Oppenheimer & Co.’s Ittai Kidron this morning reiterates an Outperform rating on shares of Apple (AAPL), while writing that �the news last night�that the�U.S. Patent and Trademark Office�rejected a second Apple patent at center of Apple�s $1.05 billion victory in August against�Samsung Electronics�(005930KS), the so-called �pinch-to-zoom� patent., number 7,844,915, is a “potential setback.”
That patent relates to the user interface technique that allows multiple finger touches to manipulate on-screen objects, as on Apple’s iPhone and iPad, and now plenty of other devices as well.
Not only is Samsung appealing the August jury verdict, and this could help them, but it makes it harder for Apple to pursue licensing, using the verdict as a weapon, argues Kidron:
Samsung’s appealing that decision, and if a key patent used in the case is no longer valid, Samsung�s case for overturning the decision, and the amount of the damages, is much stronger.�Having the �915 patent (and any others) invalidated also likely impacts Samsung�s (and other companies’) willingness to pursue a licensing agreement with Apple. Apple has been involved in several patent infringement cases with Android vendors (HTC, Motorola…), and while the results are mixed, it did use the courts to successfully push HTC to come to terms on a licensing agreement. We believe Samsung is unlikely to pursue a licensing agreement in the near term given Apple�s recent setbacks with the USPTO.
“Clearly,” writes Kidron, “this IP battle isn’t over. Although the verdict should put pressure on Apple’s shares, “We still believe the shares are overextended to the downside and embed too much pessimism regarding headwinds and execution,” he concludes.
“We would buy on weakness.”
Apple shares today are indeed weak, falling $2.16, or 0.4%, to $524.15.
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