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Business News/ Tech-news / News/  Samsung says $2 bn for Apple patents 57 times too much
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Samsung says $2 bn for Apple patents 57 times too much

Apple's damages are inflated because the five patented smartphone features at issue are of marginal value, says Samsung

Samsung on Tuesday also began presenting its case that Apple is infringing two of its patents. Photo: Bloomberg Premium
Samsung on Tuesday also began presenting its case that Apple is infringing two of its patents. Photo: Bloomberg

San Francisco: Samsung Electronics Co. Ltd says Apple Inc.’s patent-infringement claims of $2.19 billion are 57 times higher than what the Galaxy maker should pay if a jury finds it infringed smartphone technology.

Samsung called on a Yale University business school professor on Tuesday to make its case to a federal jury in San Jose, California, that if it has to pay anything, the amount should be as little as 35 cents a phone—a stark comparison to Apple’s demand for more than $40 a phone.

Judith Chevalier’s testimony builds on a Samsung lawyer’s argument at the outset of trial that Apple’s multibillion-dollar figure is a gross exaggeration and an insult to the intelligence of jurors. According to Samsung, Cupertino, California-based Apple’s damages are inflated because the five patented smartphone features at issue are of marginal value.

The second US trial between the world’s top two smartphone makers follows legal battles on four continents to dominate a market that was valued at $338.2 billion last year, according to data compiled by Bloomberg.

Revenue share

Samsung, based in the Suwon, South Korea, had 31% of industry revenue, compared with 15% for Apple, whose share of the market has shrunk as the touch-screen interface has become commonplace and Samsung, LG Electronics Inc. and Lenovo Group Ltd have introduced lower-cost alternatives.

It is generally in the patentee’s best interest to present as large a figure as possible without appearing unreasonable, just as it is in the accused infringer’s best interest to present a figure as small as possible without appearing unreasonable, Brian Love, a law professor at Santa Clara University, said in an interview. On average, jury verdicts tend to fall very near the mid-point between the parties’ respective damages estimates.

Chevalier, an economics and finance professor at the Yale School of Management, was called by Samsung to contest a report produced for Apple by Christopher Vellturo, an Massachusetts Institute of Technology-trained consultant based in Boston.

Vellturo said the $2.19 billion sought by the iPhone maker accounts for two types of damages: lost profits and reasonable royalties the company should have earned on more than 37 million infringing products that Samsung sold from August 2011 to December 2013.

In patent law, to calculate damages, companies are asked to recreate a ‘‘hypothetical" license negotiation, according to Love. Vellturo’s damages estimates assume Samsung would ‘‘capitulate" and ‘‘roll over" to Apple’s royalty demands, Chevalier said. She argued that Apple’s patents at issue in the case are of such marginal value that the company hasn’t lost profits due to Samsung’s infringement.

‘‘My analysis compensates Apple through a reasonable royalty and zero lost profits, Chevalier told jurors. When Samsung sells a phone, Apple may be losing out. But that is not the same as saying that Apple loses sales because Samsung infringes Apples patents.

Samsung on Tuesday also began presenting its case that Apple is infringing two of its patents. Bloomberg

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Published: 22 Apr 2014, 10:09 AM IST
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