Apple CEO Tim Cook
U.S. District Court Judge Lucy Koh has ordered a settlement conference between Apple (AAPL) and Samsung (SSNGY). The settlement conference will be moderated by a magistrate judge.
Both Apple and Samsung have agreed that their chief executives and general counsels will participate.
Here is the order from Judge Koh:
"The parties have indicated that they are willing to participate in a Magistrate Judge Settlement Conference ('MJSC'). ECF No. 873. Therefore, the parties are hereby referred to an MJSC with Magistrate Judge Joseph Spero with a 90-day deadline. As the parties have indicated in their joint statement, the chief executive officer and general counsel of Apple and the chief executive officer and general counsel of Samsung shall appear and participate at the MJSC."
Of note is that a similar settlement conference between Oracle (ORCL) and Google (GOOG) failed. Now a trial is underway between these two companies.
It appears that Apple CEO Tim Cook is willing to make a decision on this matter based on business merits and not prolong the battle based on principle.
Steve Jobs was passionate about the principle. According to Walter Isaacson, the authorized biographer of Steve Jobs, Jobs was determined to destroy Android because Jobs believed it to be a stolen product. "I will spend my last dying breath if I need to, and I will spend every penny of Apple's $40 billion in the bank, to right this wrong," Jobs reportedly told Isaacson. "I'm going to destroy Android, because it's a stolen product. I'm willing to go thermonuclear war on this."
From an investment perspective, a settlement will be good for the stock of both Apple and Samsung. After all, these two companies have risen to the present height by innovating and not based on their litigation expertise. End of litigation will not only eliminate massive legal fees, it will also remove a major distraction for the management of both companies.
Given the special relationship between Apple and Samsung, a settlement may give a booster shot to the stock price of both companies. Apple and Samsung compete fiercely in the marketplace, but they also cooperate. Components from Samsung form the backbone of Apple products.
From a practical point of view, even if Jobs was right, Android has become too wide spread to be stopped with litigation. Paradoxically, Apple’s scorched earth litigation strategy is beginning to back fire against Apple. Since competitors cannot license Apple patents, they are forced to innovate. The more they innovate, the stronger they become in competing with Apple.
A settlement has the potential to propel both Apple and Samsung stocks on their next leg up. Such a settlement may be considered negative for Google especially if the royalty rates are in the range of $10 to $15 per handset.
About Me: I am an engineer and nuclear physicist by background. I have founded two Inc. 500 companies, and have been involved in over 50 entrepreneurial ventures. I am the chief investment officer at The Arora Report, which publishes four newsletters to help investors profit from change. Please feel free to write me at Nigam@TheAroraReport.com. You can follow me here and get email notification when I publish a new article.
Full disclosure: Subscribers to The Arora Report are long Apple from $131 and have taken partial profits at $360, $525 and $629.
