Apple: Samsung should pay us $2.191B for infringement

An expert hired by Apple says he reached the amount based on the scale, time span, rivalry between the companies, and belief the patents covered technologies that helped Samsung gain users.

applesamsungruling.jpg
Apple and Samsung are battling in court.

SAN JOSE, Calif. -- Apple should receive about $2.191 billion in damages from Samsung for patent infringement, an expert for the iPhone maker argued Tuesday.

Apple earlier said it wanted about $2 billion, but the testimony Tuesday marked the first time the company disclosed the precise total and the factors that went into the calculation.

Christopher Vellturo, an economist and principal at consultancy Quantitative Economic Solutions, said he reached $2.191 billion figure by calculating reasonable royalties and lost sales and profits. He noted the figure comes from evaluating the scale of the infringement, the time span, the head-to-head rivalry between Apple and Samsung, and the belief that the patents were key for making Samsung devices easier to use and more attractive to buyers.

"It's a very large market, and Samsung is doing a lot of sales into that market," Vellturo said. "This was a significant period for Samsung to be infringing."

Samsung sold more than 37 million infringing devices, Vellturo said. The total amount of sales in dollars was kept confidential.

Almost two years after Apple and Samsung faced off in a messy patent dispute, the smartphone and tablet rivals have returned to the same San Jose, Calif., courtroom to argue once again over patents before federal Judge Lucy Koh. Apple is arguing that Samsung infringed on five of its patents for the iPhone, its biggest moneymaker, and that Apple is due $2 billion for that infringement. Samsung wants about $7 million from Apple for infringing two of its software patents.

While the companies are asking for damages, the case is about more than money. What's really at stake is the market for mobile devices. Apple now gets two-thirds of it sales from the iPhone and iPad, South Korea-based Samsung is the world's largest maker of smartphones, and both want to keep dominating the market. So far, Apple is ahead when it comes to litigation in the US. Samsung has been ordered to pay the company about $930 million in damages.

Earlier Tuesday another expert hired by Apple argued that the company's patented features made Samsung's devices more appealing and that fewer people would have purchased the gadgets if the features were missing.

However, Samsung, in its cross examination, sought to poke holes in expert John Hauser's methodology. Its attorneys said features such as brand and operating system factor more prominently in consumers' purchase decisions.

Hauser, the Kirin professor of marketing at the MIT Sloan School of Management, is key to Apple's argument that it deserves about $2 billion in damages for Samsung's alleged infringement. The company argues that Samsung copied Apple's iPhone as it tried to figure out how to react and compete with the device. It realized it "simply did not have a product that could compete successfully against the iPhone," Apple attorneys said during opening arguments last week. Samsung, however, argues that many of the patented items are features Google had earlier created for Android.

Hauser surveyed hundreds of Samsung device users -- 507 for phones and 459 for tablets -- to measure the percent of consumers who would buy devices with certain features. He then used those results to determine how much people would pay for Apple's patented features.

"The features that were enabled by the patents at issue in this case have a measurable impact on consumer demand for Samsung devices," Hauser said during his testimony Tuesday.

Hauser surveyed users about Apple's patented features -- universal search, background syncing, quick links, automatic word correction, and slide-to-unlock -- as well as 21 other features such as screen size, camera, Wi-Fi, GPS, and voice-to-text. However, he didn't take into account brand, operating system, battery life, or LTE connectivity as reasons for buying a phone.

In the case, Apple and Samsung have accused each other of copying features used in their popular smartphones and tablets, and the jury will have to decide who actually infringed and how much money is due. This trial involves different patents and newer devices than the ones disputed at trial in August 2012 and in a damages retrial in November 2013. For instance, the new trial involves the iPhone 5, released in September 2012, and Samsung's Galaxy S3, which also debuted in 2012.

The latest trial kicked off last Monday with jury selection. Last Tuesday featured opening arguments and testimony by Phil Schiller, Apple's head of marketing. Other witnesses who have testified include Greg Christie, an Apple engineer who invented the slide-to-unlock iPhone feature; Thomas Deniau, a France-based Apple engineer who helped develop the company's quick link technology; and Justin Denison, chief strategy officer of Samsung Telecommunications America. Denison's testimony came via a deposition video.

Apple experts who took the stand included Andrew Cockburn, a professor of computer science and software engineering at the University of Canterbury, New Zealand; Todd Mowry, a professor of computer science at Carnegie Mellon University; and Alex Snoeren, a professor of computer science and engineering at the University of California, San Diego.

There are seven patents at issue in the latest case -- five held by Apple and two by Samsung. Apple has accused Samsung of infringing US patents Nos. 5,946,647; 6,847,959; 7,761,414; 8,046,721; and 8,074,172. All relate to software features, such as "quick links" for '647, universal search for '959, background syncing for '414, slide-to-unlock for '721, and automatic word correction for '172. Overall, Apple argues that the patents enable ease of use and make a user interface more engaging.

Samsung, meanwhile, has accused Apple of infringing US patents Nos. 6,226,449 and 5,579,239. The '449 patent, which Samsung purchased from Hitachi, involves camera and folder organization functionality. The '239 patent, which Samsung also acquired, covers video transmission functionality and could have implications for Apple's use of FaceTime.

The Samsung gadgets that Apple says infringe are the Admire, Galaxy Nexus, Galaxy Note, Galaxy Note 2, Galaxy S II, Galaxy SII Epic 4G Touch, Galaxy SII Skyrocket, Galaxy S3, Galaxy Tab 2 10.1, and the Stratosphere. Samsung, meanwhile, says the iPhone 4, iPhone 4S, iPhone 5, iPad 2, iPad 3, iPad 4, iPad Mini, iPod Touch (fifth generation) and iPod Touch (fourth generation) all infringe.

The arguments by Apple and Samsung in the latest case are expected to last until April 29 or 30, at which time the jury will deliberate. Court will be in session three days each week -- Mondays, Tuesdays, and Fridays -- though the jury will deliberate every business day until it has reached a verdict.


 

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