Samsung, Apple CEOs Ordered into Settlement Talks

Samsung Electronics vice chairman Choi Gee-sung and Apple CEO Tim Cook will meet at the US district court in San Francisco on May 21 to discuss the possibility of settling their patent litigation, pursuant to a mandatory settlement conference order.

Such orders are routinely issued after the major issues of a litigation have become clarified. The meeting is scheduled to continue for two days.

The litigation is pending in the San Jose division of the federal court for the northern district of California but the settlement conference was ordered to take place in San Francisco courthouse so that the settlement conference can be presided over by a judge not involved in the massive litigation under way in San Jose.

The litigation was initiated with Apple’s claim that Samsung violated various design patents relating to the iPhone and iPad. Samsung counter-claimed alleging that Apple infringed on its 3G mobile communication patents. Based on settlements typically reached between adversaries in similar patent disputes, any settlement by Samsung and Apple will likely entail a cross-licensing agreement under which each will pay royalties to the other for the right to continue using the patents in dispute.

While a settlement is ultimately the most likely outcome, it is unlikely to result from the initial mandatory settlement conference due to remaining uncertainties about the outcome of certain issues. A settlement is far more likely after more major points of dispute have been resolved through a series of summary judgment motions.

Apple is currently the world’s most valuable company with a market capitalization of over $600 billion. Samsung is the world’s most valuable consumer electronics company with a market cap of about $200 billion. Samsung enjoys a bigger share of the global smartphone market but Apple is able to command a substantially larger profit margin.