Apple-Samsung Trial, Day 10, Damages Expert Michael Wagner Testifies [Liveblog]



We are back at the Samsung-Apple Trial with another of Samsung’s witnesses, damages expert Michael J. Wagner. He is testifying about his analysis of possible damages based on the patent infringement Apple accuses Samsung of orchestrating for the last few years. Let’s get to it.

9:30AM: After quick introduction, Wagner gets to the point of the matter. His analysis is that Apple’s lost profits are overstated, by both the Cupertino company’s analysis and by their witnesses in this trial.

Wagner goes after the methods of the other accountant analysts, especially Musicka from earlier in the week. He says that came up with a number about 20% more than was the real profit for U.S. based sales of their products. Basically, the damage has been boosted by not looking at certain sales and accounting figures.

9:35AM: Wagner says Samsung’s profit from the phones containg the patents in question is about $500 million, a bit less than the more than $8 Billion Apple contends.

9:40AM: A slide goes up defining Wagner’s analysis, declaring the reasons why Apple is overstating its profit loss (with my brackets):


Assume accused features were removes from Samsung’s products

[Assume] Apple would not have made additional sales

* The patents can be designed around
* Absent of these features would not drive consumers to Apple
* Groups of features drive demand [not just design]
* Apple lacked capacity “documentation” [to show its damages]

9: 45AM:  Wagner says Musicka uses worldwide prices instead of U.S. prices in making his report. The damage Apple seeks is based on U.S. prices.

9:50AM: Wagner says there are many reasons why someone would choose a smartphone and that design is not the only one. He says it is one reason, but it may not be, and often is not the top reason people choose a smartphone. He says you have to look at the buying patterns of users in order to truly know whether Apple is overstating its case, and he says that is exactly what he did.

9:55AM: Wagner says about 70% of Android purchasers never considered Apple as a choice. He says other features like GPS navigation, carriers, camera options, and the quality of the screen often are more important for a large number of people.

10:05AM: Wagner is a forceful personality on the stand. He is raising his voice the longer the testimony continues. I’d go so far as to call his attitude both tactful and pissed off. Or “nicely outraged.” This continues when he talks about the U.S. market share and puts down Musicka’s testimony. “[Musicka] is ignoring the fact that Samsung is DRIVING technology in the smartphone business.” He now brings up the fact that for a time, Samsung processors were considered better in their phone’s than in the iPhone.

10:15AM: Wagner puts down Apple’s effect on on the consumer electronics market by saying that most of the year, Apple has nothin new to sell. He says it’s true that demand has increased and that giant spikes in sales happen when Apple releases a product, but that Apple’s claimed lost profits are based on consistent spikes, and he says evidence does not support that.

10:25AM: The witness states that Apple’s extremely succesful sales figures of the iPhone and the iPad inadvertdly show why they cannot claim $2B in losses. He says that every documentation available shows that Apple could not keep up with the demand of their products. Apple could not build enough iPads. So any profit loss based on products they could never build in the first place is unrealistic to think about.

He also states that the higher the price of products of Apple means the products would not be purchased by more people.

10:28AM:  A slide comes up saying that based on his analysis, Apple’s reasonable royalaty rates should be in the thousands of dollars and not in the millions.

10:30AM: Apple cross-examines Wagner.

10:35 AM: The cross examination mostly focuses on Wagner’s dealings with Samsung and how they provided him with information late in the trial process. Wagner takes umbrage at the assumption that either his team didn’t do the right work or that they worked with information that was not complete. He eventually admits that he was rushed but says his figures are correct.

1039AM: Wagner finished testifying.

In the proceedings after Wagner leaves, the judge become noticeably angry as she notes that she received 75 objections to the witnesses from the attorneys.

10: 45AM: Judge Koh —  “Are you really going to call 22 witnesses in four hours?” Samsun objected and responded to 16 witnesses, but she says that is still too much.

There are 75 pages of motions with 7 motions to seal.  She says that if they think she’s going to look over 75 pages of motions and , they “must be smoking crack.” Attorney: “First off, I am not smokin crack.” The judge says that they are being unreasonable and may burden the court with their request and that if they don not call all of their witnesses tomorrow for those objections, 22 of them, she’s in to punish them somehow. She doesn’t say how she will do so.