December 6, 2011 / 6:31 PM / 8 years ago

German patent firm asks retailers to halt HTC sales

(Reuters) - Patent firm IPCom said on Tuesday it had asked top German cellphone retailers to stop selling phones of HTC, threatening them with legal action, as HTC has not complied with a court ruling on injunction of its sales.

A shop attendant arranges HTC phones in a mobile phone store in Taipei November 24, 2011. REUTERS/Pichi Chuang

IPCcom also turned to the Mannheim court, asking it to start fining HTC for not following the ruling from 2009.

Possible fines from the German court could cost millions of euros and hurt HTC’s position in one of its key markets. The company sells around 2 million smartphones a year in Germany, some 4-5 percent of the group’s total, according to research firm IDC.

The latest battle highlights growing risks for HTC, whose sleek handsets catapulted it in recent years from obscure contract manufacturer to global smartpone brand. It is now grappling with falling sales and an even bigger legal fight with Apple.

In the Apple case, HTC faces the possibility of a negative ruling from the U.S. International Trade Commission which could result in a ban on smartphone sales in the United States, a market accounting for 50 percent of its sales. That decision is due next week.

The ITC’s preliminary ruling in July said HTC was infringing on two patents belonging to Apple, and the full commission ruling will decide whether to uphold that.

The legal challenges have forced investors to question whether HTC, which has risen to the No.4 spot in the global smartphone market, can keep growing.

The Mannheim court ruled in February 2009 against HTC in a patent fight with IPCom, allowing an injunction against sales of HTC phones using UMTS technology, and setting a penalty of up to 250,000 euros ($335,000) each time the injunction was contravened.

HTC, all of whose smartphones use UMTS technology, withdrew its appeal against the 2009 decision last month, making the original decision enforceable.

A week ago IPCom asked HTC to stop selling and distributing its smartphones, and on Monday it turned to the court to implement the sales ban.

HTC says the injunction covers only one HTC handset which is no longer sold in Germany.

While IPCom hopes for a quick decision in the German case, patent expert Florian Mueller said it could take months before the court in Mannheim decides on the request for sanctions.

IPCom is also fighting Nokia over usage of patents IPCom acquired from Bosch and has since licensed to several key players of the mobile phone industry.

Reporting By Tarmo Virki; Editing by Ritsuko Ando and Jon Loades-Carter

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