Apple Inc. v. Samsung Electronics Co. Ltd. et al

Filing 1495

Administrative Motion to File Under Seal APPLE'S MOTION TO SEAL CONFIDENTIAL TRIAL EXHIBITS filed by Apple Inc.. (Attachments: # 1 Proposed Order, # 2 Declaration of Jim Bean)(Jacobs, Michael) (Filed on 7/30/2012) Modified on 7/31/2012 pursuant to General Order No. 62 attachment #2 sealed (dhm, COURT STAFF).

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HAROLD J. MCELHINNY (CA SBN 66781)
[e-mail]
MICHAEL A. JACOBS (CA SBN 111664)
[e-mail]
RACHEL KREVANS (CA SBN 116421)
[e-mail]
JENNIFER LEE TAYLOR (CA SBN 161368)
[e-mail]
ALISON M. TUCHER (CA SBN 171363)
[e-mail]
RICHARD S.J. HUNG (CA SBN 197425)
[e-mail]
JASON R. BARTLETT (CA SBN 214530)
[e-mail]
MORRISON & FOERSTER LLP
425 Market Street
San Francisco, California 94105-2482
Telephone: [phone]
Facsimile: [phone]

WILLIAM F. LEE
[e-mail]
WILMER CUTLER PICKERING
HALE AND DORR LLP
60 State Street
Boston, MA 02109
Telephone: [phone]
Facsimile: [phone]
MARK D. SELWYN (SBN 244180)
[e-mail]
WILMER CUTLER PICKERING
HALE AND DORR LLP
950 Page Mill Road
Palo Alto, California 94304
Telephone: [phone]
Facsimile: [phone]

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Attorneys for Plaintiff and
Counterclaim-Defendant APPLE INC.

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UNITED STATES DISTRICT COURT
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NORTHERN DISTRICT OF CALIFORNIA
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SAN JOSE DIVISION
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APPLE INC., a California corporation,
Plaintiff,

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v.

Case No. 11-cv-01846-LHK
DECLARATION OF JIM BEAN IN
SUPPORT OF APPLE’S MOTION TO SEAL
TRIAL EXHIBITS

SAMSUNG ELECTRONICS CO., LTD., a
Korean corporation; SAMSUNG
ELECTRONICS AMERICA, INC., a New
York corporation; and SAMSUNG
TELECOMMUNICATIONS AMERICA,
LLC, a Delaware limited liability company,
Defendants.

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DECLARATION OF JIM BEAN ISO MOTION TO SEAL TRIAL EXHIBITS
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I, Jim Bean, hereby declare as follows:

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1.

I am an employee of Apple Inc. (“Apple”). My title is Vice President of Financial

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Planning & Analysis. As part of my role, I am very familiar with financial information and

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systems at Apple, and the efforts Apple takes to ensure that sensitive financial information is kept

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confidential. I have personal knowledge of the matters set forth below. If called as a witness I

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could and would competently testify as follows.

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2.

Apple seeks to seal financial documents or portions of financial documents that

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contain: (1) capacity data, (ii) product line details beyond general categories such as “iPhone,”

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“iPad,” “iPod touch,” or “iTunes,” (iii) information regarding costs and profit margins, and (iv)

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information regarding the terms of patent license agreements that Apple has entered into, as well

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as information regarding royalties paid under those agreements. Exposure to the public of these

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categories of documents would cause that information to become public where it is currently

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confidential and, in doing so, cause Apple severe harm.

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3.

This confidential financial data is not included in Apple’s SEC filings. Apple goes

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to extensive lengths to protect the confidentiality of its financial data—indeed, this information is

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among the most painstakingly protected information at the company, on par with source code.

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The material is stamped confidential, and only certain individuals at Apple are authorized to view

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Apple’s nonpublic financial information on a need to know basis. Apple restricts system access

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to its nonpublic financial information to a small list of individuals who have been approved by

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myself or one of the other Vice-Presidents of Finance. The list is reviewed at least every quarter

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and revised as appropriate to ensure that Apple employees who no longer require access do not

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receive the information. Apple further protects against the disclosure of nonpublic financial

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information to third parties, such as vendors. On the rare occasions Apple is required to share

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nonpublic financial data with third parties, Apple will only allow them to view this information

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under very restrictive nondisclosure agreements or protective orders.

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4.

Much of the financial information that Apple seeks to seal here is treated with an

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even higher level of confidentiality. Apple views even general profit margin information across

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different products and over a lengthy period of time to be confidential and competitively
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sensitive, but specific cost and profit margin information for particular products is even more so

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because it has the most value to companies seeking to compete with Apple. Apple’s cost and

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margin information and its profit and loss data for particular products is only shared with the

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company’s CFO, CEO, Apple’s Board and the Company’s executive team. It is never shared

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externally. Apple even precludes its OEM suppliers from having visibility into its cost structure.

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Although many companies in the industry have their OEM suppliers buy directly from component

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manufacturers, Apple buys from these manufacturers itself and provides the component parts to

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the OEMs so that they are not aware of the cost of Apple’s products.]

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5.

Information regarding costs of goods sold, product line details, profit and capacity

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is immensely valuable precisely because of its confidential nature. Companies engaging in free-

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market competition normally do not share this type of sensitive financial information with each

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other and thus must compete without perfect insight into their competitors’ financial status,

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business models, or business plans. Maintaining the confidentiality of its financial data thus

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allows Apple to remain competitive in an opaque and fast-moving marketplace. Making Apple’s

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confidential information available to the public, and thus to Apple’s competitors, would allow

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those competitors to obtain economic value from its disclosure at Apple’s expense.

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6.

Capacity data is valuable because it can reveal when Apple is stretched thinly and

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when it has excess capacity. Armed with this information, Apple’s competitors could alter their

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production timing accordingly. For example, Apple’s competitors could increase production of

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competing products at times when Apple typically has constrained capacity and thus would be

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most vulnerable to an output squeeze, and could lower their prices of competing products at times

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when Apple has excess capacity and thus would be most vulnerable to a price cut. In addition, if

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contract manufacturers gain access to Apple’s capacity data, it would harm Apple immensely.

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Success in Apple’s industry is in large part dependent upon identification and selection of key

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contract manufacturers. If these entities are able to view Apple’s historical and recent capacity

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data, and thereby gain insight into the patterns in the fluctuations of Apple’s supply chain, they

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would be able to predict when Apple may be most driven to increase supply and could negotiate

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exorbitant rates using their unfairly gained knowledge.
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7.

Product line information, i.e. financial details with information as to specific

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versions of a given product (iPhone 3GS vs. iPhone 4S, or different sizes of iPad), is also

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critically sensitive and valuable. Competitors who are permitted to view product line capacity

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information will see what specific lines of products Apple is increasing its supply of and what it is

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decreasing its supply of, giving a significant insight into Apple’s current and future business

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plans. Product line sales and revenue information would similarly reveal to competitors whether

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and to what extent Apple has had success with particular products over precise periods of time,

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and thus allow those competitors insight into how much they should invest in that specific area.

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Competitors will know exactly what products they need to release in order to counter Apple, and

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in what categories—for example, the specific size of phone or tablet that Apple is focusing the

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majority of its attention on.

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8.

Apple’s cost and profit information would also provide an economic boon to

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Apple’s competitors if disclosed, giving them a substantial and unfair advantage over Apple.

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Apple does not follow any formula for setting its margins, nor does it follow an industry

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standard—the specific margins set for particular products are unique to Apple and they are not

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publicly disclosed. As a result, competitors could only learn this information from disclosure of

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Apple’s confidential internal documents. Disclosure of this information would allow competitors

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to tailor their product offerings and pricing to undercut Apple. Competitors would be able to

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determine exactly what price level would make a given product unprofitable to Apple, and target

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their product offerings at exactly that price. Access to Apple’s cost information would also harm

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Apple with respect to component suppliers. Apple’s suppliers could use this information to alter

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their pricing on components Apple uses in its products, looking at the cost of goods for Apple’s

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related products and Apple’s product margins on specific products. Margins alone would allow

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competitors to approximate Apple’s cost, as they could simply research Apple’s prices or publicly

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available total revenue information, and calculate Apple’s cost using that information in

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combination with the highly confidential margin information.

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9.

Apple also seeks to seal the terms of various license agreements. In all cases,

these license agreements are subject to strict confidentiality provisions, oftentimes the very
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existence of the agreement itself must be kept confidential. Apple has not disclosed the terms of

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the agreements it is seeking to seal here. Even within Apple, very few employees have access to

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these agreements. They are stamped confidential, they are maintained in a highly secure manner

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to prevent any inadvertent disclosure, and access granted only on a “need-to-know” basis. If

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terms of licenses to patents not subject to any FRAND obligation were disclosed—in particular

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amounts paid, royalty rates and duration—potential licensees and licensors could use this

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information to gain an unfair negotiating advantage over Apple and the companies involved in the

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license agreements. Disclosure of the terms of these Apple license agreements would reveal what

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Apple did in the past, and could permanently damage Apple’s negotiations in the future as third

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parties would expect similar terms, basing their expectations on heavily negotiated agreements

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that were meant to be confidential.

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10.

Apple also seeks to seal internal Apple royalty charts. These royalty charts should

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be sealed for the same reasons as Apple’s license agreements with third parties. The royalty

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charts track royalty payments paid on a quarterly basis. Besides being information that is meant

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to be kept confidential under the confidentiality provisions of Apple’s agreements, this

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information could be used by potential licensees and licensors to gain an unfair negotiating

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advantage over Apple and the companies involved in the license agreements. Revealing what

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Apple has done in the past with respect to patents not subject to a FRAND obligation would

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inhibit Apple’s ability to negotiate in the future as third parties would expect similar terms.

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11.

None of the material above has been disclosed publicly by Apple, nor has this type

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of information been publicly disclosed by any competitor of whom I am aware. As a result, if

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Apple’s information were disclosed, Apple’s competitors would have a valuable insight that

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Apple would not have. This is not a matter of Apple wanting to keep secret information that most

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of the world shares—this type of information is generally understood in the industry to be

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critically important to keep under lock and key and is not publicly disclosed by its competitors

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either.

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12.

I have reviewed PX25, 67, 76, 78, 102, 103, 181, 182 and DX541, 542, 543, 544,

581, 587, 589, 593, 630, 755, 756, 757, 758, 777, 778, 779, and 780, or versions thereof redacted
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of Samsung’s confidential information. Below is a chart detailing the specific items in each that

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are sealable for the reasons explained above. Apple will lodge proposed redacted versions of

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these exhibits in highlighted form with the Court

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Document To Be Sealed

Sensitive Information to be
Redacted, Consistent with Proposed
Redactions Lodged

PX 25

25.2: Apple incremental profit
margins over time

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25.22-23: detailed cost information
and incremental and operating profit
margins over time on a product line
basis.

This exhibit consists of a summary of the
damages evidence relied upon by Apple’s
damages expert Terry Musika.

25.9-10, 13: capacity and margins

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Notes

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25.31-32: capacity data over time by
specific model

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Page 25.2 contains incremental profit numbers
from 2010 through second quarter 2012 for
the iPhone and iPad product lines on a per unit
business. This margin information could be
used by Apple’s competitors against it as
described above.
Pages 25.9-10 contain detailed capacity
numbers and margins by quarter, from early
2010 through mid-2012. This margin and
capacity information, and the information
described further down the page is viewed as
among the most sensitive information at the
company could be used by Apple’s
competitors against it as described above.
This information relates to our current iPhone
and iPad models. Our 2010 information
includes the 3GS and iPhone 4 models of the
iPhones, which we still currently sell. While
2010 information concerns the first iPad only,
that product is not as mature, and this data is
representative of our current information.
Pages 25.22-23 contain detailed profit and
loss statements including costs, gross profit,
gross margin, operating expenses, and
operating profit from 2010 through 2Q 2012.
These are very recent numbers, and this
information could be used by Apple’s
competitors against it as described above.

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Pages 25.31-32 contain capacity data and
product line details from 2010 through 2012.
As above, this exemplifies the risk described
in this declaration—it would allow
competitors to see how Apple is changing its
sales, what products it is pushing more
strongly now as compared to last year or the
year before, and also displays Apple’s
fluctuations in supply.

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PX 67

67:1-6: iOS app units sold revenues,
royalties, and Apple profits.

PX76

The content contained in the
following columns: "Apple License
Partner," "Effective Date,"
"Expiration Date," "Term of
Agreement," "Monetary
Consideration," "Includes Rights to
UMTS-Related Patents?," "Includes
Rights to Other Patents?," and "Cross
License?"

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Pages 67.1-6 quantify net sales of iOS apps to
date. This exhibit shows the units of apps
sold, the purchase royalty price for the apps,
the purchase royalty price for in-app
purchases, and Apple net proceeds from app
sales, among other information. App sales
information is sensitive to Apple and to third
party app developers.
As explained in the attached declaration, this
FRE 1006 summary of Apple's license
agreements contains highly confidential
information regarding, among other things,
royalty rates and payment terms that are trade
secret information whose loss might harm
Apple’s competitive standing. All of these
license agreements contain confidentiality
provisions and are non-public documents.

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The information in these columns
implicates the confidential business
information of Apple and 6 different
third parties. All information in the
chart is Apple and third party trade
secret information as it summarizes
the core confidential terms of these
non-public license agreements,
including royalty rates, payment terms
and license term.
Each of these license agreements
include confidentiality provisions.
The confidentiality provisions are as
follows:

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1) “[E]ach Party shall continue to
keep any information confidential,
disclosed and deemed confidential in
accordance with the Non-Disclosure
Agreement dated [Redacted] . . . .”

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2) “[T]he Parties shall maintain as
strictly confidential this Agreement
and any proprietary information
disclosed under, or as a result of or
during the negotiation of, this
Agreement . . . .”
3) “The Parties will hold this
Agreement, its Appendices and its
terms and conditions, but not the
existence hereof, along with all
information shared hereunder
(including, without limitation, all
reports, records or other information
DECLARATION OF JIM BEAN ISO MOTION TO SEAL TRIAL EXHIBITS
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provided under Section 4) as
confidential and agree to refrain from
disclosing them to any third party . . .
.”

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4) “The Parties shall have the right to
disclose the existence of this License
Agreement. The Parties hereto,
however, shall keep the terms of this
License Agreement confidential . . .
.”

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5) “The Parties shall have the right to
disclose the existence of this License
Agreement. The Parties hereto,
however, shall keep the terms of this
License Agreement confidential . . .
.”

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6) “Both Parties hereto undertake
to keep confidential any
information and data, including but
not limited to any kind of business,
commercial or technical information
or data disclosed between the Parties
in connection with this Agreement,
irrespective of the medium in which
such information or data is embedded,
which is - when disclosed in tangible
form - marked "Confidential" by the
disclosing Parties or which is – when
disclosed orally or visually - identified
as such "Confidential" ("Confidential
Information").”

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PX78

These invoices provide insight
into component costs of the
Apple accused devices and is
confidential to both Apple and
Intel. Specifically, the
Quantity, unit price, and
amounts due (Extension, SubTotal, Total) should be
redacted. Intel has separately
asked that the pricing
information on the invoices be
redacted because of their
commercial sensitivity.

This information provides insight into
component costs of the Apple accused
devices and is confidential to both
Apple and Intel. Intel has separately
asked that the pricing information on
the invoices be redacted because of
their commercial sensitivity.

PX 102

Page 102.1: World Wide and
Domestic Summary for iPhone Line
for FY2012

Page 102.1 tallies the number of units of
iPhone Apple has sold, by model and
configuration for the current fiscal year. It
also reveals Apple’s average selling costs for
each quarter of fiscal year 2012. This detailed
level of unit sales information is not available

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Page 102:2-6: FY2007-11 iPhone

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Summary

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anywhere outside of Apple. Disclosure would
be extremely harmful to Apple because it
would inform competitors of which specific
iPhone product configurations sell best. This
page also discloses Apple’s average selling
costs by quarter. This information is
extremely current and would also be very
valuable to our competitors looking for ways
to attack Apple’s market share.
The second half of Page 102.1 provides the
same information for the domestic market
only. This information is even more valuable
to competitors. Apple limits substantially the
amount of information it discloses on a
country-by-country level.

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Pages 102:2-6 contain the same information as
above on a quarterly basis for each quarter in
the years limited to Fiscal Year 2011. This
information is recent and still very indicative
of key financial aspects of our business. It
covers products that Apple currently sells,
including the iPhone 3GS, the iPhone 4 and
the iPad 2. Moreover, having a complete
historical series trends over time. It also
reveals which of Apple’s offerings have been
most successful both on a unit and profit
basis.

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PX 103

Page 103.1-2: U.S. Unit Sales

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Pages 103.1-2 contain quarterly unit sales
information for Q3 2010 through Q3 2012 on
a detailed model and model configuration
basis for iPad and iPod touch. This detailed
level of unit sales information is not available
anywhere outside of Apple. Disclosure would
be extremely harmful to Apple because it
would inform competitors of which specific
iPad and iPod touch product configurations
sell best. This page also discloses Apple’s
average selling costs by quarter. This
information is extremely current and would
also be very valuable to our competitors
looking for ways to take away Apple’s market
share. This information relates to our current
iPhone and iPad models. Our 2010
information includes the 3GS and iPhone 4
models of the iPhones, which we still
currently sell. While 2010 information
concerns the first iPad only, that product is not
as mature, and this data is representative of
our current information.

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Pages 103.3-4 contain quarterly revenue

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Page 103.3-4: U.S. Revenue

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Page 103.6-7: U.S. Standard Cost

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Pages 103.8-15: Worldwide Sales

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information for Q3 2010 through Q3 2012 on
a detailed model and model configuration
basis for iPhone and iPod touch. This detailed
level of revenue information is not available
anywhere outside of Apple. Disclosure would
be extremely harmful to Apple because it
would inform competitors of which specific
iPad and iPod touch product configurations
sell best. This information is current and
would be very valuable to our competitors
looking for ways to attack Apple’s market
share.

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Pages 103.5-7 contain quarterly cost
information for Q3 2010 through Q3 2012 on
a detailed model and model configuration
basis for iPhone and iPod touch. This detailed
level of revenue information is not available
anywhere outside of Apple. Disclosure would
be extremely harmful to Apple because it
would inform competitors of the cost profile
of each individual iPad and iPod touch
product configuration for the end of 2010
through Q3 2012. This information is
extremely current and would also be very
valuable to our competitors looking for ways
to attack Apple’s market share.

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Pages 8-15 repeat the information described
above on a world-wide basis and are highly
sensitive for the same reasons.

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PX 181

Page 181.1: GAAP Line of Business
Reporting for iPhone

Exhibits 32 through 35 are detailed profit and
loss statements including costs, gross profit,
gross margin, operating expenses, and
operating profit for each quarter that the
iPhone has been sold through the present.
This level of detailed information about
Apple’s cost, profits and revenue structure
would be extremely valuable to competitors
for the reasons described above.

PX182

Capacity information

DX541

Page 541.1-2: U.S. Unit Sales

This exhibit contains detailed capacity
numbers by quarter, from Q3’10 through
2011. This capacity information is highly
sensitive as it could be used by Apple’s
competitors against it as described above.
This information relates to our current iPhone
and iPad models.
Pages 541.1-2 contain quarterly unit sales
information for Q4 2007 through Q2 2012 on
a detailed model and model configuration
basis for iPad and iPod touch. This detailed

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Page 541.3-6: U.S. Revenue

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Page 541.6-7: U.S. Standard Cost

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Pages 541.8-15: Worldwide Sales

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level of unit sales information is not available
anywhere outside of Apple. Disclosure would
be extremely harmful to Apple because it
would inform competitors of which specific
iPad and iPod touch product configurations
sell best. This page also discloses Apple’s
average selling costs by quarter. This includes
current data, and shows trends in Apple’s
sales information. It would be very valuable
to our competitors looking for ways to take
away Apple’s market share.
This data , and the data referenced below,
includes the iPhone and iPad models that
Apple is currently selling. Data from earlier
models is still competitively sensitive and is
treated as highly confidential at Apple and not
disclosed. This information would be
valuable to competitors because it would give
them insight into Apple’s strategies regarding
product mix and profit margins during the
lifecycle of the iPhone and iPad products
Further all of the information concerning the
iPad is extremely sensitive, including the
information concerning the first iPad only.
The iPad is not as mature, and this data is
representative of our current information.

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Pages 541.3-6 contain quarterly revenue
information for Q4 2007 through Q2 2012 on
a detailed model and model configuration
basis for iPhone and iPod touch. This detailed
level of revenue information is not available
anywhere outside of Apple. Disclosure would
be extremely harmful to Apple because it
would inform competitors of which specific
iPad and iPod touch product configurations
sell best. This information is extremely
current and would also be very valuable to our
competitors looking for ways to attack
Apple’s market share.

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Pages 541.6-8 contain quarterly cost
information for Q4 2007 through Q2 2012 on
a detailed model and model configuration
basis for iPhone and iPod touch. This detailed
level of revenue information is not available
anywhere outside of Apple. Disclosure would
be extremely harmful to Apple because it
would inform competitors of the cost profile
of each individual iPad and iPod touch
product configuration for the end of 2010
through Q3 2012. This information is
extremely current and would also be very
valuable to our competitors looking for ways

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to attack Apple’s market share.

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Pages 8-15 repeat the information described
above on a world-wide basis and are highly
sensitive for the same reasons.
Page 542.1 tallies the number of units of
iPhone Apple has sold, by model and
configuration for the current fiscal year. It
also reveals Apple’s average selling costs for
each quarter of fiscal year 2012. This detailed
level of unit sales information is not available
anywhere outside of Apple. Disclosure would
be extremely harmful to Apple because it
would inform competitors of which specific
iPhone product configurations sell best. This
page also discloses Apple’s average selling
costs by quarter. This information is
extremely current and would also be very
valuable to our competitors looking for ways
to attack Apple’s market share.

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DX542

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Page 542.1: World Wide and
Domestic Summary for iPhone Line
for FY2012

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Page 542.2-6: FY2007-11 iPhone
Summary

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The second half of Page 542.1 provides the
same information for the domestic market
only. This information is even more valuable
to competitors. Apple limits substantially the
amount of information it discloses on a
country-by-country level.

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DX543

Page 543.1: iPhone Units / Revenue
Report

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Pages 543.2-543.6: iPhone Summary

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25
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Pages 542.2-6 contain the same information as
above on a quarterly basis for each quarter in
the years limited to Fiscal Year 2011. This
information is recent and still very indicative
of key financial aspects of our business.
Moreover, having a complete historical series
trends over time. It also reveals which of
Apple’s offerings have been most successful
both on a unit and profit basis.
Each page of this exhibit tallies the number of
units of iPhone Apple sold, by model and
configuration, in a given fiscal year. It
includes 2007 through 2012. This detailed
level of unit sales information is not available
anywhere outside of Apple. Disclosure would
be extremely harmful to Apple because it
would inform competitors of which specific
iPhone product configurations sell best. This
page also discloses Apple’s average selling
costs for each year. This information is
extremely current and would also be very
valuable to our competitors looking for ways
to attack Apple’s market share.
This data and the iPhone and iPad models that
Apple is currently selling. Data from earlier
models is still competitively sensitive and is

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treated as highly confidential at Apple and not
disclosed. This information would be
valuable to competitors because it would give
them insight into Apple’s strategies regarding
its product mix during the lifecycle of the
iPhone and iPad products Further all of the
information concerning the iPad is extremely
sensitive, including the information
concerning the first iPad only. The iPad is not
as mature, and this data is representative of
our current information.

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7

DX544

Pages 544.1-2: U.S. Unit Sales

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Pages 544.2-5: U.S. Revenue

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Pages 544.5-7: U.S. Standard Cost

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Pages 544.1-2 contain quarterly unit sales
information for Q3 2007 through Q1 2012 on
a detailed model and model configuration
basis for iPad and iPod touch. This detailed
level of unit sales information is not available
anywhere outside of Apple. Disclosure would
be extremely harmful to Apple because it
would inform competitors of which specific
iPad and iPod touch product configurations
sell best. This page also discloses Apple’s
average selling costs by quarter. This includes
current data, and shows trends in Apple’s
sales information. It would be very valuable
to our competitors looking for ways to take
away Apple’s market share.
Pages 544.2-5 contain quarterly revenue
information for Q4 2007 through Q2 2012 on
a detailed model and model configuration
basis for iPhone and iPod touch. This detailed
level of revenue information is not available
anywhere outside of Apple. Disclosure would
be extremely harmful to Apple because it
would inform competitors of which specific
iPad and iPod touch product configurations
sell best. This information is extremely
current and would also be very valuable to our
competitors looking for ways to attack
Apple’s market share.

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Pages 541.5-7 contain quarterly cost
information for Q4 2007 through Q2 2012 on
a detailed model and model configuration
basis for iPhone and iPod touch. This detailed
level of revenue information is not available
anywhere outside of Apple. Disclosure would
be extremely harmful to Apple because it
would inform competitors of the cost profile
of each individual iPad and iPod touch
product configuration for the end of 2007
through Q1 2012. This is a large amount of
information and would be very valuable to our
competitors looking for ways to attack

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Apple’s market share.

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This data , and the data referenced below,
includes the iPhone and iPad models that
Apple is currently selling. Data from earlier
models is still competitively sensitive and is
treated as highly confidential at Apple and not
disclosed. This information would be
valuable to competitors because it would give
them insight into Apple’s strategies regarding
product mix and profit margins during the
lifecycle of the iPhone and iPad products
Further all of the information concerning the
iPad is extremely sensitive, including the
information concerning the first iPad only.
The iPad is not as mature, and this data is
representative of our current information.

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DX581, 587, and 589

Q3’10, Q4’10, and Q1’11 Worldwide
iPhone Performance Summary

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These three exhibits are among the most
confidential documents that exist in Apple’s
finance department. This is exemplified by
the “Need to Know Required – Do Not
Distribute” brand at the bottom of each page.
The Worldwide iPhone Performance
Summaries comprise dense documents packed
with not only the particular categories of
financial information discussed above—cost
information, margin information, and in many
cases product line information—but strategy
discussions, conclusions drawn from data,
plans for market and retail channel movement
or expansion, analysis of existing markets and
retail channels, and analysis of supply issues
throughout the world. It goes well beyond the
cold data of profit and loss statements with the
introduction of these strategic discussions and
analyses.

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Disclosure of these documents in any form
would be even more harmful than the data by
itself, as it would provide competitors with
insight into how Apple uses the data, how
Apple analyzes the data and plans to alter its
strategies accordingly, and what data Apple
views as important (for example, the
presentation leads with “the quarter in five
bullets,” showing the most important five
items to Apple’s finance in terms of planning
and strategy.

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DX593

For all the same reasons articulated by

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As a result of the intensely confidential nature
of these documents, they should be sealed in
their entirety.
As explained in the Declaration of Jim Bean,

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the Court at the July 27, 2012 hearing
with respect to license agreements,
documents pertaining to the
negotiation of a settlement agreement
and/or cross-license should be treated
as confidential. Exhibit 593
implicates the confidential business
information of both Apple and
Motorola. Specifically, Exhibit 593
makes reference to a proposed
payment structure and license rate
between Apple and Motorola for
settlement purposes. Each page of
Exhibit 593 states, “Confidential *
Provided for Information and
Business Settlement Purposes
Only.” The clear message is that
Apple and Motorola intended for this
information to remain non-public and
limited in distribution. As Motorola
argued in its emergency motion to seal
other similar exhibits, “[w]hen it
comes to patent license agreements,
trade secrets that should be sealed
include licensing information, such as
pricing terms, royalty rates, and
guaranteed minimum payment
terms. In re Electronic Arts, Inc., 298
Fed. Appx. 568, 569-570 (9th Cir.
2008).” (See Dkt. 1400.) The
proposed payment terms within
Exhibit 593 should therefore be
sealed.

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DX630

this document contains highly confidential
Apple and third-party information. This is a
non-public presentation created solely for
settlement negotiation purposes, and not for
public consumption.

The content contained in the
following columns should be sealed:
"Licensor," "Title," "Effective Date,"
"Date Last Signed," "Term," Licensed
Products/Technology," "Geographic
Scope," and "Payments."

As explained in the attached declaration, this
FRE 1006 summary of Apple's license
agreements contains highly confidential
information regarding, among other things,
royalty rates and payment terms that are trade
secret information whose loss might harm
Apple’s competitive standing. All of these
license agreements contain confidentiality
provisions and are non-public documents.

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The information in these columns
implicates the confidential business
information of Apple and 15 different
third parties. All information in the
chart is Apple and third party trade
secret information as it summarizes
the core confidential terms of these
non-public license agreements,
including royalty rates, payment terms
and license term.
Each of these license agreements
include confidentiality provisions.
The confidentiality provisions are as
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follows:

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1.

 “The Parties will hold this 
Agreement, its Appendices and 
its terms and conditions, but not 
the existence hereof, along with 
all information shared 
hereunder . . . as confidential 
and agree to refrain from 
disclosing them to any third 
party . . . .”  

2.

“The Parties hereto . . . shall 
keep the terms of this License 
Agreement confidential and shall 
not now or hereafter divulge any 
part thereof to any third 
party . . . .”  

3.

“The Parties will hold this 
Agreement, its Appendices and 
its terms and conditions . . . along 
with all information shared 
hereunder . . . as confidential 
and agree to refrain from 
disclosing them to any third 
party . . . .”  

4.

“[T]he Parties shall maintain as 
strictly confidential this 
Agreement and any proprietary 
information disclosed under, or 
as a result of or during the 
negotiation of, this Agreement, 
and shall only use such 
information for the purpose of 
performing under and/or 
enforcing this Agreement.”  

5.

“[E]ach Party shall continue to 
keep any information 
confidential, disclosed and 
deemed confidential in 
accordance with the Non‐
Disclosure Agreement dated 
[redacted] including but not 
limited to any claim charts.”  

6.

“The terms of this Agreement 
and all correspondence relating 
to this Agreement are 
confidential.  The Parties shall 
keep terms and particulars of 
this Agreement strictly 

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confidential and no Party shall 
now or hereafter disclose such 
terms and particulars to any third 
party . . . .”   

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7.

“The terms of this Agreement 
and all correspondence relating 
to this Agreement are 
confidential.  The Parties shall 
keep terms and particulars of 
this Agreement strictly 
confidential and no Party shall 
now or hereafter disclose such 
terms and particulars to any third 
party . . . .”  

8.

“Both Parties hereto undertake 
to keep confidential any 
information and data, including 
but not limited to any kind of 
business, commercial or 
technical information or data 
disclosed between the Parties in 
connection with this 
Agreement.”   

9.

“The terms of this Agreement 
and all correspondence relating 
to this Agreement are 
confidential.  The Parties shall 
keep terms and particulars of 
this Agreement strictly 
confidential . . . .”  

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10. “The terms of this Agreement 
and all correspondence relating 
to this Agreement are 
confidential . . . .”   
11. “[E]ach Party shall keep the
provisions of this Agreement
confidential, and shall not
disclose its provisions and such
reports without first obtaining the
written consent of the other
Party.”
12. “Neither party shall make any
press release or public
statement regarding this
Agreement or its terms, except
that either Party may make any
statement (but not in the form of a
press release) it deems necessary
to satisfy its various public
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reporting obligations.”
DX755

Identical to DX543

DX756

Identical to DX542

DX757

This exhibit includes Apple and third
party confidential trade secret
information, including a roster of
Apple’s licensors, royalty rates and
payments to licensors.

This exhibit is identical to DX543. It should
be sealed for the same reasons described
above.
This exhibit is identical to DX542. It should
be sealed for the same reasons described
above.
Information regarding the roster of Apple’s
licensors, as well as the royalty rates and
payments to licensors is trade secret
information whose loss might harm Apple’s
competitive standing.

DX758

This exhibit includes Apple and third
party confidential trade secret
information, including a roster of
Apple’s licensors, royalty rates and
payments to licensors.

Information regarding the roster of Apple’s
licensors, as well as the royalty rates and
payments to licensors is trade secret
information whose loss might harm Apple’s
competitive standing.

DX777

777.1-2: Worldwide Unit Sales

Pages 777.1-2 contain quarterly unit sales
information for Q4 2007 through Q1 2012 on
a detailed model and model configuration
basis for iPad and iPod touch. This detailed
level of unit sales information is not available
anywhere outside of Apple. Disclosure would
be extremely harmful to Apple because it
would inform competitors of which specific
iPad and iPod touch product configurations
sell best. This page also discloses Apple’s
average selling costs by quarter. This
information is extremely current and would
also be very valuable to our competitors
looking for ways to take away Apple’s market
share.

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5
6
7
8
9
10
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12

777.2-4: Worldwide Revenue

13

777.4-6: Worldwide Standard Cost

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Page 777.2-4 contain quarterly revenue
information for Q4 2007 through Q1 2012 on
a detailed model and model configuration
basis for iPhone and iPod touch. This detailed
level of revenue information is not available
anywhere outside of Apple. Disclosure would
be extremely harmful to Apple because it
would inform competitors of which specific
iPad and iPod touch product configurations
sell best. This information is extremely
current and would also be very valuable to our
competitors looking for ways to attack
Apple’s market share.

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Page 777.4-6 contain quarterly cost
information for Q4 2007 through Q1 2012 on
a detailed model and model configuration
basis for iPhone and iPod touch. This detailed

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level of revenue information is not available
anywhere outside of Apple. Disclosure would
be extremely harmful to Apple because it
would inform competitors of the cost profile
of each individual iPad and iPod touch
product configuration for the end of 2010
through Q3 2012. This information is
extremely current and would also be very
valuable to our competitors looking for ways
to attack Apple’s market share.

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3
4
5
6

This data includes the iPhone and iPad models
that Apple is currently selling. Data from
earlier models is still competitively sensitive
and is treated as highly confidential at Apple
and not disclosed. This information would be
valuable to competitors because it would give
them insight into Apple’s strategies regarding
product mix and profit margins during the
lifecycle of the iPhone and iPad products
Further all of the information concerning the
iPad is extremely sensitive, including the
information concerning the first iPad only.
The iPad is not as mature, and this data is
representative of our current information.

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DX778

778.1-5: iTunes Business P&L
778.6-7: iTunes Music Store Business
P&L

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Pages 7-12 repeat the information described
above on a U.S. basis and are highly sensitive
for the same reasons.
This exhibit displays detailed information on
the equivalent of a product line basis for
Apple’s iTunes business, stretching from 2005
through Q1 2012. It includes unit sales,
broken down into each type of purchase on a
quarter-by-quarter basis. It expands that
information into revenue broken down to each
type of purchase, and also displays cost,
margin, and other expenses.
With the exception of total revenue, none of
the information above is available anywhere
outside of Apple. Disclosure would be
extremely harmful to Apple because it would
inform competitors where Apple is investing
its capital with respect to iTunes, and
specifically where it is generating revenue.
The time period covered will allow
competitors to analyze trends, predict how
Apple’s revenue is changing, and see how
Apple has changed its expenditures over the
years. Finally, the cost information will give
competitors the information they need to
undercut Apple with offerings in specific
areas that are priced just below what would be

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DX779 and DX780

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779.1: iPad GAAP Line of Business
Reporting
779.2: Phone GAAP Line of Business
Reporting

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5
6

779.3-4: Music GAAP Line of
Business Reporting
780: Mobile Advertising Line of
Business Reporting

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profitable for Apple.
Each page of these exhibits displays total
revenue, substantial margin and expense
information, and finally total units sold. The
iPad data covers Q1’09 through Q1’12. The
phone data covers Q2’07 through Q1’12. The
music data covers Q4’05 through Q1’12. The
Mobile Advertising data covers Q1’09
through Q1’12.
This data includes the iPhone and iPad models
that Apple is currently selling. Data from
earlier models is still competitively sensitive
and is treated as highly confidential at Apple
and not disclosed. This information would be
valuable to competitors because it would give
them insight into Apple’s strategies regarding
product mix and profit margins during the
lifecycle of the iPhone and iPad products
Further all of the information concerning the
iPad is extremely sensitive, including the
information concerning the first iPad only.
The iPad is not as mature, and this data is
representative of our current information.

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With the exception of total revenue and total
units sold, none of this information is
available anywhere outside of Apple.
Disclosure would be extremely harmful to
Apple because it would inform competitors
where Apple is investing its capital. The time
period covered will allow competitors to
analyze trends, predict how Apple’s revenue
is changing, and see how Apple has changed
its expenditures over the years. Finally, the
cost information will give competitors the
information they need to undercut Apple with
offerings in specific areas that are priced just
below what would be profitable for Apple.

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I declare under penalty of perjury that the foregoing is true and correct. Executed this
30th day of July, 2012 at Cupertino, California.

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/s/ Jim Bean
Jim Bean

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ATTESTATION OF E-FILED SIGNATURE
I, Michael A. Jacobs, am the ECF User whose ID and password are being used to file this

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Declaration. In compliance with General Order 45, X.B., I hereby attest that Jim Bean has

4

concurred in this filing.

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Dated: July 30, 2012

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/s/ Michael A. Jacobs
Michael A. Jacobs

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