Apple began to lay out its £1.3 billion damages claim against Samsung Electronics for the first time on Tuesday, arguing to an eight-person jury in California that Samsung’s alleged patent infringement was large and significantly damaged Apple.
Apple is demanding the money for lost sales and royalties it says it suffered as a result of Samsung’s sale of more than 37 million smartphones and tablets between August 2011 and the end of 2013, the company told the court.
The trial, which began last week, involves five Apple patents and 10 Samsung products: nine models of smartphones and one tablet.
The patents are the “slide-to-unlock” function that takes the phone from the lock screen to home screen; universal search, which pulls in results from the phone and the Internet; the ability to sync data in the background; automatic word correction as a user types; and contextual links that attach a menu to items such as phone numbers, email addresses and postal addresses.
The damages figure was calculated by Chris Vellturo, president of Quantitative Economic Solutions.
Vellturo, who is being paid £417 per hour by Apple for his work on the case, said he considers Samsung’s infringement particularly damaging because the patents cover the ease of use of the phone, one of the main qualities that made the iPhone the most popular smartphone in the world.
He also said Apple suffered particular damage because Samsung was able to pick up many first-time smartphone users.
“The competition for first-time buyers is particularly important, because once they buy, they are very likely to make their next purchase from the same manufacturer, and maybe other products and services too,” he said.
Vellturo’s figures were based on studies conducted by John Hauser, a marketing professor at the MIT Sloan School of Management, who spoke immediately before him.
Hauser conducted a series of conjoint studies, a type of marketing research survey that involves offering consumers hypothetical products that differ by one feature, at different prices, in order to gauge how much that feature is worth to consumers.
His study of 507 Samsung smartphone owners determined that on a hypothetical £89 phone, they would pay an additional £70 for automatic word correction and an extra £41 for contextual links. A second study of 459 Samsung tablet owners determined they would pay an extra £19 for slide-to-unlock, and £20 for universal search, on a hypothetical £178.50 tablet.
But Hauser cautioned the numbers couldn't just be added together with the price of a product.
“There are many other considerations that would go into setting a market price,” he said. “That would be a different survey. Here, it’s just an indicator of demand.”
Samsung attorney Bill Price spent almost two hours chipping away at Hauser’s testimony.
He questioned the specific wording of some parts of the study, such as pointing out that automatic word correction had been described as requiring that a period or space be entered before the word was corrected. The Galaxy S III, one of the accused phones, corrects words before an additional key press.
Price also questioned the general value of the study, as it looked solely at features and discounted the Samsung brand or user’s allegiance to Android.
“One of the major questions is whether Apple has lost anything to Samsung,” Price said. “Buying a different version of a phone is very different from buying a different phone.”
“Yes, it is,” Hauser said.
Samsung is expected to argue later in the case that it doesn't owe Apple any more than £3.5 million in lost sales and royalties.
This is the second patent infringement case between the two phone makers. In an earlier case, which has been appealed, two juries have ordered Samsung to pay Apple a total of £554 million for infringement of different patents in different phones.
