Samsung expert knocks Apple's $2.5 billion damages tally
SAN JOSE, Calif. -- The $2.4 billion Apple says Samsung earned on devices with Apple's looks and technology is certainly a hefty sum, but about $1.7 billion off, according to Samsung.
To prove that, the company called on Michael Wagner, a former partner at PriceWaterhouse with 36 years of calculating corporate damages, who said that Apple's own damages expert had left out major parts of Samsung's financial data when making its calculation.
"[Apple's] total calculation of total profits did not include the total cost to figure out the profits," Wagner told the court.
Wagner made the case that Apple had left out things like expenses for sales, marketing, research and development, as well as administration -- costs that ate into Samsung's potential profits, and that were critical to calculating the company's financial responsibility.
Wagner also argued that Apple had miscalculated its lost profits, pointing to the fact that the company was having troubles keeping up with supply of the iPhone and iPad during portions when Apple says Samsung was raking in lost sales.
Eyeing sales from accused devices that were a part of the case, Wagner said that Samsung had earned $518.7 million in profits on those devices, far less than the $2.24 billion figure Apple claimed at the beginning of the trial.
Earlier in the week, Apple's expert witness Terry Musika offered that figure, adding potential royalties the company might have earned along with lost sales, tallying up damages beginning at $2.5 billion. Musika said he had thoroughly gone through Samsung's financials, going so far as to spend $1.75 million and 7,000 hours coming up with a computer program to crunch the numbers.
"I can assure you, it's not me sitting at a desk with a calculator, doing calculations," Musika joked in his testimony on Monday.
By comparison, Wagner said that he and his team had done most of the initial calculations for his figures in just three weeks, due a delay on Samsung's part.
"I didn't know what I was rebutting," Wagner said. "I had three weeks to do all my work. This was an enormous amount of work in three weeks."
Wagner was preceded by Timothy Sheppard, Samsung's vice president of finance and operations. Samsung brought Sheppard on to explain how the company tallied up its internals, something Apple questioned in cross-examination. Apple's lawyers pointed out that Samsung had gone through nine different versions of those financials during the evidence gathering process of the case, something Sheppard did not deny.
The trial continues through the rest of the week. Samsung is expected to rest its case today, with both sides to give closing arguments next week.
Update at 11:30 a.m. PT:After Wagner, Samsung called on Vincent O'Brien to talk more damages. In testimony, O'Brien said that Apple had paid out more than $1.4 billion to other companies for patent royalties, and owed Samsung $22.84 million for three of its feature patents used in this case. As mentioned in previous coverage, those patents cover e-mailing photos, Samsung's photo gallery bookmark technology, and playing MP3 musics in the background.
Update at 11:48 a.m. PT: Piling on with more damages claims was Samsung's expert David Teece, a University of California at Berkeley chair and economist. Teece talked damages for the essential patents Samsung's aiming at Apple's iPhones and iPads. By his estimate, Samsung should have earned somewhere between $290 million and $399 million from Apple in royalties for these patents.