Apple makes last pitch for why Samsung owes $380M more

An attorney for the Cupertino, Calif., electronics giant stresses during closing arguments in a damages retrial that Apple took a huge risk by making the iPhone and that Samsung "destroyed its revenue."

Shara Tibken Former managing editor
Shara Tibken was a managing editor at CNET News, overseeing a team covering tech policy, EU tech, mobile and the digital divide. She previously covered mobile as a senior reporter at CNET and also wrote for Dow Jones Newswires and The Wall Street Journal. Shara is a native Midwesterner who still prefers "pop" over "soda."
Shara Tibken
6 min read
Outside U.S District Court in San Jose, Calif., the scene of the Apple v. Samsung retrial. Josh Lowensohn/CNET
SAN JOSE, Calif. -- Apple on Tuesday argued that Samsung's patent infringement significantly harmed the company and that the electronics giant deserves an additional $380 million for that damage.

Apple attorney Bill Lee said that Samsung's copycat tactics helped it gain significant market share while other rivals struggled. And he said the patent infringement set back Apple.

"Apple can never get back to where it should have been in 2010," Lee said Tuesday during closing arguments in a federal court here.

Samsung attorney Bill Price, meanwhile, argued that Apple deserves only $52 million in additional damages because Apple's patents are limited.

"Apple has tried to mischaracterize these patents so they are the iPhone," Price said during his closing arguments. But "these patents are very narrow...Apple doesn't own beautiful and sexy."

Check out Samsung's closing argument here.
A jury last year determined Samsung had infringed on five patents related to the iPhone's design and functionality. A judge earlier this year vacated about $450 million of the original award and ordered a new jury to convene to recalculate the damages for patent infringement. Samsung is still on the hook for about $600 million, but Apple is asking for $380 million more. Samsung believes it only owes Apple $52 million.

Samsung sold 10.7 million infringing devices, generating $3.5 billion in revenue. Apple only wants about 10 percent of that revenue, leaving about 90 percent of the revenue to account for the differences in Samsung's devices, such as Android and bigger screens, Lee said.

"They're asking to retain $3.45 billion, 99 percent of what they made," Lee said. "Samsung destroyed Apple's revenue...This is not punishment...This is saying, give us back what you got."

Lee also stressed how much time and investment Apple put into making the first iPhone and what a big risk it was for the company to create such a device.

"Hundreds of Apple engineers worked in secret to try to bring you something that had never been done before," Lee said "They invented, they created, they innovated."

He cited Samsung documents, including a speech by top mobile executive JK Shin, as evidence that the company wanted to copy Apple. In the speech by Shin, the Korean executive said Samsung was experiencing a "crisis of design" and needed to "make something like the iPhone."

"Documents, ladies and gentlemen, don't lie," Lee said. "Samsung has infringed not one, not two, not three, not four, but five patents."

Price, meanwhile, said Shin's wasn't directing Samsung to copy Apple. Rather, he was saying Samsung should "try to compete better and make our phones more appealing to consumers."

He added that while Samsung knew it needed to alter its devices to compete with the iPhone, Apple has done the same thing with new devices like the iPad Mini.

"There's nothing wrong with looking at your competitors and changing what you do because of it," Price said.

Apple vs. Samsung
Lee and Price made the comments during a retrial in the United States District Court for the Northern District of California. A new jury of eight people -- six women and two men -- has been assembled to determine the new damages total for Samsung's patent infringement.

The retrial kicked off last Tuesday with jury selection, followed by opening arguments Wednesday. Witnesses who took the stand included Phil Schiller, Apple's head of marketing; and several expert witnesses who calculated the total damages owed.

For most, the damages retrial was a case of "Groundhog Day." No new revelations emerged during the testimony, and most witnesses also took the stand during the last trial more than a year ago. Apple's witnesses argued Samsung's copycat devices hurt the company, while Samsung argued that people seek out its devices more for their differences than similarities to Apple gadgets.

Not at issue in this case is whether Samsung infringed Apple's patents. The judge instructed the jury that a previous jury already decided Samsung infringed, and that they shouldn't revisit that issue. The sole consideration in the retrial is money -- just how much Samsung owes Apple for infringing its patents.

Judge Lucy Koh allowed each side eight hours of testimony over the four-day trial. Samsung rested its case Monday with two minutes left. Apple had 16 minutes left. Samsung made its closing arguments later Tuesday. Both sides were allotted 90 minutes for closing. The case was handed over to the jury at about 12:15 p.m. PT.

Samsung products involved in rethink of damages (pictures)

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The two companies spent their final hours and minutes Monday grilling expert witnesses on how much money Samsung owes Apple for patent infringement. A big part of the discrepancy between what Apple wants and what Samsung thinks it should pay comes from differing views on how much Apple lost in profits and how much it should be due for royalties. The two sides also disagree on how much money Samsung made from its copycat products.

Apple arrived at the $380 million amount based on lost profits of about $114 million, Samsung's profits of about $231 million, and reasonable royalties of approximately $35 million. Apple estimates it would have sold 360,000 devices if Samsung hadn't released infringing rivals.

Samsung, meanwhile, said Apple shouldn't receive any money for lost profits, $52.7 million for Samsung's profits, and royalties of only $28,452 because the patents have limitations.

Apple originally filed suit against Samsung in April 2011, accusing the Korean company of copying the look and feel of its products. Samsung countersued two months later over patent infringement and said it was at work on touch-screen phones with giant rectangular screens and rounded corners well before Apple showed up. The initial trial, which stretched more than three weeks in August 2012, wrapped both of those cases in one, somehow squeezing together the patent infringement issues, alongside antitrust claims, and even trade dress issues.

In August of last year, a nine-person jury sided with Apple on a majority of its patent infringement claims against Samsung. At that time, the jury awarded Apple $1.05 billion in damages, much less than the $2.75 billion sought by the Cupertino, Calif., electronics giant. Samsung, which asked for $421 million in its countersuit, didn't get anything.

Apple v. Samsung redux: What you need to know (FAQ)

However, Koh in March ordered a new trial to recalculate some of the damages in the case, striking $450.5 million off the original judgment against Samsung.

The products in question include the Galaxy Prevail, Gem, Indulge, Infuse 4G, Galaxy SII AT&T, Captivate, Continuum, Droid Charge, Epic 4G, Exhibit 4G, Galaxy Tab, Nexus S 4G, Replenish, and Transform. The Prevail in particular racked up $57.9 million of the damages tally, which Koh said was a failure on the jury's part, since the device was found to infringe only on utility patents, and not on design patents.

Schiller argued last week that Samsung's copycat devices made it "much harder" for Apple to differentiate and sell its devices. He also noted that the reason Samsung gained so much market share in smartphones was because it copied Apple.

"At the end of the day, there's a cumulative effect of doing all of this that's incredibly damaging [to Apple]," Schiller said Friday.

Lee and Harold McElhinny, another Apple attorney, on Tuesday pointed out to the jury that Apple brought top executives to talk about the creation of the iPhone and the importance to the company. Samsung, however, didn't put any of its top Korean executives on the stand, they said.

"How can they disrespect the process so much that they don't even come to the trial?" McElhinny said.

He also appealed to the jurors' emotions, saying the entire Bay Area and economy will suffer if Samsung isn't adequately fined for its infringement. He compared the situation to US TV makers who went out of business because they didn't protect their intellectual property. Samsung is currently the world's biggest TV maker by a wide margin.

"This is not about punishment," McElhinny said. "This is not about pitchforks. This is not about getting even...If juries take the profit out of patent infringement, then patent infringers will stop. If Samsung eventually believes they will not make money doing this, they will stop infringing our patents."

Updated at 9:45 and 11 a.m. PT and 12:25 p.m. PT with additional comments from Apple and Samsung.