Apple's damage demands for its patent infringement case against Samsung are massive: up to $2.88 billion. This morning in court, Samsung put a damages expert on the stand who said that Samsung’s total profit for the accused products is only $518.7 million, and that Apple’s numbers are way off base.
Other Samsung experts put up on the stand said that it's Apple that should pay out for its own infringement of Samsung patents—up to $422 million in all.
The first expert, Michael Wagner, said that Apple's expert didn't even figure in Samsung's cost in creating the accused phones, including the cost of manufacturing, marketing, and research.
"You have to develop this very complicated product," said Wagner. Apple deducted "not one penny" for Samsung's wide array of costs, and that led to a flawed analysis, he said.
Apple was accused of wildly overstating how many Samsung sales might have gone to Apple, even if the accused features were taken out. According to a survey Wagner presented, 75 percent of Android users didn't even consider buying an iPhone. And the features that appealed to Android fans were functional features like 4G speed, not, for the most part, design.
The two sides' experts have very different calculations of how profitable Samsung is. While Samsung's expert says the company's overall operating margin is around 12 percent, Apple puts it at 35 percent.
Lastly, Wagner laid into Apple’s “lost profits” argument, arguing that there were practically no lost profits at all. If Samsung hadn't made its sales, some other competitor could have picked them up—not Apple. Android phones are substantially cheaper, with the average reported cost of an iPhone being $206, as opposed to $139 for an average Samsung smartphone (and $160 for an HTC or Motorola smartphone).
Samsung demands cash for its patent counterattack
Samsung experts also asked for money for its own patents, which it says are infringed by Apple products. The jury should award a reasonable royalty of between 2 percent and 2.75 percent, Samsung’s expert (Dr. David Teece) argued. That would result in Apple paying out $290 million to $399 million over the 3G “high speed data” patents that Samsung has used in this case.
A separate expert, Dr. Vincent O’Brien, addressed Samsung’s interface patents, said to cover playing music in the background and sending e-mail with photos on mobile devices. Those added up to $22.9 million for the accused Apple products: iPhones, iPads, and the fourth-generation iPod touch. The lower damage demands for Samsung’s UI patents suggest that the real reason for showing those patents to the jury has more to do with emphasizing that Samsung has its own innovations, rather than getting real financial leverage in the case.
Samsung is down to the final minutes of its case, and may be at a real tactical disadvantage because of that. Apple still has a few hours to present its rebuttal case to Samsung. Judge Koh has said she will absolutely not extend the time allowances, and is willing to cut attorneys off mid-sentence if they go over. The attorneys representing Samsung are keenly aware they're down to the wire; they're shooting questions at their own expert witnesses in a rapid-fire staccato.