Apple and Samsung's Complicated Relationship

At a time when the epic legal battle between Apple, Inc. (AAPL), and Samsung Electronics Co Ltd seemed to have settled down, Apple’s claim has added a new twist. Apple and Samsung are two of the world’s largest smartphone manufacturers and market leaders. In early December, Samsung finally agreed to pay Apple a sum of $548 million after the latter won a patent battle that started in 2011 against Samsung for infringing upon some of Apple’s patents and designs.

According to the Joint Case Management Statement, “Samsung has confirmed to Apple that it will pay Apple the $548 million partial judgment directly. Samsung indicates that payment should be complete within 10 days of delivery of Apple’s invoice to Samsung, which will take place on December 4. Payment should therefore be complete by Monday, December 14.”

However, Apple has been swift in filling papers in the court for the additional $180 million in supplemental damages and prejudgment interest and so the motion has been allowed. Florian Mueller, an intellectual property expert, published a link to a declaration by Apple's damages expert Julie Davis on his blog in this regard.

According to the declaration by Julie Davis, the supplemental damages total to $178,659,870 while prejudgment interest on supplemental damages is $1,192,490 through the date of the hearing on Apple’s motion for supplemental damages (March 24, 2016).

In the Joint Case Statement, Apple’s statement mentioned the amount and Samsung’s reluctance on the same. It read, “Apple’s motions to enforce surety liability with respect to the $548 million partial judgment and $1.8 million costs judgment remain pending...It further said, Samsung has indicated that it does not intend to pay Apple the $1.8 million costs judgment. For the reasons stated in Apple’s briefing, the Court should grant Apple’s motion to enforce with respect to costs.”

According to the (Proposed) Order Granting Apple’s Motion for Supplemental Damages and Prejudgment Interest, the breakdown of the calculation is as below.

Love-Hate Relationship

The two companies have been involved in multiple patent lawsuits since 2011 when Apple first sued Samsung in the U.S. for copying features of the iPhone. It was followed by Samsung suing Apple in South Korea, Japan, Australia, the Netherlands, Germany, France, Italy and the U.K. for patent infringement, to which Apple filed countersuits.

As a result of the 2012 verdict, Samsung was initially ordered to pay $930 million to Apple, which was reduced by $382 million by an appeals court, resulting in about $548 million remaining due for payment by Samsung, which finally got settled few days back.

There were more than 40 patent lawsuits, which the two companies were involved in against each other. These were settled as the two smartphone giants called for partial truce by dropping all patent lawsuits against each other outside the US in August 2014.

The relationship between Apple and Samsung is not just that of rivals in the market place or restricted to lawsuits. The two companies in fact work as supply chain partners and are important for each other. Samsung is Apple’s biggest supplier (A9 chipsets for iPhone 6s and 6s Plus being one of them) which places Apple as Samsung’s important customer, contributing a sizeable part of its revenue from component sales. According to reports, approximately 40% of the A9 chips in iPhone 6s and 6s plus are Samsung.

Thus despite battles in courtrooms and media, they remain significant for each other for business. In fact, Apple and Samsung have managed to keep their business relationship insulated from the bitter rivalry that exists between them. But while both continue to work together, Apple’s $180 million claim on Samsung will accentuate the love-hate relationship between these smartphone leaders.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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