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April 17, 2012

Judge Tells Apple, Samsung to Make Love Not War - They Agree, For Now

By Peter Bernstein, Senior Editor

It’s no secret Apple (News - Alert) and Samsung are at each other throats with litigation, spanning most aspects of smartphones and tablets. In fact, despite doing a reported $8B in business with each other, the two are locked in mortal combat in more than 20 cases in 10 countries. 

The first federal lawsuit pending trial is set to start in the U.S. District Court, Northern District of California as Apple, Inc. v. Samsung (News - Alert) Electronics Co Ltd. et al, 11-1846 – in addition to their having evidentiary hearings on their mutual claims coming up before the International Trade Commission (ITC) in June. 

It turns out that on April 16, Judge Lucy Koh, the presiding judge in the two federal suits in the Northern District, ordered the parties to comment on their availability for an Alternative Dispute Resolution effort.

In fact, she did more than just order them to bury the hatchet; she told them they should make their respective CEOs and general counsels the representatives for these talks, overseen in San Francisco by U.S. Magistrate Judge Joseph C. Spero.

What happened?

It only took a few hours, according to the influential Foss Patents blog, for the parties to agree:

"As directed by the Court, Apple and Samsung are both willing to participate in a Magistrate Judge Settlement Conference with Judge Spero as mediator. At Apple, the chief executive officer and general counsel are the appropriate decision-makers, and they will represent Apple during the upcoming settlement discussions. At Samsung, the chief executive officer and general counsel are also the appropriate decision-makers, and they will represent Samsung during these settlement discussions."

 The Judge then ordered them to meet and set a 90-day deadline for them to reach a settlement.

What happens next?

Firstly, while U.S. courts can make contesting parties meet to discuss their difference, they cannot force them to settle. In fact, as legal observers have pointed out, the agreement by both parties to sit down can be viewed as more atmospherics than substantive.

Neither side is interested in looking like they are being unreasonable to the court. And as inconvenient as it might be to tie up such high-priced executive talent, it’s a way to keep hope alive. After all, the reason for the Judge requesting who she did was because negotiations will be between equals and by the final decision-makers in consultation and approval of their boards.

But there is a cautionary note that needs to be stated. History is not on the side of this having a non-trial based outcome. With this type of contention and so much at stake, the case will likely follow the path of the court-ordered talks between Oracle and Google (News - Alert). They talked, and they talked again, and then they talked about seeing each other in court, which is where they now are. 

Innovation instead of litigation would be beneficial for everyone. While obvious, that is unlikely. Not only are the stakes too high here because of immediate and short-term financial reasons, but there are long-term impacts as well. As Sony knows from missing a technology refresh/upgrade cycle in the big screen TVs, and Nokia (News - Alert), Motorola and RIM know in the smartphone and tablet space, the torrid pace of innovation means there is a business imperative to be leading-edge or face the possibility of being irrelevant and not profitable.  

Think about the fact that Apple released the first iPad in April of 2010. Think about what it would mean to the losing party to have to license technology from the winner or find an alternative. The result in the markets would be lethal, if not fatal. 

Here’s hoping for nice/nice but with the expectation that it is time to fasten ones seat belts.




Edited by Braden Becker
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