Apple could win more than US$1bn off Samsung but isn’t China the pressing issue?

1st April 2013

A recent ruling in one of the seemingly interminable court clashes between Apple and Samsung over patents, was initially widely reported as very much advantage Samsung. The case was reported as cutting the potential payout from a billion dollars to $600 million.

Not specialist patent website FOSS Patents.  At the time, it noted that the ruling by a Californian court left open the possibility that a second court case could order compensation well beyond £1bn. Filings from Samsung for this new case, now confirm this.

Website Fortune lists a range of renowned media outlets – adding that, in its view, got things wrong after the first case, where they definitely saw a reverse for Apple.at

So far, so legalistic.

At Mindful Money, we pity investors who are not patent lawyers, when they try and understand this situation and whether it has a bearing on their investments.

Enforcing patents has always been a significant business tool. Perhaps it is better termed as a business weapon. It is one that Apple has taken up with a vengeance. Its law suits sometimes seem to circle the globe, though it is by no means the only tech firm to sue. But given that each device can carry hundreds of patents, the devices also obviously carry hundreds of opportunities for infringing patents too.

On this basis, Apple has often sought to stymie Samsung, its growing rival, across many lucrative markets, forcing product withdrawals and amendments as well as extracting financial penalties.

We are not convinced it is the best use of either company’s time and is probably devilishly difficult to work out what way juries and judges around the world will decide. It is something that investors shouldn’t ignore however. It also underlines the fact that the media certainly doesn’t always get things right. However maybe there are bigger issues affecting Apple than its court room battles.

Fortune has another interesting report this week. In the last few weeks, Apple has come in for some pretty sustained criticism from the Chinese state-backed Consumers Association which suggested that Chinese customers were getting a second class service when it came to repairs.

Citi analyst Glen Yeung suggests it could cost $13bn in sales though Apple CEO Tim Cook, no doubt sensing danger in a key market, has now apologised and adjusted some of repairs policies. It will for example use new not refurbished parts in its repairs to the iphone 4 and 4s for Chinese customers.

It sounds like Apple has bigger fish to fry. And while it can afford a battalion of lawyers, we wonder how much valuable management time should be spent on patent fights even ones that could see it win billions.

It seems that it is always wise to closely read court documents and rulings. A recent ruling concerning what seems like the interminable court clashes between Apple and Samsung over patents, was widely reported as very much advantage Samsung.

Not however by specialist patent website Foss Patents, which noted that an original ruling by a Californian court ruling while not accepting all the patent cases from Apple, had left the potential amount of damages that could be awarded against Samsung capable of rising well beyond £1bn – this is dependent on a second trail. Filings from Samsung for this new case, now confirm this.

Website Fortune lists a range of media outlets that in its view got things wrong after the first case, where it saw a reverse for Apple.

So far, so legalistic.

At Mindful Money, we remain relatively sceptical about the situation and pity investors trying to understand it.

Enforcing patents has always been a significant business tool, and perhaps business weapon. It is one that Apple has taken up with a vengeance with law suits at times almost seeming to circle the globe in litigation.  But each device can carry hundreds of patents, and of course hundreds of opportunities for infringing patents too.

It has often sought to stymie Samsung, its growing rival, across many lucrative markets, forcing product withdrawals and amendments as well as extracting financial penalties.

We are not convinced it is the best use of either company’s time and is probably devilishly difficult to work out what way juries and judges around the world will decide.

For all the billions of dollars at stake, does this really impact the bottom line in any significant way?

Fortune has another interesting report this week. Apple has come in for some pretty sustained criticism from the Chinese state backed consumers association which suggested that Chinese customers were getting a second class service when it came to repairs. One analyst suggested that it could cost Apple huge market share in a market that is increasingly important.

Citi analyst Glen Yeung suggests it could cost $13bn in sales though Apple CEO Tim Cook has now apologised and adjusted some of repairs policies. It will for example use new not refurbished parts in its repairs to the iphone 4 and 4s.

It sounds like a bigger issue than patent squabbles.

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