As Samsung Electronics (
SSNLF
,
quote
)
rested its case
in a trial against Apple (
AAPL
,
quote
) over possible patent infringement in smartphone technology, the
share price of the South Korean giant
dropped in Friday trading
.
[caption id="attachment_58078" align="alignright" width="300"
caption="Samsung HQ in Seoul, Korea"]
[/caption]
Before you decide whether or not to jump into Samsung, you must
evaluate the ramifications or benefits of any possible verdict.
Currently, Samsung is suing Apple in U.S. District Court for
damages of roughly $400 million over alleged patent infringement on
the Korean firm's smartphone technology. Samsung is demanding
royalties for Apple making use of this technology. Apple considers
Samsung's claim to be unfair as the royalties demanded are
supposedly far more than standard industry practices.
While the amount of damages demanded may superficially seem like
pocket change to these two tech giants and their massive cash
hoards, we need to evaluate the two companies' arguments in a
larger global context.
Apple has recently won a preliminary ban preventing Samsung from
selling one of its tablets in the United States; the firm would
like to extend this ban to the Korean company's smartphones as
well. While a defeat for Samsung in the current case would not
necessarily result in this ban coming to fruition, this would yield
increased precedent of favoring Apple's claims over Samsung in the
United States, which would not bode well for the
Korean
chaebol
.
Although America's smartphone market may not be growing as fast
as that of China, it remains one of the largest smartphone markets
in the world; inability to sell in the United States would severely
affect Samsung's bottom line.
With that in mind, it remains unlikely that Samsung's newest
offerings will be banned in the United States. For investors
interested in both firms, a settlement would be ideal. This way the
products could stand on their own merits, as opposed to a drawn-out
legal battle spanning multiple continents.
As long as there are no unexpected, sweeping declarations in the
verdict, investors in Samsung should not be overly concerned.
Disclosure: Author is long AAPL
