Samsung Hammers Apple's Damage Claims

Apple rested its case against Samsung Monday with an estimate that $2.5 billion was the low end of the damage it estimates it has suffered as a result of alleged Samsung infringement of its patents. The high end: $2.75 billion, an additional $250 million.

That latter figure was backed up by complex modeling done by silver-haired accounting expert Terry Musika, founder and managing director of Invotex Group. As the Samsung Galaxy rapidly became the best selling smartphone in the world, Apple lost sales and profits that would have been its own, if Samsung hadn't copied its design and user interface, Apple's suit claimed.

Samsung attorney Bill Price launched a bold cross-examination by allowing that some observers might agree with Apple's claim that the Galaxy's "bounce-back" feature, where a user at the edge of an electronic document bounces back to a central point, closely resembles the iPhone's. But after he suggested Samsung might be vulnerable on that point, Price then fired question after question at Musika as he tried to whittle down the estimated damages. At one point Musika looked to Apple counsel, as if to ask whether he needed to answer the question.

"Don't look at him," Price commanded the $800-an-hour expert. "Look at me. Just tell me what you think."

Musika's model assumed that if buyers hadn't gotten a Samsung phone, they would have bought Apple's, doesn't it? Price asked. It does, Musika agreed.

[ Learn more about how Apple is building its case that Samsung produced a look-alike smartphone. See Apple Design Expert Confused Samsung for iPhone. ]

Price then zinged the witness with Samsung consumer research that suggested buyers bought the phone they did because it enabled them to continue with their present carrier, and for part of the time of Musika's study, the iPhone was available from only AT&T. They also choose a Galaxy model because they knew Google created and backed the phone's Android operating system, he said.

During the period of "infringed" sales, Apple couldn't capture all the buyers it wanted because it couldn't produce iPhones fast enough, Price reminded Musika. Apple had earlier used that data to establish how its brand and reputation for innovative, cool products gave value to its patents. Price turned that shortage into a Samsung advantage, noting that Apple claimed it lost $199 million during from June to October 2010, even though it lacked phones to sell.

Samsung sold 22.7 million smartphones and Galaxy Tab tablet computers during the period for which it's charged with infringement, resulting in $8.16 billion. The vast majority of the devices--21,251,000--were smartphones, which generated $7 billion in sales. Samsung's Tab 10.1 tablet, with 1.4 million sold, on the other hand, is the device that is most likely to lead to an infringement verdict. Judge Lucy Koh said it was "virtually indistinguishable" from the iPad when she ruled in July in favor on an injunction against its further sale.

Apple's larger figure includes penalties for duplicating Apple's trade dress, or the way it packages and presents its iPad and iPhone to consumers. Apple encourages immediate involvement between the user and the device by excluding a product manual from the package. Buyers just pick it up and start using it. Apple's attorneys say Samsung mimics the packaging of Apple products and sells Galaxy products without a product manual. Samsung attorneys denied copying Apple trade dress.

At the end of Musika's testimony, Apple rested its case and Samsung moved for an immediate dismissal of all infringement charges on the grounds Apple hadn't proven its case. Judge Koh listened patiently to Samsung attorney Mike Zellers' argument, but few in the large, fifth-floor courtroom doubted which way her decision was going to go. Without fanfare, she denied the motion, saying a jury may decide "it's fair and reasonable" to judge Samsung has infringed Apple's patents.

The jury had been excused from witnessing the arguments over the dismissal motion and didn't hear the judge's comment.

But in the process of denying the motion, Koh made a small concession to Samsung. The firm had cited three Galaxy smartphones that should not be included in any damages consideration because they were never sold in the United States. Lead Apple attorney Harold McElhinny attempted to convince her they had been because Samsung describes them as "global" smartphones. But Samsung attorneys said "global" was a designation for phones that would not be pushed into the U.S. market, so Judge Koh allowed the removal of those three phones.