German patent firm IPCom plans to halt as quickly as possible the sale of all HTC smartphones in Germany, another blow to the Taiwanese firm just two days after it shocked markets by cutting its fourth-quarter outlook.
IPCom said on Friday it would enforce an injunction based on a Mannheim court decision from February 2009 after HTC, the fourth largest smartphone vendor globally, withdrew its appeal, which was due to be decided on next week.
IPCom now intends to execute this injunction in the shortest possible time, the company said in a statement.
We will use the right awarded by the courts, likely resulting in HTC devices disappearing from shops during the crucial Christmas season.
HTC confirmed it pulled the appeal on Friday and said it thought it was redundant as a German patent court has questioned the validity of the patent in question.
Analysts and lawyers said the withdrawal gives HTC time to battle against two other patents which could have been decided upon next week, while it can still try to delay the original injunction.
While HTC can try to oppose the enforcement of the injunction, my research shows that the odds are very long against HTC on this one, said German patent expert and blogger Florian Mueller.
Possible sales halt in Germany, one of the largest smartphone markets in Europe, comes at a time when HTC struggles to hold on to its position on the smartphone market.
This represents an unwelcome distraction during an already difficult quarter for HTC, said CCS Insight analyst Geoff Blaber.
Late last month, HTC warned that revenue would fall by up to 8 percent in October-December from the third quarter, and this week it flagged a much bigger drop, citing tougher competition and the global downturn.
The stock has fallen 30 percent in eight straight trading days.
The popularity of Apple's iPhones and Samsung Electronics's Galaxy line-up, recession-weary shoppers and long-running lawsuits have taken the gloss off what was one of the industry's biggest success stories.
IPCom has battled for years against HTC and Nokia in European courts.
IPCom had acquired Bosch's mobile telephony patent portfolio, created between the mid-1980s and 2000, which includes about 160 patent families worldwide, including some of the key patents in the wireless industry, such as patent 100, which standardizes a cellphone's first connection to a network.
(Additional reporting by Christoph Steitz; Editing by Will Waterman, Bernard Orr)