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Samsung must pay $2.1B, says Apple

Posted: 10 Apr 2014  Print Version  Bookmark and Share

Keywords:Apple  Samsung  patent 

Apple ought to demand $2.191 billion in damages from Samsung on account of distributing smartphones that allegedly copy at least one Apple patent—implying a wilful infringement that could consequently multiply the damages up to three times—said an Apple expert.

Separately, another expert showed a survey concluding consumers would pay from $44 to $102 for access to some of the patented Apple features.

Economist Christopher Vellturo laid out much of Apple's case against Samsung in testimony here Tuesday afternoon. Samsung attorneys will get a chance to cross examine him on Friday.

Vellturo's firm, Quantitative Economic Solutions LLC, built a database of sales of infringing phones, based on access to Samsung's financial records. He showed the eight-person jury confidential details of estimated revenues and profits from those phones. Samsung shipped more than 37 million accused devices, an infringement he called "massive."

Samsung's 10 per cent share of the smartphone market in 2007, when Apple launched the iPhone, declined to a low of 5 per cent by late 2009, according to a chart Apple showed from International Data Corp. As the infringing phones came on the market in late 2010, it then rapidly rose to nearly 35 per cent in mid-2012 where it remains today, according to IDC.

Apple accuses Samsung of infringing five patents in nine smartphones and one tablet. Six of the phones were launched between August and November 2011, and the other devices followed in 2012. The IDC figures show Samsung's market share rising rapidly starting in early 2010, before the first infringing phones hit the market.

"The iPhone fundamentally changed the market, shifting power from hardware to software... creating huge challenges for Samsung because historically they were strong in hardware," said Vellturo. "A central aspect was improving the UI, and these patents were an important part of the strategy Samsung used to get into a two-horse race with Apple and stay there."

"This happened while many people were buying their first smartphones—that first smartphone purchase is so important," because it influences future purchases, noted Vellturo, who holds a doctorate in economics from MIT.

Apple has paid Vellturo about $560,000 to date, based on 800 hours of work at $700 an hour. In addition, Apple paid his staff an unspecified amount. "There was a lot of data to keep track of... it was a big undertaking," he said.

Reading Samsung's documents

Apple laid out several of its arguments using internal Samsung documents. For example, a July 2008 report titled "3G iPhones U.S. Market Impact" said:

While traditional OEMs are busy fighting each other in the feature phone space, Apple is busy making the category obsolete... Focusing on hardware is a losing proposition for direct iPhone competition.


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