The U.S. District Judge Lucy Koh in San Jose, California, sided with Apple Inc. (AAPL), imposing a ban on Samsung’s Galaxy Tab 10.1 range of tablets in the country, reported Bloomberg. An earlier ruling in May by the U.S. Court of Appeals for the Federal Circuit favoring the iPad maker related to patent infringements paved the way for the recent ban.
Ruling in favor of Apple, Judge Lucy Koh stated that the Cupertino-based company had a strong case against Samsung in the design-related patent case. The judge also noted that Apple would be "irreparably harmed" if the ban against Galaxy 10.1 tablets was not imposed as the design of iPad and Galaxy 10.1 tabs are indistinguishable.
However, the judge also said that Samsung can contest the aforesaid ban. Apple was ordered to post a $2.6 million bond as damage payment to Samsung if the former loses the case. The trial starts on July 30.
In December last year, Apple had appealed to the District Court in San Jose to ban Samsung’s Galaxy Tab in the U.S. However, the plea was rejected at the time, with the court allowing Samsung to sell its products in the country until the case went to trial.
By banning Samsung tablets in different countries, Apple’s main objective is to stall the growth of Google Inc.’s (GOOG) Android OS. Samsung is leveraging on Android to emerge as one of Apple’s most significant competitors and the company is already the largest vendor of Android-based products. The fact that Android is expected to continue its strong growth all over the world is a major headache for Apple. Adding to the competition, Google has plans to unveil its first tablet at its Google I/O conference, according to Bloomberg.
Despite the threat from Android and lower-than-expected sales in the tablet market, Apple has maintained its leading position in this arena with 68% market share in the first quarter of 2012, which rose significantly from 55% in the fourth quarter of 2011, according to IDC. Samsung came in second while Amazon.com Inc. (AMZN) was third.
Over the last couple of years, Apple has been highly vocal about saving its intellectual property from misuse and violations. The company has been aggressive in filing lawsuits against other handset makers such as Samsung and HTC, in order to protect its patents where Apple has accused these manufacturers of blatantly copying its iPhone and iPad designs.
So far, these lawsuits have yielded mixed results for Apple. Although it won some cases against Samsung, Apple has lost a couple against Motorola recently.
We believe that Apple remains the biggest growth story based on its product pipeline, popular apps, iCloud, iPhone 4S, the new iPad, Apple TV, and loyal customer base. With a solid balance sheet and robust revenues, we expect Apple to outperform its peers in the long run.
We maintain our Outperform recommendation over the long term (6-12 months). Currently, Apple has a Zacks #3 Rank, which implies a Hold rating in the near term.
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