Apple (NASDAQ:AAPL) won a decisive victory against Samsung in South Korea, after the Seoul Central District Court dismissed a patent infringement lawsuit filed by the latter. The court ruled that Apple’s iPhone 4S, iPhone 5 and iPad 2 did not violate Samsung’s three mobile patents.
This is the third consecutive win for Apple against Samsung within a short span of time. In November, a U.S. jury ordered the South Korean company to pay $290.0 million as damages to the iPhone maker.
In a separate case, the U.S. Court of Appeals ruled that Judge Lucy Koh should reconsider Apple’s request for a U.S. ban on 26 Samsung products that were found guilty of infringing patents. The appeals court ruled that out of the six infringed patents, three qualified for calling a ban on Samsung products.
Samsung filed the case in Mar 2012 in Seoul’s District Court, alleging that Apple has violated its intellectual property related to short message services in smartphones and tablets. The company demanded Won 100 million as fine and also requested the court to ban of six Apple products.
However, the court found that one of the allegedly violated patents was not at all used by Apple in any of its devices, while the other two can be developed easily from other inventions. The court scrapped Samsung’s ban request and the compensation claim.
We believe that this is a sound victory for Apple in Samsung’s own backyard. To date, Apple had a mixed luck in this Seoul court, where it was fined Won 40 million in 2012, for violating Samsung’s two patents related to wireless technology.
In the same case, the court fined Samsung Won 25 million for infringing patent related to the bouncing-back function, used at the time of navigating electronic documents.
Apple has won more than $900.0 million in damages from Samsung. However, the legal fight between the two companies does not end here, as Samsung plans to challenge the U.S. jury’s retrial verdict. Moreover, both are scheduled to meet in court in Mar 2014 in a new trial for examining more recent smartphones including iPhone 5 and Galaxy S3.
Although these are great moral victories for Apple, they do not provide significant competitive benefit apart from the penalty. The legal victories are related to products that Samsung does not sell anymore.
Apple is facing significant competition in most of the markets from Google’s (GOOG) Android operating system. Moreover, intensifying competition from low-cost smartphones and tablets produced by Samsung, HTC, LG, Huawei and Amazon (AMZN) remains a concern.
Nevertheless, we believe that the refreshed product line-up will boost top-line growth in the near term. Additionally, the recent partnership with China Mobile (CHL) is expected to boost Apple’s market share in China. Further, shareholder-friendly moves such as higher dividend payment and expanded share buybacks are expected to drive the stock, going forward.
Currently, Apple has a Zacks Rank #3 (Hold).
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