Masimo v. Apple, reminds me of the case of another "obscure" firm, known as STAC Electronics v. Microsoft.
In the STAC case, which was fought some 30 years ago, STAC accused Microsoft of infringing certain STAC patents that provided a method for compressing data files so that they would occupy less space on a hard drive. That was a period when, if you needed an external disk drive for extra capacity on your Mac or PC, you paid as much for an extra 10 megabytes \as you would pay now for at least 2 terabytes. STAC had a nice compression software package that would reduce a file size by about 50%. Microsoft used that software as part of its DOS until it stopped, abruptly, claiming it had designed its own slightly different software. After several years, STAC won the case, plus a sizable payment from Microsoft (sizable for a company the size of STAC), but spent so much time and energy on the case that the company eventually disappeared.
In the Masimo case, I think Apple already knows it infringed one or more claims of Masimo patents and did so intentionally, knowing that, after protracted litigation, Masimo would agree to a probable out-of-court settlement. Masimo is already not the same company it was before getting involved with Apple, when Apple poached at least 20 Masimo key employees. If Masimo wins, it may be entitled to treble damages for intentional infringement, but the case may take so long to resolve on appeal that Masimo will seriously consider a settlement. In any event, the damages Apple will probably have to pay might amount to less than a dollar per AAPL share. No big deal – for Apple, but one which Apple can delay final resolution by the usual methods, including formal court appeals.
Meanwhile, Apple is moving from a hardware oriented firm to a seller of online products such as music, video, and its own or other company apps from its Apple store. As the components of smartphones, tablets, laptops, and desktops become more and more commoditized, Apple's potential profit margins on hardware will decline toward the levels of its competitors, but its music, TV, and related revenues will make up for reduced unit profits from hardware. Of greater import are ongoing investigations of Apple's alleged anticompetitive business practices, especially by the European Union, which could place a noticeable dent in net income growth before taxes. Trying to squeeze every last penny of profit isn't always the best business practice in the long run.
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