On Thursday the long battle between Apple Inc. (NASDAQ:AAPL) and Samsung Electronics Co. Ltd. (KRX:005930) over smartphone technology came to an end when the US court ruled in favour of Apple. In its final judgement, the Supreme court has ordered the Korean electronics giant Samsung to pay $539 million to Apple against patent infringement. The verdict is being seen as a big win for Apple as Supreme Court has directed Samsung to cough up more money than before decided in the previous trials.
The lawsuit came into existence in 2012 when Apple accused Samsung of infringement three of its smartphone patents – covering the rounded corners of its phones, the grid of icons that users view and the rim that surrounds the front face – and two utility patents, which secures the unique way something works and is used. Initially, Apple sought $1 billion in damages in 2012 after it was established that Samsung did infringement patents, but the Korean giant argued that it should pay nothing more than $28 million.
In 2013, the verdict was overturned and asked Samsung to pay $399 million to Apple. Samsung, however, decided to appeal against the verdict and the case went to the U.S. Supreme Court in 2016 to revisit the order. The company strongly believes that the fine should be in relation to the components that infringe the patents instead of the price of overall devices, Apple was wanting from court to consider. Now in the light of final verdict Samsung will have to cough up additional $140 million.
While Apple believed that the lawsuit was always about more than money, disappointed Samsung told the judges that the verdict was not supported by the evidence.
“Today’s decision flies in the face of a unanimous Supreme Court ruling in favour of Samsung on the scope of design patent damages,” Samsung said in a statement after the verdict. “We will consider all options to obtain an outcome that does not hinder creativity and fair competition for all companies and consumers.”
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Though the verdict may have come as a big sigh of relief to Apple considering it’s more than 10X the amount Samsung was willing to pay, it’s interesting to evaluate the significance of the payout.
Apple sought the damage of $1 billion and filed the lawsuit first in 2011. The amount was quite significant for the company considering $108 billion in revenue and $26 billion in earnings reported in fiscal 2011. $1 billion in damage was equal to 1% of the company’s total revenue or 4% of the total profit in fiscal 2011. Undoubtedly, it would have made a significant impact on the accounts books of Apple.
Fast forward to 2018 when the U.S. Supreme Court rules in the favour of Apple, the company reported $48.3 billion in profit in fiscal 2017 ending September 30, 2017. The $539 million payout equals to little over 1% of the company’s total profit.
Besides, since the time Apple filed the lawsuit first in 2011, the company has garnered over $313.5 billion in profits. What is even more interesting is that the awarded amount is lesser than Apple’s net profit in any given quarter since the filing of the lawsuit.
It clearly depicts that the $539 million payout becomes quite insignificant in the current scenario. The awarded amount is hardly enough for Cupertino-giant to make any move that could create an impact on the company’s overall strategy.
However, the amount may not be enough for Apple to create a buzz, but winning over Samsung is definitely a big morale boost for iPhone maker. Eventually, it’s more about the principal of things than money.