Will Apple's lawsuit against HTC hurt Android and give Windows Phone 7 a leg up?

Apple's first patent lawsuit against an Android smartphone maker, which it filed earlier this month, is a signal to many people in the industry that this is probably the first in a series of patent lawsuits against smartphone makers that threaten the dominance of the iPhone.

Will the move cause handset makers to worry about using the Android OS?

Apple sued smartphone maker HTC for infringing on 20 of its patents related to the iPhone's user interface, underlying architecture and hardware earlier this month. It is already embroiled in a patent squabble with Nokia too. At the heart of it all is Apple's technology pertaining to multi-touch technology--one of the technologies that made the iPhone so unique when it was introduced.

According to Fortune's Brainstorm Tech, Oppenheimer's Yair Reiner said in a research note to clients that Apple's lawsuit has spurred tier-one handset makers to look for work-arounds to Apple's patents.

"Starting in January, Apple launched a series of C-Level discussions with tier-1 handset makers to underscore its growing displeasure at seeing its iPhone-related IP [intellectual property] infringed," Reiner wrote. "The lawsuit filed against HTC thus appears to be Apple's way of putting a public, lawyered-up exclamation point on a series of blunt conversations that have been occurring behind closed doors."

Reiner continues, "Our checks also suggest that these warning shots are meaningfully disrupting the development roadmaps for would-be iPhone killers. Rival software and hardware teams are going back to the drawing board to look for work-arounds. Lawyers are redoubling efforts to gauge potential defensive and offensive responses. And strategy teams are working to chart OS strategies that are better hedged."

Reiner said the first threats from Apple came in January 2009, when Apple COO Tim Cook warned that Apple "will not stand for having our IP ripped off." He said the months following that proclamation, major handset vendors refrained from introducing smartphones with multi-touch technology. Palm Pre was supposed to be the iPhone killer because it had multi-touch technology, but didn't represent a direct threat to Apple.

But the Motorola Droid and the HTC Eris supposedly changed all of that. "Top-tier handset makers continued to avoid implementing multi-touch, but Apple could safely assume that they were hanging back to gauge Apple's response to Motorola and HTC. If there wasn't one, the OEMs would likely read the silence as a green light, especially after Google also moved to enable multi-touch on its Nexus One phone," Reiner wrote.

Apple then began conducting some high-level meetings with handset makers to re-iterate its position on its multi-touch IP, Reiner said. HTC appeared to be the early target because it has the most aggressive plans for Android.

"Until recently, most high-end smartphone programs were focused primarily on trying to match the iPhone's user experience, and secondarily on avoiding any egregious violations of Apple's patents," Reiner wrote. "We believe this order of priorities has temporarily changed--along with the industry's appreciation for how far Apple is willing to extend the fight. Few OEMs believe that simply staying clear of multi-touch can, on its own, avert Apple's wrath. We believe a lot of software and hardware is being sent back to engineering departments for work-arounds."

Reiner said its too early to tell how Apple's action against HTC will play out and whether Apple might go after others, like Motorola, next. But Reiner claims handset makers' faith in Android--seen as the route to counter the iPhone--is shaken.

Could handset makers run into the arms of Microsoft and Windows Phone 7 because of this? Reiner suggests so. "Our checks indicate that Microsoft has been quick to sniff out this burgeoning opportunity and has begun to aggressively promote the strength of its own IP portfolio, as well as its willingness to join battle with customers that come under IP attack."

This is a very interesting and opportunistic time for Microsoft. Google itself should be scrambling for a work-around too on the software side. Everyone has said the Android has too much momentum for Windows Phone 7 to catch up with it. That might not be the case given the outcome of these legal skirmishes. - Lynnette