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Apple rests its case after claiming it lost 2 million iPhone and iPad sales due to Samsung

Apple rests its case after claiming it lost 2 million iPhone and iPad sales due to Samsung


Apple rest its case today after its final witness, a damages expert, detailed how he arrived at the $2.7 billion payout the company is looking for.

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iphone and ipad together
iphone and ipad together

Apple finished up its case against Samsung today after calling a financial expert to the stand today who estimated that Cupertino may have lost 2 million iPhone and iPad sales due to the alleged infringement. CPA Terry Musika began by walking the jury through a breakdown showing how many accused devices Samsung sold in the US — and how much revenue they brought in (we first saw the report last week). The report is the starting point for determining the damages Apple is requesting if it wins out in the jury's eyes.

$488.8 million in lost sales

In putting together the total, Musika looked at three different buckets: the profits Samsung made with the accused products, reasonable royalty fees for the allegedly-infringed patents, and the profits Apple itself may have lost. Using demand and the presence of other products in the marketplace as a barometer, Musika estimated that Apple lost around 2 million mobile device sales, at a cost of $488.8 million.

In calculating Samsung's alleged "unjust enrichment" — its profits for selling the accused devices — he started with the $8.16 billion in revenue generated from the devices, and after going through the company's financials estimated that Samsung made $2.241 billion in profit. Musika did take time to note the complexity of following the trail, citing inconsistencies with some of Samsung's data and the way its handles money for tax purposes as causes for the difficulty (97 out of every 100 dollars Samsung Telecommunications America makes go back to the company's parent company to avoid US taxation, he said).

Asking for damages between $2.5 and $2.7 billion

Using estimated royalty rates for the various patent and trade dress claims brought the third section of the pie to $21.24 million. All told, Musika presented a spread of between $2.5 billion and $2.75 billion in damages, depending on whether Apple's lost profits are included.

Samsung attorney Bill Price wasted no time poking holes in Musika's presentation, however, getting the witness to admit that there were an endless number of different ways the damages could be split up and calculated (Apple has paid Musika's 20-person team around $1.75 million to reach the numbers he presented today). Musika also neglected to break the numbers down into any kind of per-violation total, to give the jury an idea of what would be at stake if it were to find that Samsung had infringed just one of Apple's patents, for example.

Apple didn't have iPhone 4s to sell

With regard to lost profits, Price also raised the issue of iPhone 4 inventory; for several months after release, the device was notoriously hard to obtain, which would make calculating lost sales during that time extremely difficult simply because Apple couldn't make enough phones to meet demand in the first place.

Price's cross-examination followed up on testimony from Apple's patent-licensing head Boris Teksler earlier in the day. Teksler was asked if Apple had ever charged any licensing partner the same fees it's suggesting Samsung pay as "reasonable royalties." Teksler admitted it had not, though he specified the company doesn't usually license out the respective patents directly in the first place.

Samsung followed Apple's last witness with a standard legal maneuver: asking Judge Lucy Koh to grant a judgement as a matter of law that Apple hadn't proven its case. Samsung asked to provide a written brief on the matter, to which Koh — frustrated after a flurry of filing over the lunch break — bristled. "I never get written briefings on Rule 50," she told Samsung's legal team. "Ever."

Koh eventually allowed Samsung attorney Michael Zeller to provide a lengthy verbal explanation of its concerns, with Apple offering its own rebuttal. The judge eventually agreed with Samsung that three of the accused devices should be cut from the trial altogether, though Koh didn't grant the company the rest of its asks. Samsung is already beginning its own case, and we'll continue to bring you coverage from the courtroom.