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Apple overstated its damages at trial: Samsung expert

Apple overstated its damages at trial: Samsung expert

By Reuters | Updated: 17 August 2012 09:15 IST

A financial expert said Apple Inc has overstated Samsung Electronics Co Ltd's profit margins for mobile products, an issue that goes to the heart of damages in the high profile patent trial between the two tech companies.

Michael Wagner, an accountant who testified on Thursday for Samsung, said Samsung's U.S. profits from the smartphones and tablets targeted in the case should be calculated at about 12 percent, or about $519 million.

Earlier in the trial, an Apple expert witness testified the U.S. margin was closer to 35.5 percent.

Additionally, two other Samsung financial experts contended that Apple should owe up to $421.8 million for violating a clutch of the South Korean company's patents.

Apple and Samsung are going toe-to-toe in a patents dispute that mirrors a bigger struggle for industry supremacy between the rivals that control more than half of worldwide smartphone sales.

Apple accuses Samsung of copying the design and some features of its iPad and iPhone, and is asking for a sales ban in addition to monetary damages. South Korea's Samsung, which is trying to expand in the United States, says Apple infringed several patents, including some for its key wireless technology.

Earlier this week, Apple expert Terry Musika said Samsung earned 35.5 percent margins from mid-2010 through March 2012, on $8.16 billion in U.S. revenue. Apple is seeking over $2.5 billion in damages.

However, Wagner testified on Thursday that Musika did not take into account many of Samsung's costs, including marketing. "Not a penny," Wagner said.

Wagner said his 12 percent figure assumes a period beginning in April 2011 for most of the mobile products.

The trial, now in its third week, is drawing towards a close.

U.S. District Judge Lucy Koh had given each side 25 hours to present evidence. Samsung began feeling the crunch on Thursday: its attorneys decided not to cross examine two of Apple's technical experts at all, citing time limitations.

More financial details about the famously secretive Apple were revealed on Thursday: The company has paid about $1.4 billion in patent royalties to at least 90 companies, according to testimony from Samsung financial expert Vince O'Brien.

Apple has sold $12.23 billion worth of iPhones in the U.S. since September 2010, and U.S. sales for the iPad are at $2.29 billion since the end of April 2011, Samsung financial expert David Teece said.

Other testimony on Thursday focused on how much Apple should pay if the jury finds that Apple violated Samsung's patents. O'Brien said a reasonable royalty for three of Samsung's feature patents including one for seamlessly emailing a photo was $22.8 million.

Asked why the amount was so small, O'Brien said "They're one of many features on the phone."

Yet Teece said Samsung's wireless patents in the case were worth up to $399 million. Under questioning from Apple, Teece acknowledged that he had not seen any evidence that Samsung had ever received money for those patents from another company.

The case in U.S. District Court, Northern District of California, is Apple Inc v. Samsung Electronics Co Ltd et al, No. 11-1846.

Copyright Thomson Reuters 2012

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