Apple vs. Samsung – Cat and Mouse

 

 

 

 

 

 

 

  • Samsung has been thoroughly defeated in the courtroom but in reality, Apple has achieved very little.
  • The object of the exercise is to stop Samsung from making money from its innovations but last time I checked Samsung is still churning out Galaxy SIII’s and the Galaxy Note by the million.
  • Neither of these two devices were cited in the suit because they did not exist at the time of filing.
  • This means that further action will be necessary if Apple wants to really stop Samsung in its tracks.
  • Herein lies the problem. The life cycle of a patent infringement claim is much longer than that of a mobile phone.
  • Hence by the time one has been through the assertion, trial, verdict and appeal, the device will in all likelihood no longer be selling in volume making any injunction useless.
  • Furthermore the procedure of appeals for awarded damages is so time consuming that back-royalties will take years to appear and will carry the risk of being hugely reduced upon appeal.
  • This case is a classic example. I think that Samsung had pretty good evidence prior-art for the patents that Apple claimed it was infringing but the evidence ended up being excluded from the trial.
  • I can only assume that this was due to the rather poor performance of its defence counsel.
  • Hence this evidence could easily re-surface on appeal and put at risk both the verdict and the awarded damages.
  • It looks to me like Apple’s only real recourse is to go for a pre-trial injunction and this is where the real risk for Samsung lies.
  • Apple has added the Samsung Galaxy SIII to the list of the devices it wants banned at the injunction hearing on December 6th but seeing as infringement has not been proven for this device I would expect this request to be thrown out.
  • I am sure that Apple expects this and is planning to immediately file a suit against the Galaxy SIII and Note II citing the 6 patents that have already been upheld by a court.
  • In this instance, Apple will have a very strong case to apply for and get a pre-trial injunction against these devices.
  • Hence, Samsung could be left with an injunction on its hottest selling devices in the USA before the end of the year.
  • Although, this would only have a small effect on group EBIT, the sentiment hit will be much greater and likely to keep a lid on any recovery of the share price.
  • The probable release of the Samsung Galaxy SIV in March 2013 would just add another twist the story resulting in another lawsuit and pre-trial injunction.

RICHARD WINDSOR

Richard is founder, owner of research company, Radio Free Mobile. He has 16 years of experience working in sell side equity research. During his 11 year tenure at Nomura Securities, he focused on the equity coverage of the Global Technology sector.

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