Apple and Samsung Look to Mediation to Head Off Next Patent Legal Battle - a Great Idea, But Don't Hold Your Breath!

By Tony Rizzo January 09, 2014

The latest news on the Apple-Samsung patent wars is that Apple and Samsung are going to give mediation a shot in order to discover if the two companies can find enough common ground to put their ongoing patent wars to rest once and for all. It certainly would make a lot of sense for the two companies to put an end to their differences - which at this point now date back as much as half a decade.

Some patent battles were meant to be fought. We fully believe Apple had to launch the very first offensive it took - and the end result has been to achieve a modicum of success in intellectual property protection and in gaining some dollars - but these are all in areas that almost no longer have any real relevance today.

These battles are enormously time consuming, enormously costly (Apple recently noted in court documents that it has paid its leading outside legal counsel approximately $60 million in fees directly attributable to the Samsung patent lawsuits), and in many cases very distracting.

Both Apple CEO Tim Cook and Samsung Electronics CEO Oh-Hyun Kwon have agreed to attend the mediation session or sessions. It is anticipated that the session will be held on or before February 19, 2014, just ahead of the next scheduled court proceedings over patents that would otherwise begin in March.  Both companies' in-house legal teams will participate in the sessions, but outside counsel will be absent from the meeting.

The Apple-Samsung lawsuit falls once again under the United States District Court for the Northern District of California, and continues to be headed up by Judge Lucy Koh - who presided over the original cases Apple won. Judge Koh, as far as we can tell, did not specifically require mediation sessions - in which case both companies would have had to attend. But apparently she created a scenario under which she would "appreciate" any efforts the two companies might be able to take doesn't resolving the dispute before the court date arrives at the end of March.

Well. Good for Judge Koh! Even though there was no direct order she apparently made it clear that she would not be a very happy camper if the mediation sessions did not take place and at the very least look to put some creative solutions on the table. Both companies have taken the mediation route already in the past but nothing came of those efforts. Perhaps this time around something positive will emerge. This is the point in the discussion where we say, "Yes, and we will also see pigs fly this evening."

A big part of the problem in achieving a compromise is that neither company is fazed by the costs involved in the litigation. Ultimately the cost to litigate is a drop in the bucket for both companies. The real challenge here is for one or the other company to perhaps drive home a clear message as to what is at stake and whether or not one or the other is able to demonstrate a potential winning hand.

As much as the cost of litigation is a drop in the bucket the potential financial harm from injunctions and penalties can become overwhelming. Let's not forget that Samsung has had to pay up about $930 million to date. That is "almost" real money. In Samsung's case the company merely looks at it as the price it took to get seriously into the smartphone game at the level Apple plays it, so perhaps it was worth it to Samsung. Apple on the other hand is no doubt feeling deeply unsatisfied with $930 million.

It will all come down to whether or not Apple can persuade Samsung that its patents cannot be circumvented and that there is another balloon payment in hand, against which Samsung will try to determine if it has enough technology in hand to deliver technical workarounds. In the latter case there will be no incentive for Samsung to settle up outside of court. In the former, Samsung has to weigh whether or not a settlement would be more costly than taking its chances yet again in court.

If they don't settle - and let's face it, the odds are something like 99 to 1 in favor of a non-settlement, then it will be back to court - but at least they can tell Judge Koh they tried mediation. Our expectation for the trial is that Apple will once again come out ahead. The key issue at stake is just by how many dollars it will come out ahead.

What we find most interesting is that Apple will perhaps end up winning a moral victory - in a sense the first victory was nothing more that. For Samsung, win or lose, it will simply be viewed as the ongoing cost of doing business and competing. It is quite a different take on things the two bring to the table - and that is probably why they would never actually be able to find common ground and a settlement. Samsung will pay up and Apple will win another moral victory but continue to feel unfulfilled by it.

So be it.




Edited by Cassandra Tucker

TechZone360 Senior Editor

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