Not Only SAMSUNG ELECT LTD(F) But Also Apple Inc. Would Benefit If Smartflash’s Patents Infringement Case Proves Invalid


SAMSUNG ELECT LTD(F)(OTCMKTS:SSNLF) is in a patent war that, if it wins, could end up saving its archrival Apple Inc. (NASDAQ:AAPL) nearly $533 million. However, whether Apple benefits in the Samsung case will depend on how fast the company is made to pay damages in its case with Smartflash LLC. Analysts have pointed out that it will be difficult for Apple to reclaim its money after it has made the payment.

Apple Inc. (NASDAQ:AAPL) was told to pay $533 million early this year, following a decision by a jury in its patent dispute with Smartflash, a Texan licensing firm. The patent issue between Apple and Smartflash concerns a technology used in Apple’s iTunes service.

According to Smartflash, Apple infringed its patent rights in using the technology which controls access to iTunes data by way of a payment system.

Samsung takes on Smartflash

Samsung is battling the same technology and has already made impressive progress against Smartflash. The South Korean company asked the U.S. regulators to find out whether the patents that Smartflash is laying claims to should have been granted in the first place.

In its preliminary findings, a patent review board last week said that Smartflash’s patents do not qualify for legal protection. The reason given for that is that the patents cover what the reviewers termed “abstract ideas.” In other words, the patents do not cover actual inventions as required to be eligible for legal protection. However, a panel of judges will have the last word on the dispute in about a year, after taking arguments from both Smartflash and Samsung.

According to a lawyer for Smartflash, they are confident of winning the dispute with Samsung, despite the preliminary review showing that the patents in questions shouldn’t have been awarded in the first place. Jason Cassady noted that Smartflash has been through such cases and won before.

The challenge for Apple

In the event that a review board of the U.S. Patent and Trademark Office throws out the patents, both Samsung and Apple Inc. (NASDAQ:AAPL) stand to benefit. Apple has spent several years trying to battle Smartflash on the controversial patent issue, in nearly four continents.

The challenge for Apple Inc. (NASDAQ:AAPL), though, is that if it is forced to make the $533 million payment to Smartflash on the patent issue, it will be difficult for the company to earn back the money. Therefore, it means that Apple should work to put off the payment of the demanded damages until the case of Samsung against Smartflash is determined, possibly in favor of Samsung.

Neha Gupta

Neha Gupta has been in the financial space for over six years now. Gupta earned her MBA degree from Symbiosis Centre of Distance Learning in 2009 and her passion for finance led her to pursue Chartered Financial Analyst (CFA) course. She has successfully completed Level II of her CFA. She is a veteran in article writing, which is depicted in her numerous pieces published on SeekingAlpha, Nextiphonenews, InsiderMonkey, MarketWatch, and Techinsider. Her crisp and eloquent writing finds its best place in Researchcows, where emphasis is given on developing rich content for various websites, products, business plans, trainings, and book writing.

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