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  • Apple v. Samsung: $1.05b verdict, the beginning or the end?

    August 25th, 2012  by  Asia-Pacific Global Research Group - Jasper Kim

    Apple has “won”…for now.

     

    Today, a federal US court ruled against Samsung, relating to patent infringement claims against certain Apple products (iPhones, iPads). Samsung has also raised claims against Apple.

     

    HIGHLIGHTS:

    – The jury’s conclusion was: $0 to Samsung, $1.05 bn to Apple.

     

    – We believe the ruling is not the “end” of the Apple-Samsung lawsuit war–instead it may be the “beginning.” True, the two have spent millions (or its won equivalent) in dozens of lawsuits spanning 4 continents. But this US lawsuit was important because (1) it is on Apple’s “home” territory (California); and (2) Samsung is highly dependent on US consumers buying Samsung products.

     

    – South Koreans will view the ruling as an unfair “home court” ruling (i.e., that this is a US court with US jury members in San Jose, CA, Apple’s backyard). Such sentiment may trigger a patriotic backlash against Apple products. In the past, Apple was identified less as an American company, but his may soon change. This could negatively effect the next iPhone (5) handset sales in South Korea. What Apple risks is an anti-Apple, anti-US double backlash effect in a country that has surprisingly been fond of Apple products (surprisingly because the rapid use of Apple products, specifically iPhones and iPads, happened right in Samsung’s own backyard, as explained in my ‘iPhoning of Korea’ WSJ op-ed below). Samsung may also request that certain Apple products be banned in South Korea in the future.

     

    – Importantly, the US ruling, with or without treble damages (where damages can be tripled), is not a “knock out” blow for Apple (given Samsung’s cash reserves), but it is a serious momentum shift towards it for Apple.

     

    – The ruling could just be the “beginning”? Namely, although the US court is a district court–the lowest federal court level–the lawsuit can in theory appeal at least 2 more times: (1) to the US appellate court; and then; (2) the US Supreme Court.

     

    – In practice, the higher up on the federal court hierarchy, the lower the chance that the appeal will be heard. So the chance of a successful appeal is not guaranteed (unlike in South Korea, in which appeals are often automatically granted). Even if an appeal is granted by the US appellate court, only issues of “law” not “fact” will be heard by a 3-judge panel and/or jury. In plain English, this means that the higher court will only hear an appeal if it believes that a possible “error in law” was applied by the judge. Basically, the appeal process is an uphill battle.

     

    – The case was heard by Judge Lucy Koh, one of the few Asian-American judges nominated to serve at the federal court level. She is a Harvard Law School graduate (a bit before my time there).

     

    – The momentum has now shifted significantly towards Apple

     

    CONCLUSION: before anyone begins to celebrate, this is not the end–Apple has won the battle, but it has yet to win the legal war against Samsung.

     

    * Check out my earlier WSJ op-ed piece (below), which explains how Apple’s iPhones surprisingly became so popular in Samsung’s own backyard of South Korea.

     

    Disclaimer: the author does not own any Apple or Samsung shares

    ———–

     

    The iPhoning of Korea – How Steve Jobs pried open a sheltered market and changed the way a country uses its mobile phones.

     

    Korean tech junkies are cheering this week’s move by the government to allow the import of the iPad, Apple’s new tablet device. Its introduction had been stalled by a government agency that claimed it needed to “certify” the tablet’s wireless networking feature. Popular pressure forced Seoul to reverse course. But while fans go aflutter over the possibilities of this new kind of computing, the transformation being wrought by the last Next Big Thing, the iPhone, is hardly finished either. It’s not simply that programmers and users continue experimenting with the iPhone’s technological capabilities. The iPhone also is shaking up …
    [The rest of the article can be found on wsj.com for subscribers]

     

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