Apple (AAPL) Scores a $1 Billion Win Against Samsung
After years of legal wrangling, Apple (AAPL) finally scored a decisive blow against nemesis Samsung last week, after a jury declared that Samsung owes Apple at least $1.049 billion for intellectual property violations. The jury found that all three of Apple's iOS disputed patents were valid and had been knowingly infringed upon by a wide variety of Samsung smartphones. Samsung was also found guilty of copying Apple's "trade dress," or the exterior appearance, of the original iPhone and the iPhone 3G.
Samsung, which counter-sued on the same basis, lost all of its primary arguments, with the jury deciding that Apple had infringed on none of Samsung's patented technologies, which include 3G networking technologies. Yet despite this victory for Apple, the jury didn't think that Samsung had copied the iPad's interior or exterior designs. Daily Chart
The bill for Samsung came in at over $1 billion because the jury decided that Samsung's patent violations were deliberate, and therefore merited an appropriate punishment. Over the past month, Apple had made the case that the company spent five years developing the iPhone, while Samsung only needed three months to copy it, without shouldering any of the development risks or expenses. As a result, recent Samsung products such as the Galaxy S II to Galaxy S4 could be banned in the United States and other markets. Although that judgment isn't likely to come immediately, the new verdict in favor of Apple means that these subsequent decisions could come fast. Of course, Samsung is also likely to appeal the case and drag out the conflict, deciding that the costs of more legal battles would be preferable to paying over a billion dollars to Apple. Meanwhile, the painful blow sustained by Samsung will resonate throughout the Android world, and other manufacturers, such as HTC and Sony (SNE
), will likely change their design forms to avoid a company-crushing conflict with Apple. Certain Apple patents, such as bounceback scrolling, pinch/tap-to-zoom and multi-touch scrolling should lead to significant changes in Android handsets down the road. Yet many industry watchers believe the Apple-Samsung courtroom drama is merely an opening act to the main event - a bitter, all-out legal war between Apple and Google (GOOG
), which got the "iClone" ball rolling with the introduction of Android in 2008 and ironically let its hardware partners, such as HTC and Samsung, bear the brunt of costly patent litigation. While winning a decisive victory against Samsung is a near-term positive catalyst, Apple still has to come to terms with its declining smartphone market share, lower shipments of iPads, and a general consensus that the company is slowly becoming the next Microsoft (MSFT
) - a stagnant, slow-growth tech giant with lots of cash but very little innovation. Today, Apple is still considered an undervalued growth stock, trading at 9.8 times forward earnings with a 5-year PEG ratio of 0.52. Other News About AAPL Apple Mobile Devices Cleared for U.S. Military
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Published on May 21, 2013
By Leo Sun