Apple (AAPL) Faces A Setback As SCOTUS Favors Samsung?

Things did not go Apple Inc.’s (NASDAQ:AAPL) way as the U.S Supreme Court ruled in favor of its rival, Samsung Electronics (KS:005930), in a design infringement lawsuit that has been going on for quite some time now.

Reportedly, in an 8-0 decision, the jury overturned a lower court’s ruling and the case has now been sent to the Appeals Court. As per media reports, Samsung is now trying to get back $399 million of the $548 million penalty it paid Apple. Samsung’s argument has been that Apple is only liable to get profits from the components that are infringed and not for the sale of the entire phone.

We are not going to see an end to this legal dispute in the near term as Apple is unlikely to take this lying down. CNBC quoted an Apple spokesperson saying “Our case has always been about Samsung's blatant copying of our ideas, and that was never in dispute. We will continue to protect the years of hard work that has made iPhone the world's most innovative and beloved product. We remain optimistic that the lower courts will again send a powerful signal that stealing isn't right."

Apple and Samsung have been entangled in a patent dispute since 2012. In an attempt to dominate the global smartphone market, both the giants have been fighting over intellectual property. Samsung too had accused Apple of violating its patents and in reprisal lodged several lawsuits across continents. In 2014, the two companies decided to drop all the other cases except two cases lodged in the U.S courts.

In 2014, a United States District Court in California imposed a penalty of $548 million on Samsung for “copying” Apple’s iPhone technology. The Korean giant coughed up the amount with a caveat that “Samsung continues to reserve all rights to obtain reimbursement from Apple and/or payment by Apple of all amounts required to be paid as taxes”, to which Apple did not agree.

Simultaneously, it moved its case to the Supreme Court asking for reconsideration of the verdict. The original damage amounted close to a billion dollars, but after several retrials and appeals through the Court of Appeals for the Federal Court (CAFC), the settlement amount was lowered to $548 million.

Following the verdict then, Samsung made its disappointment pretty evident by stating “while this will not impact American consumers, it is another example of Apple abusing the judicial system to create bad legal precedent, which can harm consumer choice for generations to come.” Samsung had found support from other Silicon Valley giants like Facebook Inc. (NASDAQ:FB) Hewlett Packard Enterprise (NYSE:HPE) and Alphabet (NASDAQ:GOOGL) .

At present, Apple has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.

Year to date, shares of Apple have registered growth of 4.46% compared with Zacks Computer Mini industry's gain of 5.13%

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