Apple Sued Over Touch-Screen RightsNew York Times, April 8, 2009
TAIPEI — The Taiwanese company Elan Microelectronics has sued Apple, alleging infringement of two of its touch screen patents, an Elan spokesman said Wednesday.
The suit was filed Tuesday in U.S. District Court in San Francisco, Dennis Liu, an Elan spokesman, said by telephone from the headquarters of the chip design company in Hsinchu, Taiwan.
“We couldn’t find a common viewpoint with Apple, so we decided we had to take action,” he said, adding that the companies had been in licensing talks for about two years.
Apple is based in Cupertino, California.
The lawsuit alleges that Apple products — including its MacBook computer, iPhone and iPod Touch — use technology that infringes on two of Elan’s patents, Elan said.
It was not immediately clear what penalties or remedial action Elan was seeking in the suit.
In January, Apple reported fourth quarter earnings that were stronger than expected in part because of robust sales for the iPhone, MacBook and iPod.
Jill Tan, an Apple spokeswoman based in Hong Kong, said in an e-mail message that the company would not comment on the Elan suit.
Touch screen technology allows users to zoom in and out, flip images around and perform other tasks using two or more fingers pressed to the screen.
Touch screens are increasingly popular in a wide array of electronic devices and appliances. The market consulting company iSuppli last year forecast that the worldwide market for all touch screen modules would nearly double, from $3.4 billion in 2008 to $6.4 billion by 2013.
Elan said it won a preliminary court injunction against a U.S.-based rival, Synaptics, in a dispute over one of the patents mentioned in the Apple lawsuit, after a suit was filed in 2006 by a unit that was a subsidiary at the time. Synaptics countersued.
Both actions were dismissed last year after the two companies reached a cross-licensing agreement, according to a statement on Elan’s Web site.
That result likely emboldened the company to take legal action against Apple, said Jessica Chang, an analyst based in Taipei who follows Elan for Credit Suisse.
“From their previous victory in the case with Synaptics, I think they should be quite confident,” she said, referring to Elan. “Elan believes they have a unique edge with this patent, and they want to send a signal to the market” and set an example for others.
Ms. Chang said that in addition to trying to secure a licensing agreement and royalties from Apple, Elan may seek future cooperation with the California company and try to raise its market profile with this case.
Touchpads helped drive up profit for Elan last year, she said, providing about 20 percent of its revenue in the fourth quarter of 2008. Much of that revenue came from touchpads that Elan provided for Asustek’s popular EEE PC netbooks, Ms. Chang said.
But like other chip companies in Taiwan, Elan has been struggling in the downturn. Its revenue plunged starting in December, Ms. Chang said, dipping to 170 million Taiwan dollars, or $5 million, in January (a 44 percent year-on-year drop), and 199 million dollars in February (a 22 percent year-on-year drop), before climbing back to 336 million dollars in March.
Mr. Liu, the Elan spokesman, said the company believed that the Apple case was “comparable” to the Synaptics case and that the company hoped to have the dispute resolved in a “shorter time.”
He declined to give details of the agreement with Synaptics, citing confidentiality agreements.
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