Judge Sets Back Apple in Patent War

GavelFor most of the past year, Apple (NASDAQ:AAPL) has bested Samsung (SSNLF.PK) in their ongoing patents dispute. However, U.S. District Judge Lucy Koh of Northern California, who imposed two pretrial sales bans against Samsung, denied the iPhone maker’s request for a permanent injunction against Samsung’s smartphones on Monday.

Why Did Koh Deny Apple’s Request?

After a jury determined that the Korean electronics manufacturer had copied key iPhone and iPad design and software features last August, Apple was awarded damages of $1.05 billion. But Apple sought more than a financial penalty. In court documents seen by CNN, Apple stated that the damage done by the patent infringement was “irreparable,” because the iPhone lost market share as a direct result of Samsung’s actions. The iPhone maker wanted the judge to impose a permanent sales ban against 26 of Samsung’s phones, which run on Google’s (NASDAQ:GOOG) Android operating system.

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Koh found the company’s case lacking. “While Apple has presented evidence that design, as a general matter, is important to consumers more broadly, Apple simply has not established a sufficient causal nexus between infringement of its design patents and irreparable harm,” she wrote in her order.

However, the case still has one more round; Koh has not yet ruled on other important post-trial proceedings, which could result in more fines for Samsung. If the judge decides that Samsung’s infringement was intentional, the damages could be tripled.

CHEAT SHEET Analysis: Is Koh’s Decision a Negative Catalyst for Apple’s Stock?

One of the core components of our CHEAT SHEET Investing Framework focuses on catalysts that will move a company’s stock. Apple and Samsung’s litigation battles reflect their battle to dominate the smartphone industry; together, they control more than half of worldwide smartphone sales. In this case, the judge’s ruling deprives Apple of “key leverage in the mobile patent wars,” according to Reuters. Furthermore, the eight Samsung smartphones that were named in the case, including the Galaxy S II, will not be removed from stores.

Investing Insights: Apple Chart of the Day: The iPad Mini Leads the Way.

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