The U.S. International Trade Commission on Monday ruled that the Apple does not violate graphics patents held by S3, a company recently acquired by HTC. The decision is a setback for handset maker HTC, which recently acquired S3 and is fighting its own patent battles with Apple at the ITC and elsewhere. It also reverses an administrative law judge's ruling last July, which had found a violation of S3 patents by Apple. Judge E. James Gildea had found that Apple infringed U.S. Patent No. 6,658,146 directed to systems and methods for compressing images and U.S. Patent No. 6,683,978 directed to image data formats, both of which belong to S3 Graphics. In the industry, that technology is known as S3 Texture Compression (S3TC).

"The U.S. International Trade Commission has determined that no violation of section 337 of the Tariff Act of 1930 (19 U.S.C. § 1337) has been shown in the above-captioned investigation and that the investigation is terminated," the ITC said in the ruling.

The ruling also mentions that AMD had filed a third-party motion to terminate the investigation based on a claim that AMD actually owns the patents at issue. Apple filed a motion to terminate the S3 case based on AMD's patent ownership claims.

"Additionally, the commission has determined to deny AMD's motion to file public interest comments out of time, to grant AMD's motion to file a reply in connection with its motion to intervene and terminate, to deny AMD's motion to intervene and terminate, and to deny Apple?s motion to terminate," the ruling reads.