTC shares fell 4.6% to 708.00 New Taiwan dollars (US$23.50), while Apple shares recently traded down 1.2% at $416.89.

HTC said it is waiting to get a full copy of the ruling before it decides how to proceed, but experts say HTC could ask the ITC to review its decision.

"This is only one step of many in these legal proceedings," HTC General Counsel Grace Lei said in a statement. "We are confident we have a strong case for the ITC appeals process and are fully prepared to protect our intellectual property."

Apple didn't immediately respond to a request for comment.

With sales of smartphones booming, and growth expected to continue, litigiousness among large technology markers has grown to a fever pitch.

The ruling represents another victory for Apple in its ongoing patent disputes with many of its rivals around the world, but analysts say Monday's decision is more of a prelude to more important rulings that will come in November and December.

On Nov. 13, the ITC is expected to decide on a preliminary ruling that Apple violated two patents owned by S3 Graphics, a company HTC is in the process of acquiring. And on December 6, the ITC will issue a final ruling on a case where it preliminarily ruled HTC had violated two Apple patents.

Analysts say Apple is hoping to block HTC smartphones, the most widely used Android devices in the U.S., from the market, while HTC is hoping to gain enough leverage in countersuits to settle for a cross-licensing agreement.

Samsung Securities analyst Birdy Lu said a cross-licensing agreement seems for now the most likely outcome and added a recent suit filed by HTC using patents it obtained from Google to pose a stronger threat against Apple. A decision on that case is likely to be at least a year away.

Nearly all mobile-device makers are actively suing or defending themselves in legal battles against one another. Apple, in particular, has locked horns with a variety of companies including Samsung Electronics Co. and Motorola Mobility Holdings Inc., which is being acquired by Google Inc.