It looks like S3 Graphics has gone from being a victorious underdog to a beleaguered combatant in the span of just a few months. A full panel at the US International Trade Commission yesterday reversed a previous July ruling by one of its administrative law judges that Apple's Mac OS X software infringed two of S3's patents relating to image compression technology. And it's likely the repercussions of this ITC reversal will extend beyond just S3's case with Apple.
On July 6, just five days after S3 received word of its original ITC win against Apple, HTC announced that it was purchasing S3 for $300 million — a move HTC itself proclaimed would bolster its patent clout. HTC was, and still is, involved in multiple patent battles with Apple. Having the S3 victory overturned certainly doesn't help HTC's attempts to gain leverage against Apple. However, we shouldn't assume this is the last we will hear of S3's infringement allegations.
S3 has a second ITC patent case pending against Apple that's moving through the early stages of the process. With regard to yesterday's ITC reversal, S3 does have some options of its own for appeal. S3 could challenge the commission's decision at the Court of Appeals for the Federal Circuit, but it's too early to gauge whether S3 or HTC will see value in devoting any more time to this particular case with Apple. And to be thorough, it should be noted that the White House gets all final ITC rulings, giving the President up to 60 days to "disapprove" of the commission's decision. Don't hold your breath on that one — it rarely ever happens. We'll keep you updated as we learn more.