Samsung Hammers Apple's Damage Claims

Samsung attorneys question Apple's calculations; cite evidence of prior touchscreen devices that may have influenced iPhone, iPad designs.
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. There are plenty of models left on the jury cart, the little four-wheeled carts that look like they were purloined from a university library. There are 175 phone exhibits in use in the trial. Apple has issued four iPhone models since its launch. It's not clear how many iPhone exhibits there are, but most of the remaining 172 phones are Samsung's.

Samsung then brought into court two witnesses to testify to the existence of prior art to Apple's touchscreen graphical user interface. It was a moment of revelation for those who like to see how major developments in the industry evolve, and it may have made an impression on the jury.

Ben Bederson, professor of computer science at the University of Maryland, showed off his Zoomable user interface, which had a somewhat iPhone-like capability of "zooming out for context, zoom in for detail."

Bederson started working on his zooming interface in 1993, and wrote an academic paper on it in 1994. He incorporated it into the LaunchTile user interface in 2004 that was put on a Microsoft Pocket PC and an HP iPaq handheld device. His research was sponsored by Microsoft, which had exclusive rights to the source code for an undisclosed period in 2004.

The interface gave a mobile device screen a six-by-six grid of tiles (icons) with three viewing options: a "Worldview" overview of all tiles; an intermediate or Zone view, where more information was visible on a section of four tiles; and a third view, Application, where the user went into a selected application. In May 2005 Bederson was clear of Microsoft's restrictions on disclosing the interface and discussed it in a talk at the Conference on Human Factors In Computing Systems (CHI Conference) in Portland, Ore. Afterward, he and one of his graduate students handed out Pocket PCs with TileLaunch on them.

"People loved this stuff. At the time, we were all running around, working on a Pocket PC with a stylus. This allowed you to navigate with one hand," he told the jury.

The interface even had a quasi bounce-back feature, where if a user dragged his finger one-sixth of the distance across the screen without reaching an activation icon, the screen snapped back to where he started. The idea behind the feature was that user finger movements would be imprecise, and if they missed a target, it would be best to get the user back to where he started on the screen than hung up somewhere in between tiles. It didn't have an edge indicator, however. Instead it used a blue bar across the screen with a marker where the user was in relation to the edge of a document.

The second witness, Adam Bogue, president of Circle Twelve, showed his firm's early DiamondTouch collaborative light table, around which four workers could work together using a touch sensitive, graphical user interface. The table had a top that reacted to touch, using the same principle as the Galaxy's or iPhone's capacitive resistance screen. It was developed by engineers at the Mitsubishi Electric Research Lab (MERL) in Cambridge, Mass., in 2001.

Bogue was in charge of business development for the device. He kept one on display in Mitsubishi's lobby and "made 100 and gave them away to universities." In 2003 he took the device on the road to show it wherever he could get an audience. One of his stops was at Apple's headquarters in Cupertino, Calif., where he recalled the names of two Apple engineers who were part of a group that watched a demonstration of the touch interface, which included two-finger gestures for zooming in on an image detail or zooming out again. It also had a single finger, scrolling gesture.

Samsung attorney Ed Defranko asked Bogue whether he required Apple to sign a confidentiality agreement. He said he hadn't, but that Apple had required him to sign an agreement that anything he showed them was not confidential.

A later version of the table had a Fractal Zoom feature that allowed a viewer to zoom in on details or zoom out for a wider view.

Samsung attorney Ed Defranko used a demonstration of the interface to claim the existence of prior art to Apple's iPhone touchscreen.

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