Apple, Samsung Battle Over Damages In Patent Trial
Apple wants billions of dollars, but Samsung said any damage award should be much less as trial enters its closing days.
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If Samsung is found guilty of infringing Apple's patents, a prospect that seems to get a little closer each day, it will not be knocked out of the smartphone business. It will redesign its models to eliminate the offending parts and get back into the market, probably within a few weeks, said Michael Wagner, a damages expert in federal District Court testimony Thursday.
Wagner, called by Samsung to dispute Apple's $2.5 billion to $2.75 billion estimate of appropriate damages, ended up discussing a Price Waterhouse study that pointed out some major differences between the two companies. Apple brings out one new iPhone a year, while Samsung introduces a new phone "about once a week," he noted. Samsung officials say they average 50 new models a year, trying to meet expectations of different carriers for a unique model.
In the Price Waterhouse study, Apple ranked higher than Samsung on attractiveness of design, as one of the 25 smartphone features consumers were asked about. But the study identified previous Android smartphone purchasers who had considered an iPhone. Twenty-five percent of this group ended up getting an iPhone. But 75% remained loyal to Android manufacturers, especially Samsung, because design was not the deciding factor in their decision. Feature sets were, and the Galaxy gained ground on the iPhone when it offered features that were exclusive, such as GPS navigation.
"Android had an advantage during the period when it had GPS functionality and Apple didn't," Wagner said. Apple added GPS navigation to the iPhone in a model that followed the appearance of the feature on Android.
"Samsung is known for having the fastest processors, the brightest screens. Groups of features drive demand," Wagner said.
Samsung attorney Bill Price gingerly asked him what Samsung should pay Apple if it's found guilty of having infringed. He tried several times to tell the jury it was a subject he was loath to bring up. Wagner said Apple's expert witness, Terry Musika, had miscalculated by using Samsung's total smartphone revenue rather than its profits from smartphone sales. By deducting the expenses of producing and selling the Galaxy and related lines, Wagner got the damages down to $518.7 million.
He urged further reductions because during the disputed period, Apple had no additional smartphones to sell, by its own admission. He also said if sales of only the offending phones were used, the number becomes smaller; Musika used sales of all Samsung smartphones, but only certain models are claimed by Apple to have infringed.
Meanwhile, Judge Koh, who is a former patent attorney herself, indicated she understands how complex the combined case, Apple vs. Samsung and Samsung vs. Apple, is. She said she was holding out an admitted "pathological hope" that Apple CEO Tim Cook will meet with the top leadership of Samsung, vice chairman Choi Gee-sung and mobile chief Shin Jong-Kyun, to settle the case. News reports indicate they met July 16, two weeks before the trial started, but nothing came of it.
"I'm also hoping there's some horse-trading going on. Now is the time," she said. If there's no out-of-court settlement, the case will be handed over to the jury.
The company executives better meet soon. The two firms will exhaust the last of their 25 hours of time arguing in front of the jury on Friday. On Aug. 21, they will each have two additional hours to make their closing statements.
Judge Koh will then spend an hour and a half on her instructions to the jury in what is likely to be, given the intricacies of patent law, a mind-numbing exercise for all. Then the jury will move from its cramped quarters next to the courtroom--the table at which the jury sits during breaks occupies the whole room--to a larger jury room, close to Koh's office in the federal court building, to do its work. No one is sure how long that will take or what the result will be.
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