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Apple Vs Samsung - Compromises to Emerge as Disputes Drag On  
The decision by a London court ordering Apple Inc. to publicly correct any impression that Samsung Electronics ('A+'/Stable) was copying Apple's iPad stands in stark contrast to a ruling by a US court. The US court had upheld Apple's claims, and placed partial injunctions against the sale of Samsung's products in the US. 
 
The legal battle is expected to continue for at least next 12 months as  over 40 different lawsuits pending across several countries; and the latest decision - by the London court - illustrates that a ruling in one country will not be followed automatically in another - according to Fitch Rating. 
 
From a regulatory point of view, Samsung is often "holding the flag" for all the Android OS based smartphone makers. Therefore it would be unlikely for the major courts around the world to rule in a manner which bans the Android operating system-based equipment from competing against Apple's devices. 
 
In June, Samsung won an offensive case against Apple for the first time, when a Dutch court found Apple liable for infringing on Samsung's wireless technologies. Samsung has been slower off the mark than Apple in initiating its litigation activities. However, Samsung's significantly longer history in wireless technology, and the substantial number of patents it has filed in this regard, suggest that it may win more cases. 
 
On the other hand, if Apple manages to secure a one-sided victory, it would clearly weigh negatively on Samsung's credit profile. In Q112, Samsung's telecom division accounted for 51% of the conglomerate's revenue and 73% of its operating profit, with most of this coming from smartphone sales. However, Fitch says that if both companies are able to win patent infringement suits and ban each other's products in various countries then Samsung and Apple has to agree on a number of compromises over the medium term - where one side may gain a slight advantage, albeit not significantly. 
 
Most recently, in July, a UK judge decided that Samsung's Galaxy Tab 10.1 does not infringe on Apple's patents, and subsequently ordered Apple to publish notification of this ruling in several major UK newspapers and on its UK homepage for six months. 
 
However, in late June/early July, Apple won a preliminary injunction from the US District Court of California blocking Samsung's Galaxy Tab 10.1 and its Galaxy Nexus smartphone from being sold in the US. In light of the size of the US market, this could be negative for Samsung if the company's appeals are unsuccessful and the bans extend to other models. 
 
The impact is unlikely to be that significant on the Galaxy Tab in particular, as Samsung sold only 7 million Tabs in 2011 compared with 97 million smartphones. There should also be only a limited impact on the Galaxy Nexus, as this is not one of Samsung's top-selling smartphone models. 
 
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