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Will Smartphone Patent Wars Raise Prices?

Fierce competition between rival businesses is supposed to benefit consumers. But experts say the growing legal battles between Apple and its smartphone rivals may end up raising gadget prices.

On Monday, Apple notched a key victory against Taiwanese phone manufacturer HTC, and by extension Google’s Android operating system. The U.S. International Trade Commission ordered HTC to stop importing Android handsets that it says infringe on Apple’s “data tapping” patents by April. These patents allow iPhone users to dial a phone number or look up an address by tapping on it. An Apple spokeswoman told The Wall Street Journal: “Competitors should create their own original technology, not steal ours.” HTC issued this statement, downplaying the decision.

The tap-and-dial feature may be a “small” one, as HTC lawyer Grace Lei says, but experts say the victory was just an opening salvo in what’s likely to be a long-term war. Consumers will likely pay for the wrangling over the patents, analysts say. “It forces others to create technology that is different and hasn’t been available,” says Robert Passikoff, co-founder of marketing research firm Brand Keys. “It will be more expensive for consumers for Androids. Increased costs to the manufacturers ultimately get passed down to the customer.”

To be sure, these kinds of patent battles also likely mean consumers will have faster and more convenient technology their fingertips. Competition is often the mother of invention, says Rob Enderle, the principal analyst at the Enderle Group, technology consultants. One of Android’s big advantages is its open-source architecture, which allows other programmers and companies to design improvements and new features, he says. Apple, on the other hand, is a closed system.

On the other hand, the patent war could also have a negative effect on innovation and prices, experts say. “There are a number of lawsuits still coming from Apple and others next year and Steve Jobs’ last pledge was to spend whatever it took to kill this platform,”  Enderle says. “Both Apple and Oracle appear to be working on that pledge.” He says Android will become an increasingly expensive product.

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    • Love the Apple response. Steve Jobs always admitted to stealing most of their product line from other companies.

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