Google Cheers as Motorola Strikes a Blow to Apple in Germany

February 6th, 2012 by Trefis Team
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The legal battle for patents in the smartphone market is getting more complicated of late. Apple (NASDAQ:AAPL) saw a couple of setbacks last week. Firstly it was forced to remove iPhone 4 and 3GS from its German online store as the models were believed to infringe certain patents of Motorola Mobility (NASDAQ:MMI). [1] Then a German court granted Motorola’s request to permanently ban Apple’s push e-mail services, a key feature of its iCloud offering.

This is indeed a big blow to Apple which is already finding itself mired in litigation issues with Samsung and HTC. Incidentally, Google (NASDAQ:GOOG) is in the process of acquiring Motorola Mobility for a valuation of $12.5 billion, and hence this win indirectly underscores the intense battle between Google and Apple.

Our $550 price estimate for Apple stock is about 20% above the market price.

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Apple Mired with Patent Issues

This is not the first time that Apple has lost a patent infringement case. A few months back, the U.S. International Trade Commission ruling that Motorola Mobility did not violate Apple’s patents dealt a blow to the iPhone maker (Read Motorola Deals Apple a Small Setback With ITC Ruling). Apple had asked the commission to block Motorola phones such as the Droid and Droid X, claiming they infringed on its patents.

A few weeks ago, Motorola won the injunction against Apple’s devices in Germany based on an essential GPRS patent. [2]

Google Benefiting from Apple’s Situation

Google and Apple are the top two contenders in the smartphone market and hence there is a lot at stake for these players. Google’s Android is still the largest player in the smartphone operating system market, but Apple recently became the number one smartphone vendor in the world in Q4 2011 overtaking Samsung. [3]

However, if Apple continues to lose patent battles, it could hurt its competitive position in the long term. While Google would be the biggest beneficiary from Apple’s loss. With Motorola scoring a decent number of legal victories over Apple, Google’s decision to acquire Motorola for its patent portfolio is increasingly looking like a wise move.

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Notes:
  1. Apple TEMPORARILY removed products from German online store due to Motorola injunction based on FRAND patent, FOSS Patents, February 3rd, 2012 [↩]
  2. German Court Rules in Favor of Motorola Mobility in Apple Litigation, Press Release, December 9th, 2011 [↩]
  3. Apple Becomes World’s Largest Smartphone Vendor in Q4 2011, Strategy Analytics, January 26th, 2012 [↩]