Samsung Electronics Co. (005930) rested its case in a patent-infringement trial with Apple Inc. (AAPL) after putting on witnesses who said the iPhone maker would owe the South Korean company as much as $421.8 million in royalties.
One of the damages experts called yesterday by Samsung, David Teece of University of California, Berkeley’s business school, outlined his calculations for Apple’s alleged infringement of two of the patents and cited $349 million as a middle-range figure based on a royalty rate of 2.4 percent.
On cross-examination, a lawyer for Apple, Joe Mueller, got Teece to admit he didn’t know how Samsung arrived at the rate. The lawyer showed Teece a July 2011 letter from Samsung to Apple proposing the iPhone maker pay the 2.4 percent rate to license any of 86 patents. Samsung had never published the rate, and “you have no evidence that Samsung has ever asked any other company for such a rate,” Mueller said.
Apple sued Samsung in April 2011, accusing it of copying patented designs for mobile devices, and Suwon, South Korea- based Samsung countersued. The case is the first to go before a federal jury in a battle being waged on four continents for dominance in a smartphone market valued by Bloomberg Industries at $219.1 billion.
The trial began July 30 and U.S. District Judge Lucy Koh limited each side to 25 hours to present their cases. Jurors are now hearing rebuttal witnesses and Koh said she wants jury deliberations to begin by Aug. 21
The judge yesterday urged the companies to narrow the claims in their dispute and directed them to report to the court on talks between their respective chief executives that she proposed on Aug. 15.
Koh said she remains “pathologically optimistic” the companies can settle. Separately, in the event the jury is left to decide the case, she said she wants a statement from the companies by Aug. 18 reporting whether “there has been some successful horse trading” to streamline and simplify claims.
Apple said in a pretrial filing that the 2.4 percent rate is “unfair, unreasonable, and discriminatory.”
Samsung “has never sought or received” the 2.4 percent royalty “from any licensee, and indeed cannot even explain where that number came from,” Apple argued in the July 25 filing. “Samsung’s royalty demands are multiple times more than Apple has paid any other patentees for licenses to their declared-essential patent portfolios,” Apple said.
‘Fair and Reasonable’
Samsung countered in its own filing that long before Apple announced the release of any of its products using Samsung’s technology, Samsung offered a “fair and reasonable” royalty rate on its patents to “virtually every major player in the mobile phone industry,” including Apple.
Samsung’s offer is “consistent with the royalty rates other companies charge for use of their standards-essential patents,” Samsung said in its filing. Apple “simply rejected Samsung’s opening offer, refused to negotiate further and to this day has not paid Samsung a dime for Apple’s use of Samsung’s standards-essential technology.”
Apple, based in Cupertino, California, claims it is owed at least $2.5 billion in damages and is also seeking to make permanent a preliminary ban it won on U.S. sales of a Samsung tablet, and extend the ban to Samsung smartphones.
Yesterday, Samsung called an accountant witness, Michael Wagner, to rebut Apple’s damages estimate. Wagner said Apple failed to include all of Samsung’s costs in its calculations.
The case is Apple Inc. v. Samsung Electronics Co. Ltd., 11- cv-01846, U.S. District Court, Northern District of California (San Jose).