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

Filing 2126

Declaration of Susan Estrich in Support of 2013 MOTION for Judgment as a Matter of Law, New Trial and/or Remittitur Pursuant to Federal Rules of Civil Procedure 50 and 59, 2054 Brief, 2053 Opposition/Response to Motion, filed bySamsung Electronics America, Inc.(a New York corporation), Samsung Electronics Co. Ltd., Samsung Telecommunications America, LLC. (Attachments: # 1 Exhibit 1 to the Estrich Declaration, # 2 Exhibit 2 to the Estrich Declaration, # 3 Exhibit 3 to the Estrich Declaration, # 4 Exhibit 4 to the Estrich Declaration, # 5 Exhibit 5 to the Estrich Declaration, # 6 Exhibit 6 to the Estrich Declaration, # 7 Exhibit 7 to the Estrich Declaration, # 8 Exhibit 8 to the Estrich Declaration, # 9 Exhibit 9 to the Estrich Declaration, # 10 Exhibit 10 to the Estrich Declaration, # 11 Exhibit 11 to the Estrich Declaration, # 12 Exhibit 12 to the Estrich Declaration, # 13 Exhibit 13 to the Estrich Declaration, # 14 Exhibit 14 to the Estrich Declaration, # 15 Exhibit 15 to the Estrich Declaration, # 16 Exhibit 16 to the Estrich Declaration, # 17 Exhibit 17 to the Estrich Declaration, # 18 Exhibit 18 to the Estrich Declaration, # 19 Exhibit 19 to the Estrich Declaration, # 20 Exhibit 20 to the Estrich Declaration, # 21 Exhibit 21 to the Estrich Declaration, # 22 Exhibit 22 to the Estrich Declaration, # 23 Exhibit 23 to the Estrich Declaration, # 24 Exhibit 24 to the Estrich Declaration, # 25 Exhibit 25 to the Estrich Declaration, # 26 Exhibit 26 to the Estrich Declaration, # 27 Exhibit 27 to the Estrich Declaration, # 28 Exhibit 28 to the Estrich Declaration, # 29 Exhibit 29 to the Estrich Declaration, # 30 Exhibit 30 to the Estrich Declaration, # 31 Exhibit 31 to the Estrich Declaration)(Related document(s) 2013 , 2054 , 2053 ) (Maroulis, Victoria) (Filed on 11/9/2012)

Estrich Declaration
Exhibit 7

1989

1

UNITED STATES DISTRICT COURT

2

NORTHERN DISTRICT OF CALIFORNIA

3

SAN JOSE DIVISION

4
5
6

APPLE INC., A CALIFORNIA
CORPORATION,

7
8
9
10
11
12
13

PLAINTIFF,
VS.
SAMSUNG ELECTRONICS CO.,
LTD., A KOREAN BUSINESS
ENTITY; SAMSUNG
ELECTRONICS AMERICA,
INC., A NEW YORK
CORPORATION; SAMSUNG
TELECOMMUNICATIONS
AMERICA, LLC, A DELAWARE
LIMITED LIABILITY
COMPANY,

14
DEFENDANTS.

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C-11-01846 LHK
SAN JOSE, CALIFORNIA
AUGUST 13, 2012
VOLUME 7
PAGES 1989-2320

15
16
17

TRANSCRIPT OF PROCEEDINGS
BEFORE THE HONORABLE LUCY H. KOH
UNITED STATES DISTRICT JUDGE

18
19
20

APPEARANCES ON NEXT PAGE

21
22
23
24
25

OFFICIAL COURT REPORTER: LEE-ANNE SHORTRIDGE, CSR, CRR
CERTIFICATE NUMBER 9595

1990

1

A P P E A R A N C E S:

2

FOR PLAINTIFF
APPLE:

3
4

MORRISON & FOERSTER
BY: HAROLD J. MCELHINNY
MICHAEL A. JACOBS
RACHEL KREVANS
425 MARKET STREET
SAN FRANCISCO, CALIFORNIA

94105

5
6
7
8

FOR COUNTERCLAIMANT WILMER, CUTLER, PICKERING,
APPLE:
HALE AND DORR
BY: WILLIAM F. LEE
60 STATE STREET
BOSTON, MASSACHUSETTS 02109

9

BY: MARK D. SELWYN
950 PAGE MILL ROAD
PALO ALTO, CALIFORNIA

10
11

13

QUINN, EMANUEL, URQUHART,
OLIVER & HEDGES
BY: CHARLES K. VERHOEVEN
50 CALIFORNIA STREET, 22ND FLOOR
SAN FRANCISCO, CALIFORNIA 94111

14

BY:

12

FOR THE DEFENDANT:

94304

16

VICTORIA F. MAROULIS
KEVIN P.B. JOHNSON
555 TWIN DOLPHIN DRIVE
SUITE 560
REDWOOD SHORES, CALIFORNIA

17

BY:

15

18
19
20
21
22
23
24
25

94065

MICHAEL T. ZELLER
WILLIAM C. PRICE
865 SOUTH FIGUEROA STREET
10TH FLOOR
LOS ANGELES, CALIFORNIA 90017

1991

1

INDEX OF WITNESSES

2

PLAINTIFF'S

3

BORIS TEKSLER
CROSS-EXAM BY MS. MAROULIS (RES.)
REDIRECT EXAM BY MR. MUELLER
RECROSS-EXAM BY MS. MAROULIS
FURTHER REDIRECT EXAM

4
5
6

JUN WON LEE
BY VIDEOTAPED DEPOSITION

7
8

DONG HOON CHANG
BY VIDEOTAPED DEPOSITION

P.
P.
P.
P.

2006
2009
2019
2022

P. 2023
2025

P. 2026

9
10

TIMOTHY BENNER
BY VIDEOTAPED DEPOSITION

11
12

P. 2028
2029

TIMOTHY SHEPPARD
BY VIDEOTAPED DEPOSITION

P. 2030

TERRY MUSIKA
DIRECT EXAM BY MS. KREVANS
CROSS-EXAM BY MR. PRICE
REDIRECT EXAM BY MS. KREVANS
RECROSS-EXAM BY MR. PRICE
FURTHER REDIRECT EXAM

P.
P.
P.
P.
P.

13
14
15
16

2031
2098
2160
2165
2171

17
18
19

DEFENDANT'S

20

BENJAMIN BEDERSON
DIRECT EXAM BY MR. DEFRANCO
CROSS-EXAM BY MR. JACOBS
REDIRECT EXAM BY MR. DEFRANCO

P. 2228
P. 2254
P. 2269

ADAM BOGUE
DIRECT EXAM BY MR. JOHNSON
CROSS-EXAM BY MR. JACOBS

P. 2274
P. 2300

21
22
23
24
25

2005

1
2

MS. MAROULIS:

IT'S THE ONE WE FILED,

YESTERDAY, YOUR HONOR, AROUND NOON.

3

THE COURT:

OKAY.

4

MS. MAROULIS:

SO BASICALLY THREE PRIOR

5

ARTISTS, DEPOSITION DESIGNATIONS, AND THEN

6

MR. WILLIAMS AND MR. YANG.

7

THE COURT:

OKAY.

SO MR. PALTIAN,

8

MR. ZORN, MR. WILLIAMS, AND THEN MR. YANG, HE'LL BE

9

ON BEFORE?

10

MR. VERHOEVEN:

11

MS. MAROULIS:

YES.
BUT THE THREE OTHER

12

WITNESSES ARE GOING FIRST, BOGUE, FORLINES AND

13

BEDERSON BEFORE THE OTHERS.

14
15

THE COURT:
ORDER THEN.

I'M SORRY.

PALTIAN, ZORN --

MS. MAROULIS:

16

GIVE ME YOUR

NO, YOUR HONOR.

IT'S

17

BOGUE, FORLINES, BEDERSON, PALTIAN, ZORN, WILLIAMS,

18

AND YANG.

19

THE COURT:

OKAY.

20

ALL RIGHT.

MR. RIVERA, WOULD YOU PLEASE

21

THANK YOU.

BRING IN OUR JURY?

22

THE CLERK:

23

(WHEREUPON, THE FOLLOWING PROCEEDINGS

24
25

YES, YOUR HONOR.

WERE HELD IN THE PRESENCE OF THE JURY:)
THE COURT:

ALL RIGHT.

GOOD MORNING AND

2006

1

WELCOME BACK.

2
3

THE TIME IS NOW 9:05.

GO AHEAD, PLEASE, WITH THE CROSS OF
MR. TEKSLER.

4

SIR, YOU ARE STILL UNDER OATH.

5

BORIS TEKSLER,

6

BEING CALLED AS A WITNESS ON BEHALF OF THE

7

PLAINTIFF, HAVING BEEN PREVIOUSLY DULY SWORN, WAS

8

FURTHER EXAMINED AND TESTIFIED AS FOLLOWS:

9

CROSS-EXAMINATION (RESUMED)

10

BY MS. MAROULIS:

11

Q

GOOD MORNING, MR. TEKSLER.

12

A

GOOD MORNING.

13

Q

WE'RE GOING TO CONTINUE WITH THE DISCUSSION OF

14

THE ROYALTIES THAT WE STARTED LAST WEEK.

15

DO YOU REMEMBER THAT?

16

A

I DO.

17

Q

LAST WEEK YOU TESTIFIED THAT NO ONE HAS EVER

18

PAID APPLE A ROYALTY OF $2.02 PER UNIT FOR THE '381

19

PATENT.

20

A

21

THE '381.

22

Q

23

$2.02 FOR THE '163 PATENT; IS THAT CORRECT AS WELL?

24

A

YES, THAT'S CORRECT.

25

Q

NO ONE HAS EVER PAID APPLE A ROYALTY OF $3.10

IS THAT STILL CORRECT?

YES, THAT'S CORRECT.

THERE'S NO LICENSE FOR

AND NO ONE HAS EVER PAID APPLE A ROYALTY OF

2007

1

FOR THE '916 PATENT AT ISSUE; IS THAT CORRECT?

2

A

YES, THAT'S CORRECT.

3

Q

AND NO ONE HAS EVER PAID APPLE A ROYALTY OF

4

$24 DOLLARS PER UNIT FOR ANY OF THE DESIGN PATENTS

5

AT ISSUE IN THIS CASE; IS THAT RIGHT?

6

A

YES, THAT'S CORRECT.

7

Q

FURTHERMORE, NO ONE HAS EVER PAID APPLE A

8

ROYALTY OF $24 A UNIT FOR ALL FOUR DESIGN PATENTS

9

AT ISSUE IN THIS CASE; RIGHT?

10

A

YES, THAT'S CORRECT.

11

Q

AS A LICENSING PROFESSIONAL, SIR, ARE YOU

12

FAMILIAR WITH THE CONCEPT OF MARKING?

13

A

I AM.

14

Q

MARKING IS PUTTING THE PATENT OR REGISTERED

15

TRADE DRESS NUMBER ON YOUR PRODUCT; CORRECT?

16

A

THAT'S ONE INSTANCE, YES.

17

Q

AND THE PURPOSE OF THAT IS TO LET EVERYONE IN

18

THE MARKET KNOW THAT THE PATENTEE HAS RIGHTS TO A

19

PARTICULAR PATENT; RIGHT?

20

A

YES, I BELIEVE THAT'S CORRECT.

21

Q

AND IT IS CORRECT, SIR, THAT APPLE DOES NOT

22

MARK ITS IPHONES; RIGHT?

23

A

YES, I BELIEVE THAT'S CORRECT.

24

Q

IT'S ALSO CORRECT THAT APPLE DOES NOT MARK ITS

25

IPADS; IS THAT RIGHT?

2008

1

A

THAT'S CORRECT.

2

Q

ISN'T IT CORRECT, SIR, THAT PRIOR TO THE

3

FILING OF THIS LAWSUIT, APPLE NEVER TOLD SAMSUNG

4

THAT IT WAS INFRINGING SPECIFIC DESIGN PATENTS BY

5

NUMBER?

6

A

7

PATENTS OF OURS, BUT WE DIDN'T ALLOCATE THOSE

8

NUMBERS TO THEM, THAT'S CORRECT.

WE TOLD THEM THAT THEY INFRINGED DESIGN

9

AS A MATTER OF FACT, SEVERAL OF THOSE

10

PATENTS HADN'T YET ISSUED.

11

Q

12

CORRECT THAT APPLE NEVER SPECIFIED ANY DESIGN

13

PATENTS TO SAMSUNG THAT IT ALLEGES IN THIS CASE

14

PRIOR TO THE LAWSUIT?

15

A

16

SAYING?

17

Q

YES, MR. TEKSLER.

18

A

YES, I AGREE.

19
20
21

MR. TEKSLER, PLEASE ANSWER MY QUESTION.

ANY ENUMERATED NUMBER?

MS. MAROULIS:

IS IT

IS THAT WHAT YOU'RE

OKAY.

I DON'T HAVE ANY

FURTHER QUESTIONS FOR YOU AT THIS TIME.
THE COURT:

22

MR. MUELLER:

24

THE COURT:

25

MR. MUELLER:

THE TIME IS NOW 9:07.

IS THERE ANY REDIRECT?

23

OKAY.

PLEASE, YOUR HONOR.
OKAY.

GO AHEAD, PLEASE.

MAY I PROCEED, YOUR HONOR?

2009

1

THE COURT:

2

PLEASE, GO AHEAD.

REDIRECT EXAMINATION

3

BY MR. MUELLER:

4

Q

5

MS. MAROULIS ASKED YOU SOME QUESTIONS A MOMENT AGO

6

WITH RESPECT TO LICENSING OF APPLE'S PATENTS.

JUST A FEW QUESTIONS FOR YOU.

7

FIRST,

DO YOU HAVE THOSE PATENTS IN MIND?

8

A

I DO.

9

Q

THE '381, THE '163?

10

A

YES.

11

Q

THE '916?

12

A

YES.

13

Q

AND THE DESIGN PATENTS.

14

A

CORRECT.

15

Q

NOW, LET'S BE CLEAR.

16

OF THOSE PATENTS ON A STANDALONE BASIS AS

17

INDIVIDUAL PATENTS?

18

A

HAS APPLE LICENSED ANY

NO.

19

MS. MAROULIS:

20

THE COURT:

21

THE WITNESS:

OBJECTION.

LEADING.

OVERRULED.
SORRY.

NO, IT'S NOT OUR

22

CUSTOMARY PRACTICE TO ENUMERATE SPECIFIC DESIGN

23

PATENTS, OR SPECIFIC PATENT NUMBERS.

24
25

IN GENERAL, YOU COME UP WITH A PRETTY
BROAD CATEGORY OF PATENTS IN A CROSS-LICENSE.

THAT

2010

1

WAY BOTH PARTIES KNOW THAT THEY HAVE SOME PEACE.

2

BY MR. MUELLER:

3

Q

4

THE JURY HOW APPLE TREATS DIFFERENT CATEGORIES

5

WITHIN ITS PATENT PORTFOLIO.

NOW, MR. TEKSLER, LAST WEEK YOU EXPLAINED TO

6
7

CAN YOU REMIND US, WHICH CATEGORY DO
THESE PATENTS FALL INTO?

8
9

MS. MAROULIS:

OBJECTION.

BEYOND THE

SCOPE OF CROSS.

10

MR. MUELLER:

YOUR HONOR, THESE ARE

11

EXACTLY THE PATENTS THAT MS. MAROULIS JUST ASKED

12

ABOUT.

13

THE COURT:

14

GO AHEAD.

15

OVERRULED.

THE WITNESS:

SO ALL THESE PATENTS ARE IN

16

APPLE'S UNIQUE USER EXPERIENCE AND NOT ONES THAT WE

17

WOULD LICENSE.

18

BY MR. MUELLER:

19

Q

20

ABOUT THE LIMITED CIRCUMSTANCES IN WHICH APPLE HAS

21

LICENSED ITS DESIGN PATENTS.

22

ASKED LAST FRIDAY.

NOW, MS. MAROULIS ASKED YOU SOME QUESTIONS

23
24
25

THOSE WERE QUESTIONS

DO YOU RECALL THAT?
A

I DO.
MS. MAROULIS:

OBJECTION.

ARGUMENTATIVE.

2011

1

THE COURT:

OVERRULED.

2

BY MR. MUELLER:

3

Q

4

APPLE'S LICENSE WITH MICROSOFT?

5

A

I AM.

6

Q

DOES THAT LICENSE COVER APPLE'S DESIGN

7

PATENTS?

8

A

IT DOES.

9

Q

CAN YOU EXPLAIN TO THE JURY THE FORM OF THE

NOW, MR. TEKSLER, ARE YOU FAMILIAR WITH

10

LICENSE GRANT?

11

A

12

DOES COVER THE DESIGN PATENTS.

13

SURE.

SO APPLE AND MICROSOFT'S CROSS-LICENSE

HOWEVER, WE TOOK SPECIAL PROHIBITIONS FOR

14

BOTH PARTIES SO THAT THERE'S WHAT I TERM AN

15

ANTI-CLONING PROVISION IN THE AGREEMENT SO THAT WE

16

WOULDN'T COPY EACH OTHER'S PRODUCTS.

17

AND SO EVEN THOUGH THERE'S PEACE BETWEEN

18

THE COMPANIES WITH RESPECT TO THE PATENTS AS A

19

WHOLE, THERE'S A CLEAR ACKNOWLEDGMENT THAT THERE'S

20

NO COPYING WITH THIS ANTI-CLONING PROVISION.

21

Q

22

WERE NOT GIVEN TO MICROSOFT WITH RESPECT TO THESE

23

DESIGN PATENTS?

24
25

AND MR. TEKSLER, TO BE VERY CLEAR, WHAT RIGHTS

MS. MAROULIS:

OBJECTION.

BEYOND THE SCOPE OF CROSS.

LEADING,

2050

1

WHAT HAVE YOU DEPICTED ON THIS SLIDE,

2

MR. MUSIKA?

3

A

4

WHAT I WAS JUST BRIEFLY TRYING TO EXPLAIN.

I THINK THIS IS GOING TO HELP SHOW AND EXPLAIN

5

I'VE GOT 22 PHONES AT THE TOP, AND THINK

6

OF THESE AS EITHER PHONES OR TABLETS, IT DOESN'T

7

MATTER.

8

UNITS TO TRY AND KEEP US ORIENTED ON THE 22 MILLION

9

TOTAL UNITS.

BUT EACH ONE OF THOSE REPRESENTS A MILLION

10

AND SO AS WE JUST WENT THROUGH, I HAVE

11

THREE FORMS OF DAMAGE.

12

EACH ONE OF THOSE 22 MILLION PHONES, HAS TO GO IN

13

ONE OF THOSE CATEGORIES, BUT NOT TWO CATEGORIES.

14

IF WE PUT IT IN TWO CATEGORIES, THEN WE'RE GOING TO

15

END UP WITH DOUBLE COUNTING.

16

Q

17

UNDERSTANDING THIS IS A SIMPLIFICATION, WALK US

18

THROUGH THE ALLOCATION THAT YOU MADE.

19

A

20

FIRST -- I THINK THE NEXT SLIDE IS GOING TO SHOW

21

THE AMOUNT OF 17 MILLION UNITS SHOULD SLIDE DOWN,

22

AND I CALCULATED THEM AS SAMSUNG'S PROFITS.

23

THE UNJUST GAIN.

24

FOR APPROXIMATELY 17 MILLION OF THE TOTAL 22

25

MILLION.

OKAY.

EACH ONE OF THOSE PHONES,

CAN YOU JUST WALK US THROUGH,

WELL, THE ALLOCATION THAT I MADE WAS I, I

THAT'S

SO I'M USING THAT FORM OF DAMAGES

2051

1

Q

OKAY.

HOW MANY OF THE 5 MILLION LEFT DID YOU

2

PUT IN THE APPLE LOST PROFITS DAMAGES CATEGORY?

3

A

4

WE SHOULD HAVE TWO OF THOSE SLIDE DOWN, AND 2

5

MILLION, APPROXIMATELY, COME DOWN THERE.

I PUT TWO INTO THE LOST PROFITS CATEGORY, SO

6

AND THAT, OF COURSE, LEAVES THE 3

7

MILLION, AND YOU CAN OF COURSE GUESS WHERE THOSE

8

GO, DOWN TO THE REASONABLE ROYALTY.

9

AND WE CAN SEE VERY CLEARLY THAT NO

10

INDIVIDUAL PRODUCT HAS HAD MORE THAN ONE DAMAGE

11

CALCULATED ON IT.

12

Q

OKAY.

13

THAT LOOKED EASY.
CAN YOU DESCRIBE FOR THE JURY THE ACTUAL

14

AMOUNT OF EFFORT THAT IT TOOK TO MAKE THESE

15

ALLOCATIONS AND THEN MAKE THOSE ONE, ONE PHONE BY

16

ONE TABLET DAMAGES CALCULATIONS THAT YOU MADE.

17

A

18

A DESK WITH A CALCULATOR DOING 22 MILLION

19

CALCULATIONS.

IT -- I CAN ASSURE YOU, IT'S NOT ME SITTING AT

20

IN FACT, BECAUSE OF THE VARIOUS

21

COMBINATIONS, THERE ARE LITERALLY HUNDREDS OF

22

MILLIONS OF CALCULATIONS, AND SO THE ONLY WAY,

23

PRACTICALLY, TO DO THIS IS TO WRITE A COMPUTER

24

PROGRAM.

25

AND SO OVER THE LAST YEAR AND A HALF TO

2052

1

TWO YEARS, I HAVE HAD A TEAM OF 20 PEOPLE,

2

ECONOMISTS, PROGRAMMERS, STATISTICIANS AND C.P.A.'S

3

DEVELOPING A MODEL THAT IS DYNAMIC ENOUGH TO TAKE

4

IN ALL 22 MILLION AND MAKE CHANGES AND ADJUSTMENTS,

5

SINCE THIS PROCESS WENT ON FOR A YEAR AND A HALF,

6

AS NEW PRODUCTS CAME IN AND WENT OUT.

7

AND ABOUT 7,000 TOTAL PROFESSIONAL HOURS

8

WERE DEDICATED TOWARDS THE CREATION AND OPERATION

9

OF THAT COMPUTER MODEL.

10

Q

THAT SOUNDS EXPENSIVE.

WAS IT EXPENSIVE?

11

A

IT WAS VERY EXPENSIVE.

12

Q

WHAT DID IT COST TOTAL FOR YOUR TEAM OF 23

13

PEOPLE?

14

A

15

THAT 7,000 HOURS, WAS APPROXIMATELY $1,750,000.

16

Q

17

TALKED ABOUT, THE SAMSUNG PROFIT CATEGORY.

20 PEOPLE, OVER MORE THAN A YEAR AND A HALF,

OKAY.

LET'S GO BACK TO THE FIRST CATEGORY YOU

18

ONCE YOU HAD ALLOCATED 17 MILLION PHONES

19

AND TABLETS TOTAL INTO THAT CATEGORY, WHAT WAS THE

20

NEXT STEP IN DETERMINING THE DAMAGES FOR THOSE 17

21

MILLION DEVICES?

22

A

23

CALCULATIONS.

24

KNOW THE UNITS, BUT HOW MUCH DID SAMSUNG ACTUALLY

25

MAKE ON THOSE 17 MILLION?

WELL, IT'S, IT'S MAKING THE ACTUAL
IT'S FIGURING OUT HOW MUCH -- WE NOW

2053

1

Q

OKAY.

2

SHOWING $2.241 BILLION HERE.

3

IF WE COULD SEE THE NEXT SLIDE.

WE'RE

CAN YOU EXPLAIN TO THE JURY HOW YOU CAME

4

UP WITH THAT NUMBER IN CONCEPT?

5

A

6

AGAIN, AND IT'S -- IT'S FIGURING OUT HOW MUCH DID

7

SAMSUNG ACTUALLY MAKE IN PROFIT ON EACH ONE OF

8

THOSE UNITS, AS SIMPLISTICALLY MULTIPLICATION.

9

IT'S THE UNITS TIMES THE PROFITS AND THAT GETS YOU

IN CONCEPT, KEEP IN MIND THE 17 MILLION UNITS,

10

TO $2.2 BILLION.

11

Q

12

USED FOR THE PURPOSES OF MAKING THESE CALCULATIONS?

13

A

14

NUMBERS.

15

THESE ARE NUMBERS THAT COME DIRECTLY FROM SAMSUNG'S

16

FINANCIAL RECORDS.

17

Q

WHAT WAS THE SOURCE OF THE INFORMATION YOU

THESE NUMBERS ARE, IN THIS CASE ARE SAMSUNG'S

OKAY.

18

WHEN I'M TALKING ABOUT SAMSUNG'S PROFIT,

COULD WE SEE SLIDE 34B.15.
STARTING HERE -- I KNOW YOU HAVE A SERIES

19

OF SLIDES HERE, MR. MUSIKA.

20

THROUGH THE NATURE OF THE CALCULATION YOU DID TO

21

ARRIVE AT THE $2.24 BILLION PROFIT NUMBER FOR THE

22

$17 MILLION PHONES -- 17 MILLION PHONES?

23

A

24

AGAIN -- PARDON ME -- AND HOPEFULLY WE CAN REMEMBER

25

THAT WAS THE TOTAL OF THE ACCUSED SALES.

YES.

CAN YOU WALK US

WELL, THERE'S THE $8.1 BILLION NUMBER

2054

1
2

BUT KEEPING IN MIND, I'M CALCULATING
THIS, THIS DAMAGE ONLY ON SAMSUNG'S PORTION.

3

SO THE FIRST THING I DO IS I HAVE TO

4

REDUCE THAT NUMBER FOR THE UNITS THAT, THAT OTHER 5

5

MILLION UNITS THAT WENT TO OTHER FORMS OF DAMAGE.

6

SO THAT'S THE FIRST DEDUCTION.

7

NEXT SLIDE.

8

I THINK THAT'S THE

AND I DEDUCT 1.749 BILLION BECAUSE I'M

9

GOING TO CALCULATE DAMAGES ON A REASONABLE ROYALTY

10

TO LOST PROFITS, AND THAT LEAVES ME $6,411,000,000.

11

Q

AND WHAT WAS THE NEXT STEP?

12

A

THE NEXT STEP IS WHAT WE ALL -- REGARDLESS OF

13

WHAT BUSINESS WE'RE IN, ALL OF US INCUR THE SAME

14

THING.

15

WE HAVE EXPENSES.

16

SAMSUNG INCURRED EXPENSES TO GENERATE THAT

17

6,411,000,000, SO I HAD TO IDENTIFY HOW MUCH DID IT

18

COST SAMSUNG TO EARN OR GENERATE THAT

19

6,411,000,000.

20

Q

OKAY.

21

A

AND THERE YOU SEE -- THERE YOU SEE THE COST OF

22

GOODS SOLD, HOW MUCH DID IT COST, WHAT ARE THE

23

DIRECTLY ATTRIBUTABLE COSTS THAT SAMSUNG INCURRED,

24

AND THAT'S 4,170,000,000.

25

WE HAVE REVENUE BECAUSE WE MAKE A SALE, AND
NOBODY JUST GIVES US MONEY.

AND

SO LET'S SEE THE NEXT SLIDE.

IF I SUBTRACT THAT FROM THAT PRIOR

2055

1

NUMBER, THAT GETS US DOWN TO THE BOTTOM,

2

$2,241,000,000.

3

Q

4

OF THE DIFFERENT PRODUCTS ACCUSED OF VIOLATING ONE

5

OF APPLE'S DESIGN OR TRADE DRESS PATENT RIGHTS?

6

A

YES.

7

Q

COULD WE SEE SLIDE 34B.19?

OKAY.

8
9

HAVE YOU DONE THIS CALCULATION FOR EACH

WHAT IS DEPICTED HERE, MR. MUSIKA?
A

THIS IS JUST A, AN ADDITIONAL SLIDE TO HELP

10

THE COURT SEE THAT NOT ONLY DID I DO IT ON AN

11

INDIVIDUAL TABLET-BY-TABLET,

12

SMARTPHONE-BY-SMARTPHONE BASIS, BUT THOSE ARE BY

13

MODEL, TOO.

14

SO HERE IS THAT SAMSUNG'S PROFITS

15

DIVIDED, OR SHOWN BY MODEL, BOTH FOR TABLETS AND

16

SMARTPHONES.

17

Q

18

IN THIS CASE OF WHAT IT SAYS ARE ITS PROFITS ON

19

THIS SAME GROUP OF 17 MILLION DEVICES?

20

A

21

I'VE JUST GIVEN YOU IS SAMSUNG'S NUMBER, TOO.

22

OKAY.

HAS SAMSUNG ALSO PROVIDED A CALCULATION

WELL, NOT TO CONFUSE ANYONE.

MY NUMBER THAT

BUT I DEDUCTED CERTAIN COSTS AND SAMSUNG

23

WOULD -- WOULD AND HAS SAID THAT THEY'VE INCURRED

24

ADDITIONAL COSTS THAT SHOULD BE SUBTRACTED.

25

SO THERE'S NO DISPUTE ABOUT THE NUMBERS

2056

1

THAT I'M USING.

IT'S JUST THAT THERE'S A DISPUTE

2

ABOUT HOW MUCH -- HOW MANY COSTS SHOULD BE INCLUDED

3

IN THE CALCULATION.

4

Q

COULD WE SEE PDX 34B.20.

5

WHAT HAVE YOU SHOWN ON THIS SLIDE,

6

MR. MUSIKA?

7

A

8

THREE NUMBERS.

9

NUMBER, OR THE OLD NUMBER WE KNOW, THE 8.1 BILLION

10

THERE'S NO MATH IN THIS SLIDE.

TOTAL REVENUE.

11

THERE'S JUST

THE FIRST NUMBER IS THE FAVORITE

SO THAT'S THE REVENUE AT ISSUE.

THE MIDDLE NUMBER IS MY NUMBER OF WHAT

12

THE UNJUST GAIN IS.

13

NUMBER.

14

THAT'S THE SAME $2.2 BILLION

BUT THE NUMBER ON THE RIGHT IS ANOTHER

15

SAMSUNG CALCULATION WHICH TAKES MY 2.2 BILLION AND

16

TAKES IT DOWN TO $1,086,000,000.

17

Q

18

SAME NUMBERS FROM SAMSUNG'S RECORDS, WHAT IS THE

19

REASON FOR THE DIFFERENCE BETWEEN YOUR CALCULATION

20

OF TOTAL PROFITS ON THESE 17 MILLION PHONES AND

21

SAMSUNG'S CALCULATION OF TOTAL PROFITS ON THESE 17

22

MILLION PHONE?

23

A

24

IT'S REAL SIMPLE.

25

WHICH ARE DIRECTLY ATTRIBUTABLE.

AND WHAT IS -- SINCE YOU BOTH STARTED WITH THE

WE'RE GOING TO SEE IT IN JUST A SECOND, BUT
KEEP IN MIND I DEDUCTED COSTS

2057

1

SAMSUNG DEDUCTED THOSE COSTS AS WELL, BUT

2

THEY DEDUCTED ADDITIONAL COSTS WHICH I DID NOT

3

DEDUCT, AND WE'LL LOOK AT THOSE PRESENTLY.

4

Q

5

IN YOUR BINDER.

6

IDENTIFYING WHAT EXHIBIT 28 IS.

7

A

8

PREPARED USING SAMSUNG'S RECORDS, TRANSLATED

9

RECORDS, FOR SEC AND I USED IT FOR PURPOSES OF

OKAY.

WHY DON'T WE LOOK AT EXHIBIT 28.

IT'S

AND COULD WE START SIMPLY BY YOU

EXHIBIT 28 IS A -- THIS IS A SCHEDULE THAT I

10

LOOKING AT THE TYPES OF COSTS -- THIS WILL LIST ALL

11

THEIR COSTS FROM TOP TO BOTTOM, AND WE'LL SEE THE

12

KIND OF COSTS I DEDUCTED AND THE ADDITIONAL COSTS

13

THAT SAMSUNG DEDUCTED.

14

MS. KREVANS:

15

THE ADMISSION OF EXHIBIT PX 28.

16

MR. PRICE:

NO OBJECTION.

17

THE COURT:

ALL RIGHT.

18

(WHEREUPON, PLAINTIFF'S EXHIBIT NUMBER

19

28, HAVING BEEN PREVIOUSLY MARKED FOR

20

IDENTIFICATION, WAS ADMITTED INTO

21

EVIDENCE.)

OKAY.

22

Q

24

SOURCE OF THESE NUMBERS?

25

A

IT'S ADMITTED.

BY MS. KREVANS:

23

YOUR HONOR, WE MOVE

YOU SAY YOU PREPARED THIS.

SAMSUNG RECORDS.

WHAT WAS THE

2058

1

Q

DID YOU CHANGE THE NUMBERS IN ANY WAY WHEN YOU

2

PREPARED THIS SCHEDULE?

3

A

4

THEY'RE NOT THE NUMBERS.

5

THE OVERALL ENTITY.

6

NON-ACCUSED ITEMS.

THE NUMBERS ARE -- THEY'RE IMPORTANT, BUT

7

THEY'RE THE NUMBERS FOR

SO IT HAS OTHER SALES OF

MY FOCUS IS REALLY MORE ON TERMS OF THE

8

TYPES OF ACCOUNTS, BUT I DIDN'T CHANGE THIS.

THIS

9

COMES DIRECTLY -- THIS IS THE TYPE OF ACCOUNTS AND

10

THE NUMBERS COME DIRECTLY FROM SAMSUNG.

11

Q

12

MR. LEE, THE TOP PORTION OF THIS DOWN THROUGH LINE,

13

GROSS SALES PROFIT PERCENTAGE.

OKAY.

14

COULD WE JUST MAKE A LITTLE LARGER,

WHAT'S DEPICTED HERE, MR. MUSIKA?

15

A

SAMSUNG'S RECORDS ARE, ARE THE SAME AS, IN

16

MANY OTHER SOPHISTICATED, SAME AS APPLE'S.

17

PREPARED BASICALLY IN THE SAME FORMAT.

18

THEY'RE

AND THE BASIC FORMAT OF A FINANCIAL

19

STATEMENT, OR A PROFIT AND LOSS STATEMENT, IS NO

20

DIFFERENT THAN OUR PERSONAL PROFIT AND LOSS

21

STATEMENTS.

22

WE START AT THE TOP WITH HOW MUCH DID WE

23

EARN, WHAT'S THE REVENUE?

24

EXPENSES.

25

AND THEN WE DEDUCT

STARTING AT THE TOP, THOSE EXPENSES ARE

2059

1

DIRECTLY ATTRIBUTABLE.

2

GET TO WHERE PEOPLE USUALLY REFER TO IT, THE BOTTOM

3

LINE, THOSE COSTS THAT ARE INCLUDED BECOME LESS AND

4

LESS SPECIFICALLY ASSOCIATED WITH THE REVENUE.

5

AS YOU MOVE DOWN AND YOU

SO HERE WE SEE REVENUE, QUANTITY AT THE

6

TOP, AND THEN SALES IN TERMS OF TOTAL DOLLARS.

7

Q

8

MINUTES AGO, WHERE IT SAYS SALES $30 BILLION, YOU

9

DIDN'T USE ALL 30 BILLION OF THOSE DOLLARS IN YOUR

AND I TAKE IT FROM WHAT YOU SAID A COUPLE

10

CALCULATIONS?

11

A

12

MANUFACTURING ENTITY THAT HAS SALES OF OTHER ITEMS

13

IN THERE, SO I'VE ALREADY PULLED MY -- MY 8

14

BILLION, OR SAMSUNG'S 8 BILLION IS IN THAT $30

15

BILLION NUMBER IN THERE, BUT THERE ARE OTHER THINGS

16

IN THERE AND WE SHOULDN'T BE FOCUSSED ON THOSE

17

NUMBERS.

18

Q

19

EXHIBIT 28 THAT WE'RE LOOKING AT ON THE SCREEN

20

RIGHT NOW, THERE ARE TWO LINES THAT SAY "GROSS

21

SALES PROFIT" AND "GROSS SALES PROFIT PERCENTAGE."

22

NO.

OKAY.

AGAIN, THIS IS THEIR NUMBERS FROM THE SEC

YOU SEE AT THE BOTTOM PORTION OF THIS

WHAT ARE THOSE NUMBERS?

23

A

STANDARD ACCOUNTING TERMINOLOGY.

SALES MINUS

24

COST OF GOODS SOLD, THAT'S -- C.O.G.S. STANDS FOR

25

COST OF GOODS SOLD, AND THOSE ARE COSTS WHICH ARE

2060

1

DIRECTLY ATTRIBUTABLE TO THE PRODUCTION AND/OR SALE

2

OF THE ACCUSED DEVICES.

3

AND THIS IS -- AGAIN, THIS ISN'T MY

4

CONSTRUCTION.

5

ACCOUNTING PRINCIPALS AND THIS IS DIRECTLY FROM

6

THEIR STATEMENTS.

7

THIS IS REALLY GENERALLY ACCEPTED

AND THAT GETS US, IF WE DEDUCT THE COST

8

OF GOODS SOLD FROM THE SALES, WE GET A GROSS PROFIT

9

NUMBER AND PERCENTAGE.

10

Q

AND WHAT'S THE GROSS PROFIT PERCENTAGE?

11

A

GROSS PROFIT PERCENTAGE IS, IN THIS STATEMENT

12

IS 39.2 PERCENT.

13

Q

14

YOU FOUND IN SAMSUNG'S FINANCIAL RECORDS FOR THE $8

15

BILLION IN SALES OF THE ACCUSED PRODUCTS IN THE

16

UNITED STATES?

17

A

18

LOWER GROSS PROFIT PERCENTAGE.

19

RECOLLECTION, THE OVERALL GROSS PROFIT PERCENTAGE

20

ON JUST THE ACCUSED PRODUCTS WAS APPROXIMATELY 35.5

21

PERCENT.

22

Q

23

WE MOVE DOWN THIS SAME PAGE OF EXHIBIT 28, WE'RE

24

GOING TO SEE SOME OTHER KINDS OF EXPENSES.

25

A

WHAT WAS THE AVERAGE GROSS PROFIT AMOUNT THAT

ALL RIGHT.

OKAY.

YES.

THE ACCUSED PRODUCTS HAVE SLIGHTLY
PER MY

YOU SAID A COUPLE MINUTES AGO THAT IF

2061

1

Q

2

APPROPRIATE TO BE DEDUCTED IN CALCULATING SAMSUNG'S

3

TOTAL PROFITS FOR PURPOSES OF DAMAGES IN THIS CASE?

4

A

5

EXPENSES.

6

THEY WERE INCURRED.

7

DO YOU BELIEVE THAT THOSE OTHER EXPENSES ARE

FIRST OF ALL, SAMSUNG DEDUCTS ALL THOSE OTHER
THEY WERE INCURRED.

I'M NOT DISPUTING

BUT I DO NOT THINK IT IS APPROPRIATE TO

8

DEDUCT THOSE TO GET TO THE PROFIT NUMBER WHICH

9

WOULD REWARD APPLE FOR SAMSUNG'S UNJUST ENRICHMENT.

10

SO REALLY ALL THE EXPENSES BELOW THERE

11

ARE REALLY THE DISAGREEMENT.

12

Q

13

THOSE OTHER EXPENSES, ARE NOT PROPERLY DEDUCTED IN

14

CALCULATING SAMSUNG'S PROFITS?

15

A

I HAVE TWO VERY SPECIFIC REASONS.

16

Q

WHAT ARE THEY?

17

A

ONE REASON IS THAT THOSE COSTS, BY THEIR VERY

18

NATURE AND HOW THEY'VE BEEN PUT ON THIS FINANCIAL

19

STATEMENT, I KNOW, AS A C.P.A., THAT THEY ARE LESS

20

AND LESS DIRECTLY ASSOCIATED WITH THE PRODUCT AT

21

HAND.

22

REPRESENTATION.

23

AND WHY DO YOU THINK THAT THOSE EXPENSES,

SO I KNOW THAT BASED ON SAMSUNG'S OWN

SECONDLY, WHEN I TRIED TO INVESTIGATE HOW

24

THEY WOULD PERHAPS TRY TO ALLOCATE THESE -- AND

25

WHEN I SAY "TRY," DON'T MEAN THAT IN A NEGATIVE

2062

1

WAY, BUT IF YOU HAD A NON-DIRECT COST, THE ONLY WAY

2

TO ASSIGN IT IS YOU HAVE TO DETERMINE SOME FORM OF

3

ALLOCATION, AND WHEN I LOOK FOR THE ALLOCATION

4

BASIS, THE RECORDS WERE UNRELIABLE.

5

SO FOR THOSE TWO PRIMARY REASONS, NO, I

6

DID NOT INCLUDE THEM.

7

Q

8

SAMSUNG'S ACTUAL EXPENSE CATEGORIES, OF SOMETHING

9

THAT SAMSUNG INCLUDED IN ITS CALCULATION WHICH YOU

10

DID NOT INCLUDE AND EXPLAIN WHY YOU THOUGHT IT WAS

11

INAPPROPRIATE.

12

A

YES.

13

Q

PLEASE.

14

A

R&D IS A GOOD EXAMPLE.

15

RESEARCH AND DEVELOPMENT, AND CERTAINLY SAMSUNG

16

ENGAGES IN RESEARCH AND DEVELOPMENT, AS DOES APPLE.

OKAY.

17

CAN YOU GIVE US AN EXAMPLE, FROM

MAY I?

R&D STANDS FOR

FROM AN ACCOUNTING STANDPOINT, IT'S

18

CALLED MATCHING.

WE WANT TO MATCH UP THE EXPENSES

19

WITH THE REVENUE.

20

EXPENSES FOR PRODUCT A AND SUBTRACT THEM FROM

21

PRODUCT B.

WE DON'T WANT TO MATCH UP THE

22

AND I KNOW, AGAIN, BASED ON MY OWN

23

ACCOUNTING EXPERIENCE, THAT THE RESEARCH AND

24

DEVELOPMENT COSTS, WHICH ARE INCURRED IN THE

25

CURRENT TIME PERIOD, RELATE TO FUTURE EVENTS, OR

2063

1

FUTURE PRODUCTS, NOT TO THE CURRENT PRODUCTS.

2

AND SO, AGAIN, FOR ANOTHER REASON THERE,

3

IT IS A COST THAT'S NOT A COST THAT'S ASSOCIATED

4

WITH THESE ACCUSED PRODUCTS.

5

Q

6

YOU SAID YOU THOUGHT IT WAS INAPPROPRIATE TO

7

INCLUDE THESE OTHER CATEGORIES, AND THAT WAS THAT

8

YOU FOUND THE INFORMATION IN SOME WAYS TO BE

9

UNRELIABLE.

OKAY.

LET'S TURN TO THE SECOND REASON THAT

10

A

YES, I DID.

11

Q

WHAT LED TO THAT CONCLUSION?

12

A

AS AN AUDITOR FOR THAT FIRST 10, 12 YEARS OF

13

MY LIFE, AND REALLY DOING INVESTIGATIONS

14

AFTERWARDS, WE AS AUDITORS ARE TAUGHT TO, TO APPLY

15

SOMETHING CALLED PROFESSIONAL SKEPTICISM, EXERCISE

16

OUR PROFESSIONAL JUDGMENT.

17

FROM OUR CLIENTS OR FROM PARTIES THAT ARE PRODUCING

18

FINANCIAL INFORMATION AND SAY, THAT MUST BE RIGHT.

19

WE GIVE IT -- IN SORT OF LAYMAN'S TERMS,

WE SIMPLY DON'T TAKE

20

WE GIVE IT A SMELL TEST AND SAY, DOES THIS MAKE

21

SENSE?

22

CERTAIN RED FLAGS?

AND IN AUDIT LINGO, AGAIN, ARE THERE

23

AND I ENCOUNTERED A NUMBER OF RED FLAGS

24

WITH SAMSUNG'S DATA BELOW THE GROSS PROFIT LINE.

25

Q

OKAY.

COULD WE LOOK AT PDX 34B.23, PLEASE.

2064

1

WHAT IS SET OUT IN YOUR SLIDE 23,

2

MR. MUSIKA?

3

A

4

AS A TEACHER, I DON'T LIKE PEOPLE READING AHEAD,

5

BUT -- GOOD.

6

Q

THANK YOU, MR. LEE.

7

A

SO, YES, THERE ARE FOUR RED FLAGS, AS YOU SAW.

WELL, I WAS GOING TO DO THIS PIECE BY PIECE.

8
9

IT WAS TAKEN AWAY, BUT THE FIRST ONE IS,
IS THE INFORMATION THAT I'M PRESENTED WITH, DOES

10

THAT TIE TO SOME RELIABLE SOURCE?

SOME OTHER

11

SOURCE, AN AUDITED FINANCIAL STATEMENT, A TAX

12

RETURN, SOMETHING ELSE THAT I KNOW SOMEBODY ELSE IS

13

LOOKING OVER THE COMPANY'S SHOULDER?

14

Q

15

ISSUE?

16

A

17

TIE IT.

18

RECONCILE OR TIE IT, EITHER.

19

THAT LEVEL OF COMFORT.

20

Q

WHAT WAS THE SECOND RED FLAG YOU LOOKED FOR?

21

A

THE SECOND ONE IS, IS THIS INFORMATION THAT'S

22

USED TO RUN THE BUSINESS?

23

COURSE," THIS IS INFORMATION THEY USE EVERY DAY.

24

THIS ISN'T SOMETHING THAT'S PRODUCED FOR A SPECIAL

25

PURPOSE.

AND WHAT DID YOU FIND WHEN YOU LOOKED AT THAT

I'M NOT SAYING IT DIDN'T TIE, BUT NOBODY DID
I COULDN'T TIE IT, AND SAMSUNG DIDN'T
SO I WAS LACKING WITH

WHEN WE SAY "ORDINARY

2080

1

COME FIVE YEARS," AND THAT CIRCLE -- NUMBER ONE,

2

THE APPLE IPHONE, THAT'S -- THAT'S THEIR DOCUMENT,

3

I DIDN'T CIRCLE THAT.

4

DOCUMENT.

5

IPHONE AS SOMETHING THAT'S GOING TO SHAPE THE NEXT

6

FIVE YEARS.

7

Q

8

2007?

9

A

2007, YES.

10

Q

OKAY.

11

DOCUMENT.

12

A

I'M THERE.

13

Q

OKAY.

14

DEPICTING?

15

A

16

SO WHAT EFFECT THE IPHONE IS EXPECTED TO HAVE.

17

Q

AND, AGAIN, IS THIS FROM SEPTEMBER 2007?

18

A

THIS ENTIRE DOCUMENT IS FROM THAT TIME PERIOD,

19

YES.

20

Q

21

THIS THREE-PAGE SECTION OF EXHIBIT 34 AND TELLS US

22

WHAT IS INDICATED ON THIS PAGE THAT YOU TOOK INTO

23

ACCOUNT IN YOUR OPINION?

24

A

25

TOP BOX, THAT'S CORRECT, IT SAYS "FACTORS THAT

I HAVEN'T CHANGED THIS

SO SAMSUNG HAS IDENTIFIED THE APPLE

AND THE DATE OF THIS DOCUMENT WAS SEPTEMBER

COULD YOU TURN TO PAGE 37 OF THIS
AND LET ME KNOW AGAIN WHEN YOU'RE THERE.

WHAT IS THIS PORTION OF EXHIBIT 34

LISTED AT THE TOP IS "IPHONE EFFECT ANALYSIS,"

OKAY.

YES.

COULD YOU TURN TO THE SECOND PAGE OF

THE BOX THAT'S SORT OF AT THE RIGHT, THE

2081

1

COULD MAKE IPHONE A SUCCESS."

2

AND THEN THE FIRST BULLET UNDER THAT IS

3

"EASE AND INTUITIVE U/I," USER INTERFACE, "THAT

4

COVERS ALL USER CLASSES, INCLUDING MALE, FEMALE,

5

OLD AND YOUNG," AND THEN THE FIRST BULLET,

6

"BEAUTIFUL DESIGN."

7

Q

8

DOCUMENT EFFECT THE DEMAND FOR THE IPHONE?

9

A

AND HOW DID THOSE, THESE PORTIONS OF THE

WELL, THE FOCUS WAS ON IPHONE AND THE

10

IDENTIFICATION BY SAMSUNG OF IPHONE AS BEING A

11

DRIVER IN THE MARKETPLACE, SO OBVIOUSLY THAT'S

12

REPRESENTATIVE OF DEMAND FOR THE IPHONE, AND

13

IDENTIFYING BEAUTIFUL DESIGN AS BEING FURTHER -- OR

14

EVIDENCE OF, OF DEMAND FOR DESIGN.

15

Q

16

PLEASE, MR. MUSIKA.

17

A

I'M THERE.

18

Q

WHAT IS -- STRIKE THAT.

COULD YOU TURN TO EXHIBIT 194 IN YOUR BINDER,

IS EXHIBIT 194 A DOCUMENT THAT YOU

19
20

CONSIDERED AND RELIED UPON IN FORMING YOUR OPINIONS

21

ABOUT DEMAND FOR THE IPHONE?

22

A

23
24
25

YES.
MS. KREVANS:

YOUR HONOR, WE MOVE THE

ADMISSION OF EXHIBIT 194.
MR. PRICE:

SAME OBJECTIONS, YOUR HONOR.

2082

1

FOUNDATION.

2
3

MS. KREVANS:

AGAIN, YOUR HONOR, WE'VE

LAID THE FOUNDATION AND IT'S A SAMSUNG ADMISSION.

4

THE COURT:

5

(WHEREUPON, PLAINTIFF'S EXHIBIT NUMBER

6

194, HAVING BEEN PREVIOUSLY MARKED FOR

7

IDENTIFICATION, WAS ADMITTED INTO

8

EVIDENCE.)

9

IT'S ADMITTED.

BY MS. KREVANS:

10

Q

WHAT IS EXHIBIT 194, MR. MUSIKA?

11

A

IT'S A, AN INTERNAL E-MAIL FROM SAMSUNG

12

EXECUTIVES TO OTHER SAMSUNG EXECUTIVES.

13

Q

AND THE DATE OF THIS DOCUMENT IS?

14

A

MARCH 2ND, 2010.

15

Q

AND WHO IS IT -- WHAT IS THE SUBJECT MATTER

16

INDICATING?

17

A

18

"EXECUTIVES."

19

Q

20

YOU FIND RELEVANT TO THE DEMAND OPINIONS THAT YOU

21

FORMED?

22

A

23

AND HIGHLIGHT THAT.

24
25

THE SUBJECT SAYS "TO UX," USER EXPERIENCE,

WHAT PART OF THIS MARCH 2ND, 2010 E-MAIL DID

GO DOWN ONE, TWO, THREE, FOUR, FIVE PARAGRAPHS
YES.

IT SAYS, "I AM NOT SAYING TO MAKE A UX
THAT IS EXACTLY IDENTICAL TO THE IPHONE, BUT I AM

2083

1

SAYING TO LEARN THE WISDOM OF THE IPHONE AND

2

RECOGNIZE THE STANDARD OF THE INDUSTRY WHICH WAS

3

SET BY THEM ALREADY."

4

Q

5

AT THE SECOND FACTOR YOU CONSIDERED, WHICH WAS

6

MARKET ALTERNATIVES.

LET'S TURN BACK TO YOUR SLIDE 34B.32, AND LOOK

7

WHAT EVIDENCE DID YOU FIND WHEN YOU

8

LOOKED AT MARKET ALTERNATIVES?

9

A

UM --

10

Q

AND LET ME FIRST ASK YOU, WHAT DO YOU MEAN BY

11

"MARKET ALTERNATIVES"?

12

A

13

DIDN'T MAKE THE SALE, WOULD APPLE HAVE MADE THE

14

SALE?

15

SO I THINK YOU PHRASED IT WELL, IS IF SAMSUNG

SO IF, IF THERE WERE OTHER ALTERNATIVES

16

IN THE MARKETPLACE, THEN APPLE WOULDN'T MAKE EVERY

17

ONE OF THOSE 22 MILLION SALES.

18

CALCULATE LOST PROFITS ON THE 22 MILLION.

19

RECALL IT WAS ONLY 2 MILLION.

OF COURSE I DIDN'T
YOU MAY

20

PART OF THE REASON WAS BECAUSE ALTHOUGH

21

I'M NOT OFFERING AN OPINION THAT THERE ARE MARKET

22

ALTERNATIVES, I CONSERVATIVELY SAID, WELL, I'M JUST

23

GOING TO ASSUME AND ACCEPT THAT SAMSUNG'S OTHER

24

PRODUCTS AND THAT EVERY OTHER MARKET PARTICIPANT IS

25

A MARKET ALTERNATIVE.

2084

1

Q

2

FOUND WHEN YOU LOOKED AT THIS QUESTION.

3

A

4

AT THE TIME PERIOD AND I TOOK THAT TWO YEARS,

5

BASICALLY THE TWO-YEAR TIME PERIOD OF 2010, 2011,

6

2012, AND I SHRUNK THAT -- SORRY -- I SHRUNK THAT

7

DOWN.

8

TRADE DRESS THAT SAMSUNG WOULD SIMPLY NOT LEAVE THE

9

MARKET, THAT THEY WOULD DO SOMETHING TO TRY TO GET

10

COULD YOU EXPLAIN TO US THE EVIDENCE THAT YOU

I DID TWO, TWO RESTRICTIONS.

ONE, I, I LOOKED

I ASSUMED THAT WITH EACH PATENT OR EACH

BACK INTO THE MARKET.

11

SO I LIMITED MY CALCULATIONS TO LOST

12

PROFITS TO ONLY A TIME PERIOD WHICH WOULD BE

13

ASSOCIATED WITH THE TIME SAMSUNG WOULD BE OUT OF

14

THE MARKET.
SO DEPENDING ON THE INTELLECTUAL

15
16

PROPERTY, IT WAS AS LITTLE AS ONLY ONE MONTH OR AS

17

HIGH AS EIGHT MONTHS, BUT NOT THE ENTIRE TIME

18

PERIOD.

19

MONTHS OR ONE MONTH, RIGHT, BASED ON THAT.

20

SO THAT 22 MILLION SHRINKS DOWN TO EIGHT

AND THERE WAS ONE OTHER THING.

21

Q

YES, THE MARKET SHARE ALLOCATION.

WHAT ARE

22

YOU REFERRING TO THERE?

23

A

24

CUT.

25

THE SALES THAT WOULD HAVE BEEN MADE IN THAT TIME

MARKET SHARE ALLOCATION, THERE WAS A FURTHER
ONCE I GOT IT DOWN TO JUST THAT TIME PERIOD,

2085

1

PERIOD, THEN I DISTRIBUTED THOSE SALES TO ALL THE

2

MARKET PARTICIPANTS.

3

I ONLY PUT IN APPLE'S PILE THEIR MARKET

4

SHARE.

5

I GAVE NOKIA THEIR MARKET SHARE.

6

THEIR MARKET SHARE.

7

I GAVE BACK TO SAMSUNG THEIR MARKET SHARE.
I GAVE MOTOROLA

SO THAT CARVED IT DOWN FURTHER AND THAT'S

8

WHY I ONLY END UP WITH 2 MILLION OUT OF THAT 22

9

MILLION THAT QUALIFY FOR LOST PROFITS.

10

Q

11

DETERMINING HOW MANY OF THE 22 MILLION UNITS

12

QUALIFIED FOR LOST PROFITS?

13

A

14

FACILITIES TO ACTUALLY PRODUCE THIS AND SELL THIS?

15

Q

AND WHAT DID YOU FIND?

16

A

I FOUND THAT THEY DID.

17

WERE LIMITATIONS, AS -- BECAUSE THE DEMAND WAS SO

18

HIGH, FROM TIME TO TIME, APPLE DID HAVE

19

CONSTRAINTS.

20

WHAT WAS THE THIRD FACTOR YOU CONSIDERED IN

CAPACITY.

COULD APPLE -- DID THEY HAVE THE

THERE WERE -- THERE

BUT WITH RESPECT TO THIS 2 MILLION

21

INCREMENTAL UNITS OVER THE TWO YEAR TIME PERIOD,

22

APPLE, I CONCLUDED, DID HAVE THE ABILITY TO MAKE

23

THOSE SALES.

24

Q

25

SALES," ARE YOU REFERRING TO MANUFACTURING

WHEN YOU SAY "THE ABILITY TO MAKE THOSE

2086

1

CAPACITY?

2

A

3

COULD BE EITHER OR BOTH.

4

Q

5

DETERMINING WHETHER UNITS QUALIFIED FOR LOST

6

PROFITS REMEDY?

7

A

8

AND I WAS ABLE TO CALCULATE HOW MUCH APPLE MAKES ON

9

EACH ONE OF ITS SMARTPHONES OR TABLETS.

MANUFACTURING AND MARKETING CAPACITY.

IT

AND WHAT WAS THE FOURTH FACTOR YOU USED IN

IT'S JUST A CALCULATION OF APPLE'S PROFITS,

AND ONCE

10

AGAIN, IT'S SIMPLE MULTIPLICATION, TIMES 2 MILLION

11

UNITS GAVE ME MY LOST PROFITS.

12

Q

13

CONCLUDED THAT 2 MILLION OF THE DEVICES DID QUALIFY

14

FOR LOST PROFIT DAMAGES, WHAT WOULD HAVE CHANGED IN

15

YOUR ULTIMATE CONCLUSION?

16

A

17

THEY'RE ENTITLED -- UNDER THE ASSUMPTION THAT

18

THEY'RE INFRINGING, THEY'RE GOING TO GET SOME FORM

19

OF DAMAGE.

20

PROFITS -- I'M NOT DOUBLE COUNTING -- AND THE

21

RESULT IS, I THINK WE CAN SHOW, WE DON'T HAVE ANY

22

LOST PROFITS, BUT THE INFRINGING PROFITS NOW GOES

23

UP TO $2.481 BILLION.

24

Q

25

WHICH YOU HAVE PHONES AND TABLETS IN ALL THREE

LET'S GO BACK TO SLIDE 34B.62.

IF YOU HAD NOT

WE WOULD JUST SLIDE THOSE PHONES UP BECAUSE

SO I SLIDE IT UP TO SAMSUNG'S

LET'S GO BACK TO YOUR ORIGINAL APPROACH IN

2087

1

CATEGORIES, AND LET ME ASK YOU ABOUT THE LAST

2

CATEGORY, THE REASONABLE ROYALTY CATEGORY.

3

FIRST, COULD YOU EXPLAIN TO THE JURY IN

4

CONCEPT WHAT IS MEANT BY A REASONABLE ROYALTY?

5

A

YES.

6

Q

34B.42, PLEASE.

7

A

YES.

8

THE FIRST EXAMPLE, RENT.

9

OUT YOUR HOUSE OR IF YOU HAVE AN APARTMENT AND YOU

I HAVE A SIMPLE LITTLE SLIDE THAT HELPS.

A ROYALTY PAYMENT IS, IT'S JUST LIKE, AS
SO IF YOU DECIDE TO RENT

10

WANT TO RENT IT, THAT'S YOUR ASSET.

11

IT'S A TANGIBLE ASSET.

12

TO USE IT, YOU WANT TO BE PAID FOR IT.

13

YOU RENT.

14

Q

15

ESTATE COLUMN ON THIS GRAPHIC, YOU HAVE WHAT LOOKS

16

LIKE A PICTURE OF TWO HANDS SHAKING.

17

HAVE THAT THERE?

18

A

19

MINERAL RIGHTS, THE PARTIES GET TOGETHER AND

20

ACTUALLY AGREE.

21

YOU OWN THAT.

IF SOMEBODY ELSE IS GOING

LET ME STOP YOU RIGHT THERE.

SO THEY PAY

UNDER YOUR REAL

WHY DO YOU

WELL, IN THE TWO EXAMPLES, REAL ESTATE AND

BUT HERE, WITHIN THE CONTEXT OF THE

22

LITIGATION, THE REASON WE'RE ALL HERE,

23

UNFORTUNATELY, IS THE TWO PARTIES HAVEN'T AGREED.

24

THEY HAVEN'T SHOOK HANDS AND AGREED.

25

HAVE AN AGREEMENT.

SO WE DON'T

2094

1

BELIEVE SAMSUNG SHOULD PAY IN THIS CASE IF THE JURY

2

FINDS THAT APPLE'S INTELLECTUAL PROPERTY IS VALID

3

AND INFRINGED?

4

A

5

TO $2,751,000,000.

6

Q

7

I'M SORRY, THIS IS 25A-1.

8

A

YES.

9

Q

WHAT IS 25A-1, MR. MUSIKA?

10

A

THIS IS A SUMMARY OF SOME OF THE CALCULATIONS

11

THAT I'VE BEEN TALKING ABOUT THIS MORNING.

12

Q

AND WHO PREPARED EXHIBIT 25A-1?

13

A

MY TEAM UNDER MY DIRECTION.

14
15

SUMMING THE THREE UP, THE TOTAL NUMBER COMES

COULD YOU TURN TO EXHIBIT 25 IN YOUR BINDER.

MS. KREVANS:

YOUR HONOR, WE OFFER

EXHIBIT 25A-1.

16

MR. PRICE:

NO FURTHER OBJECTION.

17

THE COURT:

OKAY.

18

(WHEREUPON, PLAINTIFF'S EXHIBIT NUMBER

19

25A-1, HAVING BEEN PREVIOUSLY MARKED FOR

20

IDENTIFICATION, WAS ADMITTED INTO

21

EVIDENCE.)

22

MS. KREVANS:

IT'S ADMITTED.

OKAY.

23

Q

COULD YOU, JUST BRIEFLY, MR. MUSIKA, WALK THE

24

JURY THROUGH WHAT INFORMATION IS SET OUT ON EACH

25

PAGE OF EXHIBIT 25A-1?

2095

1

A

YES.

2

YOU'LL MOVE THE SCREEN AS I TALK.

3
4

SO I'LL USE MY BOOK, AND I ASSUME THAT

SO PAGE 2 OF 16 IS JUST THE SUMMARY OF
DAMAGES, WHAT WE JUST LOOKED AT.

5

PAGE 3 OF 16 --

6

Q

LET ME STOP YOU FOR A MOMENT ON PAGE 3.

YOU

7

SEE AT THE BOTTOM THERE'S A NOTE?

8

A

YES.

9

Q

WHAT DOES THAT NOTE EXPLAIN?

10

A

THAT EXPLAINS THE, THE TIME PERIODS THAT WERE

11

USED FOR THE CALCULATION OF THE DAMAGES.

12

Q

13

WERE?

14

A

15

FOR THE REGISTERED TRADE DRESS WAS BASICALLY THE

16

START OF THE INFRINGING TIME PERIOD.

17

Q

THAT'S FOR THE UNREGISTERED TRADE DRESS?

18

A

UNREGISTERED TRADE DRESS.

19

Q

AND FOR THE REST?

20

A

AND FOR THE REST I USED AUGUST 4TH, 2010 AS

21

THE START DATE.

22

Q

23

THE JURY WHAT THE CONTENTS OF PX 25 ARE.

24

A

25

SEE THE PRODUCTS THERE ON THE LEFT AND ALL THE

AND WHAT DOES IT INDICATE THOSE TIME PERIODS

IT INDICATES THAT THE TIME PERIODS THAT I USED

THANK YOU.

YES.

COULD YOU CONTINUE EXPLAINING TO

PAGE 3 OF 16 IS JUST THE MATRIX.

YOU

2096

1

FORMS OF INTELLECTUAL PROPERTY THAT HAVE BEEN

2

IDENTIFIED THERE, WHICH PRODUCTS ARE ACCUSED OF

3

INFRINGING WHICH OF THE INTELLECTUAL PROPERTY.

4

THE NEXT PAGE IS JUST A SUMMARY OF, A

5

MORE DETAILED SUMMARY BY PRODUCT OF THE FOLLOWING

6

PHONES THAT WE WENT THROUGH.

7

CALCULATIONS.

IT'S JUST DIFFERENT

8

THE SAME IS TRUE OF 5 OF 16.

9

6 OF 16 IS A LISTING OF PRODUCTS AND THE

10

CARRIERS THAT ARE ASSOCIATED WITH EACH PRODUCT.

11

Q

12

ARE PROVIDING THEIR CUSTOMERS WITH WHICH SAMSUNG

13

PRODUCTS?

14

A

THAT'S CORRECT.

15

Q

THANK YOU.

16

THAT ARE HEADED "MOR-FLO ANALYSIS."

17

A

THAT'S 7 THROUGH 12.

18

Q

WHAT ARE THOSE?

19

A

THAT'S THE MARKET SHARE ALLOCATIONS.

20

WHERE I LIMITED THE NUMBER OF PHONES THAT APPLE

21

WOULD GET BECAUSE I'VE ALLOCATED PERCENTAGES TO THE

22

OTHER MARKET PARTICIPANTS, AND THOSE ARE THOSE

23

CALCULATIONS.

24

Q

25

ON PAGE 13?

SO THE -- THIS IS JUST WHICH PHONE COMPANIES

AND YOU HAVE A SERIES OF PAGES

THAT'S

THAT TAKES US TO PAGE 13, AND WHAT IS SET OUT

2097

1

A

PAGE 13 IS A STUDY DONE, I THINK IT WAS DONE

2

BY IBM, BUT IT WAS DONE BY SOMEONE ELSE WHICH

3

REALLY LOOKED AT THE PERCENTAGE OF USERS THAT WOULD

4

SWITCH CARRIERS, AND THAT WAS ANOTHER LIMITING

5

FACTOR THAT I USED.

6

Q

7

COURT, BUT JUST SHOW THE JURORS PAGES 14 AND 15.

OKAY.

8
9

LET'S -- MR. LEE, DON'T SHOW IT IN

YOUR HONOR, I'D NOTE FOR THE RECORD THAT
THESE TWO PAGES, PER A PRIOR ORDER OF THE COURT,

10

HAVE BEEN PERMITTED TO BE REDACTED AND FILED UNDER

11

SEAL AND WE HAVE PROVIDED BOTH THE REDACTED AND

12

UNREDACTED COPIES TO THE COURT.

13

AND MR. MUSIKA, CAN YOU TELL US WHAT

14

INFORMATION IS SET OUT ON PAGES 14 AND 15?

15

A

16

CAPACITY FACTOR, DETERMINING WHETHER OR NOT THERE'S

17

SUFFICIENT CAPACITY.

18

Q

AND FINALLY, PAGE 16.

19

A

16 IS THE RATES THAT WE JUST LOOKED AT, AND IT

20

GIVES A LITTLE MORE DETAILS ABOUT THE THREE

21

VALUATION METHODOLOGIES I USED.

22

Q

23

SUMMARIZE FOR THE JURY YOUR OVERALL DAMAGES OPINION

24

IN THIS CASE?

25

A

YES.

IT'S MY ANALYSIS THAT RELATES TO THE

JUST TO FINISH UP, MR. MUSIKA, COULD YOU

YES.

WHERE I BEGAN, THE DAMAGES ARE A RANGE

2098

1

BETWEEN $2.5 BILLION AND AT THE HIGH END,

2

$2,750,000,000.

3

Q

4

AND THE TOP OF THAT RANGE?

5

A

6

THE PHONES, THAT WE BASICALLY -- THE LOWER END

7

NUMBER IS JUST ALL OF SAMSUNG'S UNJUST ENRICHMENT,

8

PLUS A REASONABLE ROYALTY.

AND WHAT IS THE DIFFERENCE BETWEEN THE BOTTOM

ONE ASSUMES -- YOU REMEMBER WE WERE SLIDING

9

THE HIGHER NUMBER WAS SAMSUNG'S UNJUST

10

ENRICHMENT, LOST PROFIT ON THOSE 2 MILLION, PLUS

11

THE REASONABLE ROYALTY.

12

MS. KREVANS:

13

NOTHING FURTHER, YOUR HONOR.

14

THE COURT:

15

THANK YOU.

ALL RIGHT.

THE TIME IS NOW

11:20.
CROSS-EXAMINATION

16
17

BY MR. PRICE:

18

Q

GOOD MORNING, MR. MUSIKA.

19

A

GOOD MORNING.

20

Q

MY NAME IS BILL PRICE.

21

AND I WANTED TO ASK YOU, BEFORE WE GET

22

INTO YOUR METHODOLOGIES, YOU SAID YOU'VE DONE THIS

23

A NUMBER OF TIMES, THIS SORT OF ANALYSIS; CORRECT?

24

A

YES.

25

Q

AND YOU'VE DONE IT IN CONNECTION WITH

2099

1

LITIGATION?

2

A

YES.

3

Q

AND I JUST WANT TO SEE HOW YOU APPROACH THAT

4

AS AN EXPERT.

5

SUPPOSED TO KIND OF APPLY YOUR EXPERTISE IN A

6

NEUTRAL FASHION; CORRECT?

7

A

THAT'S CORRECT.

8

Q

YOU'RE NOT SUPPOSED TO FAVOR ONE PARTY OVER

9

THE OTHER; RIGHT?

IT'S YOUR UNDERSTANDING THAT YOU ARE

10

A

THAT'S CORRECT.

11

Q

YOU'RE GOING TO GIVE THE SAME OPINION

12

REGARDLESS OF WHICH SIDE HIRES YOU?

13

IDEA?

14

A

THAT IS THE IDEA.

15

Q

AND IN THAT CONNECTION, YOU KNOW THAT IT WOULD

16

BE INAPPROPRIATE, THEN, FOR YOU AS AN EXPERT TO BE

17

AN ADVOCATE?

18

OBJECTIVE USING YOUR EXPERTISE?

19

A

I WOULD AGREE.

20

Q

AND -- NOW, WE LOOKED AT A LOT OF SLIDES.

21

ASSUME THAT YOU REVIEWED THOSE SLIDES BEFORE THEY

22

WERE PRESENTED TO THE JURY.

23

A

YES.

24

Q

AND EITHER YOU CREATED THEM OR, LIKE THE

25

PRESIDENTIAL ADS, YOU APPROVED OF THEM?

THAT'S THE

THAT IS, YOU'RE SUPPOSED TO BE

I

2100

1

A

YES.

2

Q

AND WERE THERE ANY THAT YOU CREATED VERSUS

3

APPROVED, OR --

4

A

I DON'T MAKE THAT DISTINCTION, NO.

5

Q

OKAY.

6

THINK IT WAS SLIDE 34B.2, AND I'M JUST WONDERING,

7

FOR EXAMPLE, WITH THIS SLIDE -- I'M NOT GETTING

8

ANYTHING OUT OF THIS.

9

AND IF WE COULD LOOK AT, FOR EXAMPLE, I

OKAY.

SO ON THIS SLIDE, YOU SEE ON THE

10

RIGHT HERE THERE'S A SAMSUNG PHONE.

DO YOU SEE

11

THAT?

12

A

I DO.

13

Q

AND DID YOU SELECT THAT PICTURE?

14

A

THE INDIVIDUAL PHONE?

15

Q

YES.

16

A

NO.

17

WAS CONSTRUCTED ORIGINALLY BY ME, BUT THERE'S A

18

TEAM OF, OF GRAPHICS PEOPLE THAT, THAT PUT IN THE

19

ICONS ULTIMATELY.

20

PHONE.

21

Q

22

APPLE IS NOT CLAIMING THAT YOU HAVE TO USE HARD

23

KEYS ON A PHONE; RIGHT?

24

A

THAT IS NOT MY UNDERSTANDING, NO.

25

Q

AND IT'S YOUR UNDERSTANDING THAT APPLE IS NOT

I THINK THAT -- THIS -- THE SLIDE ITSELF

SO, NO, I DIDN'T SELECT THAT

I JUST WANT TO -- YOUR UNDERSTANDING IS THAT

2119

1

BY APPLE TO PRESENT TO THE JURY, FOR EXAMPLE, WHAT

2

WOULD BE YOUR OPINION OF THE DAMAGES IF IT WAS JUST

3

A BOUNCE BACK INFRINGEMENT?

4

A

NO.

5

Q

HOW ABOUT IF IT WAS -- I'M TRYING TO THINK OF

6

THE PATENT NOW -- HIT TO ZOOM AND THEN HIT

7

SOMEWHERE ELSE TO CENTER AND ZOOM?

8

A

NO.

9

Q

I'VE GOT THE LIST HERE.

THERE'S THE ONE WHERE

10

YOU, YOU USE ONE FINGER FOR SCROLLING AND THEN

11

THERE'S A PARTICULAR METHOD BY WHICH YOU USE TWO

12

FINGERS TO ZOOM.

13

A

14

UP, BUT I'M FOLLOWING YOU, AND THE ANSWER IS STILL

15

NO, I DIDN'T DO -- I WASN'T ASKED TO MAKE THAT

16

CALCULATION.

17

Q

18

THE LOST PROFITS IS A BIG PERCENTAGE OF YOUR

19

NUMBERS; RIGHT?

20

A

NO, THEY'RE NOT.

21

Q

I'M SORRY.

22

YOU MAY BE MIXING THE THREE UTILITY PATENTS

OKAY.

AND THESE -- THE LOST PROFITS THAT --

YOU'RE ABSOLUTELY RIGHT.

THE INFRINGER'S PROFITS, SAMSUNG'S,

23

THAT'S A BIG PART OF THE NUMBER; RIGHT?

24

A

THAT'S CORRECT.

25

Q

AND, OF COURSE, YOU DON'T GET INFRINGER'S

2120

1

PROFITS IF THERE'S -- IF THE PATENT THAT IS

2

INFRINGED IS A UTILITY PATENT; RIGHT?

3

A

4

DAMAGES UNDER A UTILITY PATENT, I AGREE.

5

Q

6

WITH THE WAY THE PHONE OR THE TABLET LOOKS?

7

A

8

CLEAR, IS REMEMBER THE SLIDING PHONES.

9

MOVE THOSE PHONES OUT OF INFRINGER'S PROFITS,

10

YOU'VE GOT TO PUT THEM INTO SOME COLUMN, LOST

11

PROFITS OR REASONABLE ROYALTY.

12

THAT'S RIGHT.

THAT'S NOT ONE OF THE FORMS OF

SO THOSE BIG NUMBERS ALL HAVE SOMETHING TO DO

WELL, THE ONLY ADDITION, SO THE RECORD IS
SO IF YOU

AND SO AT A MINIMUM, YOU WOULD MOVE THEM

13

ALL DOWN TO REASONABLE ROYALTY TO THE EXTENT THAT

14

THEY ALSO INFRINGED THE UTILITY PATENT.

15

Q

16

ONLY -- YOU GET INFRINGER'S PROFITS ONLY IF THERE'S

17

SOME FINDING ABOUT BASICALLY HOW THESE PHONES LOOK?

18

A

RIGHT.

19

Q

THE DESIGN PATENT, THE DESIGN PATENT OR TRADE

20

DRESS INFRINGEMENT; RIGHT?

21

A

22

IT'S NOT LIKE YOU SUBTRACT IT.

23

SUBTRACT IT, BUT YET ADD IT BACK ON THE OTHER FORM.

24

Q

25

FINDING THAT, YOU KNOW, AN ORDINARY OBSERVER, FOR

AND SO THAT'S, THAT'S WHAT I'M SAYING.

I'M AGREEING WITH YOU.

IT'S

BUT ALL I'M SAYING IS
YOU HAVE TO

WELL, YOU DON'T ADD IT BACK IF THERE'S A

2121

1

EXAMPLE, IS NOT GOING TO BE CONFUSED OR THERE'S NOT

2

DECEIT OR THAT THE PATENT'S INVALID; RIGHT?

3

A

4

KEY TO THE CALCULATION IS EVERY PRODUCT -- THE

5

CALCULATION IS DONE ON AN INDIVIDUAL PRODUCT.

6

IN YOUR HYPOTHETICAL, WE HAVE JUST A PHONE, AND

7

THAT PHONE INFRINGES THE UTILITY PATENTS AND IT

8

INFRINGES THE TRADE DRESS AND IT INFRINGES THE

9

DESIGN PATENTS.

10

NO, YOU DO.

THAT'S WHAT'S KEY, BECAUSE THE

SO

I'M THINKING THAT YOUR HYPOTHETICAL --

11

AND ON THAT BASIS, THE CALCULATION WOULD BE

12

PRESUMABLY BASED ON THE INFRINGER'S PROFITS.

13

YOU SAY LET'S ASSUME THAT THEY DON'T

14

INFRINGE THE DESIGN PATENTS AND THE TRADE DRESS.

15

LET'S TAKE THAT AWAY.
WELL, WE STILL HAVE THE POTENTIAL OF LOST

16
17

PROFITS ON THE UTILITY AND, AT A MINIMUM, THE

18

REASONABLE ROYALTY.

19

SO WHEN YOU TAKE AWAY THE INFRINGER'S

20

PRODUCTS, YOU'VE TO RECALCULATE THE DAMAGES FOR

21

THAT PARTICULAR PHONE ON ONE OF THOSE OTHER BASES

22

THERE, ASSUMING IT INFRINGES ONE OF THE OTHER

23

UTILITY PATENTS.

24

Q

25

THERE'S SOME OTHER INFRINGEMENT, THERE'S GOING TO

AND THAT'S WHAT YOU'RE SAYING.

ASSUMING

2122

1

BE SOME WAY TO CALCULATE IT?

2

A

YES.

3

Q

AND YOU'VE TOLD US THAT YOU WEREN'T ASKED TO

4

CALCULATE ASSUMING THAT, YOU KNOW, ONE OF THESE

5

PATENTS, UTILITY PATENTS WAS INFRINGED ONLY, OR, OR

6

A COMBINATION OF THE UTILITY PATENTS?

7

A

8

REQUIRED -- IS ENDLESS.

9

OF THOUSANDS OF COMBINATIONS GIVEN THE NUMBER OF

10

THE COMBINATION -- THAT'S WHY A MODEL WAS
THERE ARE REALLY HUNDREDS

PATENTS, ET CETERA.

11

AND NO, I WASN'T.

THE ANSWER IS NO, I

12

WASN'T.

13

Q

14

ARE THE THREE UTILITY PATENTS.

15

A

YOU'RE RIGHT, I WAS NOT ASKED TO PRESENT THAT.

16

Q

SO THE ASSUMPTIONS, THEN, ARE WE TALKED ABOUT

17

EACH PATENT, DESIGN PATENT IS VALID AND INFRINGED.

18

THAT'S YOUR ASSUMPTION FOR YOUR DAMAGES; RIGHT?

19

A

YES.

20

Q

THAT ALL THE DIFFERENT PRODUCTS THAT APPLE

21

SAYS INFRINGE DO INFRINGE; CORRECT?

22

A

YES.

23

Q

THAT EACH OF THE UTILITY PATENTS IS VALID AND

24

WHATEVER APPLE SAYS INFRINGES INFRINGES; CORRECT?

25

A

AND THE ONLY COMBINATIONS I'M TALKING ABOUT
OKAY?

UNTIL THE JURY SAYS IT, YES.

2123

1

Q

THAT ALL OF APPLE'S TRADE DRESS IS VALID AND

2

EVERYTHING APPLE SAYS INFRINGES INFRINGES; CORRECT?

3

A

YES.

4

Q

AND IT'S GIVEN ALL THOSE ASSUMPTIONS THAT YOU

5

THEN HAVE THIS RANGE OF 2.5 BILLION TO 2.7 BILLION?

6

A

THAT'S CORRECT.

7

Q

SO LET'S TALK ABOUT, FOR EXAMPLE, THE BOUNCE

8

BACK.

9

AROUND, FOR TOTAL, YOU'RE UP AROUND 400 SOMETHING

ON YOUR LOST PROFITS, I THINK YOU'RE UP

10

MILLION?

11

A

488 MILLION.

12

Q

OKAY.

13

NOT BE APPLE'S LOST PROFITS WITH RESPECT TO, SAY, A

14

BOUNCE BACK PATENT?

15

A

16

ANSWER.

17

Q

18

TALKED -- WHEN YOU THOUGHT IT WOULD TAKE -- IF

19

SAMSUNG WERE TOLD "YOU CAN'T DO THAT ON YOUR

20

PHONE," IT WOULD TAKE THEM A MONTH TO DESIGN AROUND

21

THAT AND DO SOMETHING ELSE?

22

A

23

TALKED ABOUT, YES, I LIMITED THE CALCULATION TO

24

JUST ONE MONTH OF LOST PROFITS FOR THAT.

25

Q

AND THAT OBVIOUSLY ISN'T LOST -- WOULD

NOT EXCLUSIVELY, NO.

SAME QUESTION, SAME

IN FACT, YOUR ANALYSIS ON THAT, WHEN YOU

AS ONE OF THOSE LIMITING CONDITIONS THAT I

SO LET'S TALK ABOUT YOUR ANALYSIS ON -- YOU

2124

1

SAID YOU DID ANALYSIS ON BUT-FOR; THAT IS, IF -- IF

2

SAMSUNG DIDN'T HAVE A FEATURE, WHAT WOULD HAPPEN?

3

AND FOR BUT-FOR, FOR LOST PROFITS, FOR

4

APPLE'S LOST PROFITS, OKAY, YOU'RE SAYING THAT IF

5

THE JURY FOUND INFRINGEMENT ON A UTILITY PATENT,

6

THEN YOU'VE GOT TO LOOK AT, OKAY, WHAT WOULD APPLE

7

HAVE MADE IF SAMSUNG DIDN'T HAVE THAT FEATURE;

8

RIGHT?

9

A

MADE?

10

Q

WOULD HAVE MADE.

11

A

ALL RIGHT.

12

YOU MEAN, BUT I'LL SAY YES.

13

WHAT --

I'LL SAY YES.

I'M NOT SURE WHAT

THEY'VE ALREADY MADE THEIR PRODUCTS.

THE

14

PRODUCTS ARE THE IPHONES IN YOUR HYPOTHETICAL, SO

15

IT WOULD BE THE IPHONE.

16

Q

17

PROFITS THEY WOULD HAVE EARNED?

18

A

OKAY.

19

Q

AND WHEN YOU'RE DOING THAT, YOU'VE GOT TO ASK

20

YOURSELF, HERE'S A SAMSUNG CUSTOMER, THEY'VE GOT A

21

PHONE, ONE OF THE ACCUSED PHONES, THAT HAS BOUNCE

22

BACK.

23

GOING TO LEAVE SAMSUNG TO GO TO APPLE BECAUSE OF

24

THAT ONE FEATURE?

25

ISN'T IT?

OKAY.

IT'S ALREADY MADE.

AND I DIDN'T MEAN MANUFACTURE, BUT THE

THAT'S WHERE I WAS NOT SURE.

NOW, IF BOUNCE BACK ISN'T IN THERE, ARE THEY

THAT'S THE BUT-FOR ANALYSIS,

THAT -- IS SOMEONE GOING TO SAY, "I

2125

1

BOUGHT THIS PHONE.

I LIKED IT.

WELL, DARN.

IT

2

DOESN'T HAVE BOUNCE BACK ANYMORE.

3

BUY AN APPLE."

4

A

5

RESPOND TO IT AS A QUESTION.

6

Q

TRUE.

7

A

MY CALCULATION IS THAT THEY WOULD GO TO THEM

8

BECAUSE, REMEMBER, I'VE ONLY TAKEN THE SALE AWAY

9

FOR THE MONTH IT WOULD TAKE FOR SAMSUNG TO

I'M GOING TO GO

WELL, THAT'S KIND OF A STATEMENT, BUT I'LL

10

BASICALLY REMOVE THE BOUNCE BACK.

11

TO -- THAT'S JUST A PHYSICAL FACT.

12

THE ASSUMPTION THAT THEY CAN'T USE IT, HAS TO TAKE

13

IT OUT OF THEIR PHONE.

14

PHONE.

15

THEY NEED TO PUT THE MANUFACTURING FACILITY IN

16

PLACE.

17

MONTH AND ONLY ONE MONTH.

18

THEY'RE GOT
SAMSUNG, WITH

THEY HAVE TO REDESIGN THE

THEY HAVE TO NEGOTIATE A DIFFERENT PRICE.

I'VE ALLOWED, FOR EVERYTHING TO HAPPEN, ONE

AND DURING THAT PERIOD OF TIME, YES, SOME

19

PORTION OF THE MARKET WOULD CHOOSE AN IPHONE

20

INSTEAD OF SAYING, "OH, WELL, I'M GOING TO WAIT OR

21

DO SOMETHING ELSE."

22

Q

23

START A MANUFACTURING FACILITY TO CHANGE THE BOUNCE

24

BACK.

25

IT INTO YOUR COMPUTER AND IT WOULD BE CHANGED?

WELL, FOR ONE THING, YOU WOULDN'T HAVE TO

THAT'S JUST A SOFTWARE UPGRADE, RIGHT?

PLUG

2126

1

A

FAIR ENOUGH, YES.

2

Q

OKAY.

3

SOMETHING ABOUT THE PEOPLE WHO PURCHASE THE SAMSUNG

4

PHONES THAT WE DON'T KNOW ABOUT THE GENERAL PUBLIC,

5

WHICH IS THAT THEY CHOSE A SAMSUNG PHONE; RIGHT?

6

A

YES.

7

Q

OKAY.

8

MIGHT WANT TO LOOK AS TO WHY THEY CHOSE THAT PHONE;

9

CORRECT?

AND MY QUESTION IS DIFFERENT.

WE KNOW

SO IF THEY CHOSE A SAMSUNG PHONE, YOU

10

A

I AGREE, AND I DID.

11

Q

AND IN CONNECTION WITH THAT, YOU'D WANT TO

12

ASK, OR FIND OUT, "OKAY, MR. PURCHASER, IF YOU

13

DIDN'T HAVE BOUNCE BACK, WOULD YOU NOT HAVE CHOSEN

14

THAT PHONE AND GONE SOMEWHERE ELSE?"

15

THE BUT-FOR CAUSATION IS.

16

WAS DOING, IT WOULD HAVE GONE TO APPLE INSTEAD;

17

RIGHT?

18

A

THAT'S CORRECT.

19

Q

AND THERE ARE HUNDREDS AND HUNDREDS OF

20

FEATURES ON A SAMSUNG SMARTPHONE; RIGHT?

21

A

YES.

22

Q

APPLE HAS DONE RESEARCH, ITSELF, ON WHY THE

23

PEOPLE WHO BUY SAMSUNG, OR ANDROID, WHY ARE THEY

24

ATTRACTED TO THAT PRODUCT INSTEAD OF OURS; RIGHT?

25

A

YES.

THAT'S WHAT

IF NOT FOR WHAT SAMSUNG

2170

1

DESIGN, IS IT, AS IT'S BEING USED HERE?

2

A

I DON'T KNOW.

3

Q

BUT THAT'S ACTUALLY THE PART YOU WERE ASKED TO

4

LOOK AT.

5

ASKED TO LOOK AT, SO I JUST -- LOOKING AT THIS, YOU

6

REALIZE THAT THIS DOCUMENT, GIVEN WHERE IT'S COMING

7

FROM, WHICH IS THE HARDWARE PART OF THE COMPANY

8

THAT MAKES THESE BRAINS, PROCESSORS, IT'S

9

DISTINGUISHING BETWEEN THE DESIGN AND THE HARDWARE?

YOU SAID YOU UNDERSTOOD WHAT YOU WERE

10

IT'S DISTINGUISHING; RIGHT?

11

A

IT'S LISTED SEPARATELY, YES.

12

Q

SO THEY'RE TALKING ABOUT DIFFERENT THINGS?

13

A

I DON'T KNOW.

14

(PAUSE IN PROCEEDINGS.)

15

MR. PRICE:

16

DONE.

THANK YOU.

17

THE WITNESS:

18

THE COURT:

19

THE TIME IS NOW

NO?
MS. KREVANS:

THERE IS VERY BRIEF, YOUR

HONOR.

24
25

ALL RIGHT.

IS THERE GOING TO BE ANY RE-REDIRECT OR

22
23

THANK YOU.

1:30.

20
21

MY BRAIN TRUST TELLS ME I'M

THE COURT:
PLEASE.

OKAY.

IT'S 1:40.

GO AHEAD,

2171

1

MS. KREVANS:

2

THAT SAME PAGE?

3

MR. LEE, WOULD YOU PUT UP

PAGE 38.

4

I THINK THAT WAS EXHIBIT 34 AT

FURTHER REDIRECT EXAMINATION

5

BY MS. KREVANS:

6

Q

7

MR. MUSIKA.

8

THAT MR. PRICE JUST POINTED YOU TO THAT STARTS WITH

9

THE WORDS "SEAMLESS INTEGRATION OF HARDWARE," WHAT

MY FIRST QUESTION IS A VERY QUICK ONE,
THE LINE OF -- THIS SAMSUNG DOCUMENT

10

DOES THE WHOLE LINE ACTUALLY SAY?

11

A

12

I UNDERSTAND TO BE SOFTWARE, "AND CONTENTS USING

13

ITUNES."

14

Q

15

IN YOUR BINDER?

"SEAMLESS INTEGRATION OF HARDWARE, SW," WHICH

OKAY.

AND MR. LEE, COULD YOU SHOW US THE SECOND

16
17

AND COULD YOU GO BACK TO EXHIBIT 25A-1

PAGE OF THAT EXHIBIT?

18

COULD YOU REMIND US WHAT'S SHOWN ON THIS

19

PAGE?

20

A

21

IS THE PAGE THAT SETS FORTH THE NOTICE THAT I WAS

22

RECITING.

23

Q

24

JUST FROM MEMORY.

25

WHAT THE ACTUAL DATE WAS IN AUGUST THAT YOU USED

YES.

OKAY.

SO THIS IS THE DAMAGE SUMMARY, AND THIS

AND YOU WERE TRYING TO REMEMBER A DATE
CAN YOU TELL US WHAT THIS PAGE,

2172

1

FOR NOTICE FOR THINGS OTHER THAN UNREGISTERED TRADE

2

DRESS?

3

A

4

IT'S AUGUST 4TH, 2010.

5

AUGUST 11TH INCORRECTLY.

6

2010.

YES.

IT'S LISTED THERE.

7

THE COURT:

I THINK I PROBABLY SAID

MS. KREVANS:

8
9

IT IS AUGUST, BUT

BUT IT'S AUGUST 4TH,

THANK YOU VERY MUCH.
ALL RIGHT.

IT'S 1:42.

ANY

RE-RECROSS-EXAMINATION?

10

MR. PRICE:

NO, YOUR HONOR.

11

THE COURT:

ALL RIGHT.

12
13
14
15
16

MAY THIS WITNESS

BE EXCUSED?
MS. KREVANS:

HE MAY SUBJECT TO RECALL,

YOUR HONOR.
THE COURT:

ALL RIGHT.

YOU'RE EXCUSED

SUBJECT TO RECALL.

17

THE WITNESS:

THANK YOU, YOUR HONOR.

18

MR. MCELHINNY:

YOUR HONOR, SUBJECT TO

19

STIPULATION AND ORDER OF THE COURT AS TO ORDER AND

20

PRODUCTION OF PROOF, WHICH RESERVES OUR CONTRACT,

21

ANTITRUST, UNFAIR COMPETITION AND DECLARATORY

22

JUDGMENT ACTIONS, SUBJECT TO THAT STIPULATION, WE

23

REST OUR CASE-IN-CHIEF.

24

THE COURT:

OKAY.

ALL RIGHT.

25

SO LADIES AND GENTLEMEN OF THE JURY, WE

2173

1

HAVE TO TAKE CARE OF SOMETHING OUTSIDE YOUR

2

PRESENCE, SO I'M GOING TO EXCUSE YOU FOR NOW.

3

AGAIN, PLEASE KEEP AN OPEN MIND.

PLEASE

4

DON'T DISCUSS THE CASE WITH ANYONE AND PLEASE DON'T

5

DO ANY OF YOUR OWN RESEARCH.

6
7
8
9
10
11

YOU'RE FREE TO TAKE YOUR JURY BOOKS WITH
YOU INTO THE JURY ROOM.

OKAY?

THANK YOU.

(WHEREUPON, THE FOLLOWING PROCEEDINGS
WERE HELD OUT OF THE PRESENCE OF THE JURY:)
THE COURT:

ALL RIGHT.

THANK YOU.

LET'S

GO AHEAD WITH THE RULE 50 MOTION, PLEASE.

12

GO AHEAD.

13

MR. ZELLER:

14

SAMSUNG DOES MOVE UNDER RULE 50 AT THIS

15

TIME FOR APPLE'S FAILURE TO PROVE ITS CLAIMS, AND

16

WE BELIEVE THIS APPLIES TO EVERYTHING THAT APPLE

17

HAS ASSERTED IN THIS CASE.

18

THANK YOU, YOUR HONOR.

FOR THE UTILITY PATENTS, APPLE HAS NOT

19

SUBMITTED EVIDENCE LIMITATION-BY-LIMITATION SHOWING

20

INFRINGEMENT.

21

WITH THEIR EXPERTS, AND WE BELIEVE THAT THAT ALONE

22

SHOWS -- ALSO, WE DID SHOW ON CROSS-EXAMINATION

23

THAT THESE WERE NOT INFRINGING.

24
25

THEY DIDN'T EVEN ATTEMPT TO DO THAT

THE SAME APPLIES FOR THE DESIGN PATENTS.
APPLE HAS FAILED TO PROVE INFRINGEMENT.

2174

1

IT HAS ALSO FAILED TO TAKE INTO ACCOUNT

2

THE LACK OF FUNCTIONALITY, OR THE FUNCTIONALITY OF

3

THE DESIGNS.

4

AND ALSO ON TRADE DRESS, IT HAS FAILED TO

5

PROVE THAT TRADE DRESS IS FAMOUS AND THAT IT'S BEEN

6

INFRINGED AND THAT IT'S NOT FUNCTIONAL.

7
8
9

SO WE MOVE ON ALL THE ELEMENTS OF THE
CLAIMS, YOUR HONOR.
WITH RESPECT TO DAMAGES, THERE'S NO

10

APPORTIONMENT THAT'S BEEN ESTABLISHED.

11

BEEN NO PRODUCT-BY-PRODUCT DAMAGES THAT HAVE BEEN

12

BROKEN OUT, AND WE BELIEVE THAT THAT'S INSUFFICIENT

13

AS A MATTER OF LAW.

14

THERE HAS

THERE'S NO CAUSATION THAT'S BEEN PROVEN,

15

AND ALSO THEY HAVE -- EXCUSE ME -- ONLY HAD

16

DUPLICATIVE DAMAGES THAT THEY'VE ASSERTED.

17
18

AND SO FOR ALL THE SAME REASONS, WE
BELIEVE THE JUDGMENT IS ALSO WARRANTED ON DAMAGES.

19

EXCUSE ME.

20

THE COURT:

21

MR. ZELLER:

22

AND ALSO, WE MOVE ON THE

FAILURE TO PROVE WILLFUL INFRINGEMENT.

23

THE COURT:

24

MR. ZELLER:

25

OKAY.

ALL RIGHT.
AND THEN FINALLY, YOUR

HONOR, ALSO ON THE DAMAGES FRONT, JUST TO BE MORE

2175

1

SPECIFIC, THERE WAS A FAILURE TO REALLY ACCOUNT FOR

2

REASONABLE ROYALTY, AND THEY ALSO FAILED TO PROVE

3

THAT THERE WAS SUFFICIENT DEMAND FOR, AND CAPACITY

4

FOR APPLE PRODUCTS.

5
6

THE COURT:

OKAY.

ANYTHING ELSE THAT

YOU'D LIKE TO STATE ON THE RECORD?

7

MR. ZELLER:

WELL, YOUR HONOR, WE WOULD,

8

OF COURSE, LIKE THE OPPORTUNITY TO OUTLINE THESE IN

9

WRITING.

10

I MEAN, THE COURT DID SAY WE WOULD DO

THAT EARLIER.

11

THE COURT:

I HAVE REVIEWED -- EVERY TIME

12

I CHECK OUR ECF, THERE ARE, LIKE, THREE OR FOUR

13

MORE MOTIONS THAT ARE FILED, AND I NEVER HAVE

14

BRIEFING ON RULE 50, NEVER.

15

NEVER HAD BRIEFING ON RULE 50 BEFORE.

NEVER, EVER.

I'VE

16

AND JUST IN TERMS OF KEEPING UP WITH ALL

17

OF THE MOTIONS THAT HAVE BEEN FILED, TO SAY NOW DO

18

ANOTHER ORDER ON RULE 50 WHEN I NEVER HAVE BRIEFING

19

ON RULE 50 MOTIONS, I'M SORRY, I JUST DON'T THINK I

20

CAN.

21

MR. ZELLER:

THIS IS, OF COURSE, AN

22

IMPORTANT MOTION, YOUR HONOR.

23

THE COURT:

24

MR. ZELLER:

25

UNDERSTOOD.
WE OBVIOUSLY WANT TO DO IT

FOR PRESERVATION PURPOSES, BUT THE COURT IS

2176

1

OBVIOUSLY NOT INCLINED TO GRANT IT IN ANY EVENT, WE

2

WOULD ASK FOR THAT OPPORTUNITY.

3

OBVIOUSLY APPLE IS GOING TO ARGUE --

4

WE'RE TRYING TO MAKE OUR GROUNDS SUFFICIENTLY BROAD

5

AT THIS MOMENT MOVING ORALLY IN ORDER TO MAKE SURE

6

THAT WE'VE COVERED EVERYTHING.

7

BUT WE KNOW, OF COURSE, APPLE IS GOING TO

8

ARGUE LATER THERE'S SOME SORT OF PROCEDURAL

9

DEFAULT.

10

OBVIOUSLY OUR VIEW IS THEY HAVE NOT

11

PROVEN THEIR CASE, AND THEY HAVEN'T PROVEN IT AS TO

12

ANY OF THE ELEMENTS THAT ARE REQUIRED HERE.

13

THE COURT SAW THEIR WITNESSES.

THEY PUT

14

THEM UP, FOR EXAMPLE, AND THEY SAID "DID YOU DO A

15

SURVEY?"

"YES, I DID.

THIS IS WHAT IT SHOWED."

16

WE DON'T THINK THAT THAT IS, AS A MATTER

17

OF LAW, SUFFICIENT IN ORDER TO CARRY THEIR BURDEN,

18

AND WE WOULD BE ABLE TO OUTLINE THESE THINGS AND

19

PROVIDE CITATIONS AT LEAST TO THE EVIDENCE, YOUR

20

HONOR, THAT WE BELIEVE SUPPORTS THAT.

21

BUT --

22

THE COURT:

I'M UNDERSTANDING YOUR MOTION

23

TO BE MOVING ON ABSOLUTELY EVERY CLAIM THAT APPLE

24

HAS MADE THAT A REASONABLE JURY WOULD NOT HAVE

25

SUFFICIENT EVIDENCE TO RULE IN THEIR FAVOR.

2177

1

SO I AM ASSUMING THAT YOU ARE, AND I HEAR

2

YOU, MOVING ON EVERY SINGLE CLAIM THAT APPLE HAS

3

MADE.

4
5

MR. ZELLER:

CERTAINLY WE WILL -- WE DO MOVE ON THAT BASIS.

6
7

LET ME GIVE SOME SPECIFIC EXAMPLES, YOUR
HONOR.

8
9

THAT IS CORRECT, YOUR HONOR.

FOR EXAMPLE, THEY INTRODUCED ABSOLUTELY
NO EVIDENCE WITH RESPECT TO PARTICULAR PHONES THAT

10

THEY CLAIM WERE SOLD IN THE UNITED STATES.

11

IS NO EVIDENCE, FOR EXAMPLE, AS TO THE GALAXY ACE,

12

WHICH IS JX 1030, THE GALAXY S I9000, JX 1007, OR

13

THE GALAXY S II I9100, WHICH IS JX 1032.

14

ZERO EVIDENCE THAT'S BEEN ADDUCED IN THIS CASE THAT

15

THOSE HAVE BEEN SOLD IN THE UNITED STATES.

16

REPRESENTED THAT THEY WERE.

17

EVIDENCE.

18

THERE

THERE'S

THEY

THEY PROVIDED NO

AND I CAN GO THROUGH A MUCH LONGER LIST

19

OF THESE KINDS OF PARTICULARS, YOUR HONOR.

20

UNDERSTOOD WE WERE GOING TO DO THIS IN WRITING, AND

21

SO WHEN THE COURT ASKED, IS THERE ANYTHING FURTHER

22

WE WANT TO SAY, THERE IS MUCH MORE WE WANT TO SAY.

23

BUT WE THINK THAT IT'S MORE EFFICIENT TO

24

SIMPLY PUT IT IN WRITING.

25

AND I'M CERTAINLY HAPPY TO DO IT NOW.

WE HAD

I CAN GO DOWN THIS LIST

2178

1
2

THE COURT:
FIVE MINUTES.

3

DO IT NOW.

I'LL GIVE YOU

GO AHEAD.

MR. ZELLER:

YOUR HONOR, WITH ALL

4

RESPECT, FIVE MINUTES IS NOT ENOUGH WHERE SOMEONE

5

IS ASKING FOR TWO AND A HALF BILLION DOLLARS ON A

6

WHOLE HOST OF CLAIMS.

7

THE COURT:

WELL, WHY DON'T YOU HAVE

8

WHATEVER YOU HAVE.

GO AHEAD.

9

OPPORTUNITY TO MAKE YOUR RECORD.

10

MR. ZELLER:

WHATEVER YOU

WOULD LIKE, GO AHEAD.

11

I'M GIVING YOU AN

I MENTIONED THAT THERE WAS

12

NO EVIDENCE THAT WAS PROVIDED AS TO CERTAIN DEVICES

13

BEING SOLD IN THE UNITED STATES BY SAMSUNG.

14

IN ADDITION, APPLE PRESENTED NO EVIDENCE

15

THAT SHOWED THAT THE GEM, THE SAMSUNG GEM PHONE,

16

WHICH IS JX 1020, INFRINGES THE '381 PATENT.

17
18

AND, IN FACT, THAT WAS NEVER DISCLOSED IN
THEIR LOCAL PATENT CONTENTIONS AS REQUIRED.
THERE'S NO EVIDENCE OF ACTIVE INDUCEMENT

19
20

BY SAMSUNG IN THIS CASE.

21

ALL THAT HAS BEEN ADDUCED IN THIS CASE SO

22

FAR BY APPLE IS THAT SAMSUNG, THE PARENT, WAS

23

AWARE.

24
25

BUT THAT IS INSUFFICIENT AS A MATTER OF
LAW FOR ACTIVELY INDUCING INFRINGEMENT.

2179

1

AS WE MENTIONED EARLIER, OF COURSE, THERE

2

IS NO EVIDENCE THAT APPLE HAS MET OR PROVEN

3

DECEPTIVE SIMILARITY IN THE CONTEXT OF PURCHASING

4

FOR THE DESIGN PATENTS AS REQUIRED.

5

AS A MATTER OF FACT, APPLE'S EXPERTS

6

ACKNOWLEDGED THAT THAT IS NOT THE ANALYSIS THAT

7

THEY DID.

8

PROPER LEGAL STANDARD UNDER THE LAW.

THEY DIDN'T EVEN ATTEMPT TO APPLY THE

9

IN FACT, THE ONLY WITNESS WHO TESTIFIED

10

ABOUT THE HARDWARE DESIGN PATENT SIMILARITIES WAS

11

PETER BRESSLER, AND HE SPECIFICALLY ACKNOWLEDGED

12

THAT IT WAS HIS UNDERSTANDING THAT IT WAS NOT

13

NECESSARY THAT THE SIMILARITY BE DECEPTIVE.

14

OF COURSE, THE COURT IS AWARE THAT UNDER

15

GORHAM, THE GORHAM STANDARD AS ARTICULATED BY THE

16

SUPREME COURT AND AS CONFIRMED BY EGYPTIAN GODDESS,

17

APPLE HAS TO PROVE THAT THERE -- THAT THE

18

SIMILARITY IS SUCH THAT IT WOULD DECEIVE THE

19

ORDINARY OBSERVER IN THE PURCHASING CONTEXT.

20
21
22

AND MR. BRESSLER ACKNOWLEDGED THAT THAT
WAS NOT THE STANDARD HE APPLIED.
IN FACT, AGAIN, HE WAS THE ONLY PERSON

23

WHO OFFERED ANY TESTIMONY ON THESE ALLEGED

24

SIMILARITIES.

25

APPLE DID, OF COURSE, OFFER VARIOUS

2180

1

HEARSAY BLOG STATEMENTS AND PRESS REPORTS, BUT THE

2

COURT HAS SAID THAT THAT IS NOT ADMISSIBLE FOR THE

3

TRUTH, SO IT CANNOT BE RELIED UPON BY APPLE TO

4

PROVE A SUBSTANTIAL SIMILARITY.

5

ALSO, MR. BRESSLER ACKNOWLEDGED HE HAD NO

6

REAL WORLD EVIDENCE OF ANY KIND OF DECEPTION OR

7

SIMILARITIES BETWEEN THE DESIGNS.

8
9

IN ADDITION, THERE WERE DIFFERENCES THAT
WERE SHOWN WITH RESPECT TO THE PRODUCTS AT ISSUE

10

THAT ALSO SHOWED THAT THEY ARE NOT INFRINGED.

11

CAN RECITE AS MUCH AS THE COURT WOULD LIKE ON THAT,

12

BUT AN EXAMPLE WOULD BE WITH RESPECT TO THE GALAXY

13

10.1.

14

I

MR. STRINGER TESTIFIED THAT AN IMPORTANT

15

ASPECT OF THIS DESIGN WAS THAT IT WAS A SINGLE

16

VESSEL ON THE BACK.

17

WE DON'T MEET THAT LIMITATION.

WE DO NOT

18

PRACTICE THAT, AND THAT IS UNDISPUTED.

19

SINGLE VESSEL WHEN YOU'RE TALKING ABOUT THE GALAXY

20

TAB 10.1.

21
22
23

IT'S NOT A

IT IS A DIFFERENT DESIGN.
AND THERE HAS BEEN NO REBUTTAL TO THAT

POINT WHATSOEVER.
SAME THING WITH RESPECT TO THE HARDWARE

24

DESIGNS FOR WHAT WE AT LEAST SHORTHAND CALL THE

25

SMARTPHONES.

2181

1

MR. STRINGER TESTIFIED THAT AN INTEGRAL

2

PART OF WHAT WAS NEW AND ORIGINAL ABOUT THOSE

3

DESIGNS WAS THAT THEY WERE FLAT.

4
5
6
7
8
9

SAMSUNG DOES NOT HAVE THAT SAME DESIGN,
AND AGAIN, THAT IS UNDISPUTED.
WITH RESPECT TO THE '305 DESIGN PATENTS,
ESSENTIALLY IT'S THE SAME STORY.
DR. KARE WAS THE WITNESS WHO TESTIFIED
ABOUT THAT DESIGN PATENT.

SHE DID NOT, AND DID NOT

10

EVEN ATTEMPT, TO APPLY THE GORHAM DECEPTION IN

11

PURCHASING STANDARD.

12

IN FACT, ALL SHE OFFERED AN OPINION ON

13

WAS ESSENTIALLY THAT SHE THOUGHT THE OVERALL

14

SIMILARITIES WERE THERE, WHICH IS NOT SUFFICIENT

15

UNDER GORHAM.

16

IN ADDITION, SHE ALSO ACKNOWLEDGED THAT

17

SHE PAID NO ATTENTION AND DID NOT FACTOR INTO HER

18

ANALYSIS ANY KIND OF FUNCTIONALITY.

19

AND OF COURSE THE COURT IS AWARE THAT

20

FUNCTIONALITY HAS TO BE FACTORED OUT OF ANY KIND OF

21

ANALYSIS UNDER RICHARDSON, THE FEDERAL CIRCUIT

22

DECISION IN RICHARDSON, IN ORDER TO FIND

23

INFRINGEMENT.

24
25

AND ALSO, DR. KARE DID NOT EVEN CONSIDER
PRIOR ART, SHE ADMITTED THAT AS WELL, WHICH, OF

2230

1

DID OTHERS WORK WITH YOU ON THE

2

DEVELOPMENT OF LAUNCHTILE?

3

A

4

PH.D. GRADUATE STUDENT, AMY KARLSON; RESEARCH

5

ASSISTANT, AARON CLAMAGE; AND THE WORK WAS DONE IN

6

COLLABORATION WITH MICROSOFT AND THEY SPONSORED THE

7

RESEARCH, THEY PAID FOR IT, SO I WORKED WITH

8

SOMEONE THERE NAMED JOHN SANGIOVANNI.

9

Q

YES.

I WORKED ON -- WITH A FEW PEOPLE.

MY

GENERALLY, WHAT LED YOUR TEAM TO COME ABOUT TO

10

DEVELOP LAUNCHTILE?

11

A

12

ONE WAS HOW TO FIT A LOT OF INFORMATION ON A SMALL

13

DEVICE; AND THE SECOND WAS TO DESIGN A USER

14

EXPERIENCE THAT PEOPLE COULD USE WITH JUST A SINGLE

15

HAND RATHER THAN TWO HANDS OR A STYLUS.

16

Q

DID YOU SOLVE THOSE PROBLEMS?

17

A

I BELIEVE WE DID.

18

Q

TELL US HOW YOU DID IT, PLEASE.

19

A

I HAD BEEN WORKED FOR ALMOST TEN YEARS AT THE

20

TIME ON AN INTERFACE APPROACH I CALLED ZOOMABLE

21

USER INTERFACES, AND WE APPLIED THAT TECHNIQUE TO

22

LAUNCHTILE.

23

Q

24

ABOUT WHAT A ZOOMABLE USER INTERFACE IS.

25

A

WE WERE TRYING TO SOLVE TWO MAJOR PROBLEMS.

OKAY.

SURE.

CAN YOU JUST GIVE US A SENTENCE OR TWO

GENERALLY SPEAKING, IT'S AN INTERFACE

2231

1

WHERE YOU PRESENT A BIG INFORMATION SPACE AND YOU

2

CAN ZOOM OUT TO GET SOME CONTEXT, AND ZOOM IN TO

3

LOOK A LITTLE CLOSER TO GET MORE DETAIL.

4

Q

5

THAT YOU WORKED WITH ZOOMABLE USER INTERFACES?

6

A

7

WHILE.

8

Q

9

TERMS, WAS YOUR LAUNCHTILE PROGRAM DESIGNED TO RUN

OKAY.

NO.

WAS THIS THE FIRST TIME IN YOUR CAREER

AS I SAID, I'VE BEEN DOING IT FOR A
I THINK I STARTED IN 1993.

WHAT, WHAT TYPE OF DEVICE, IN VERY GENERAL

10

ON?

11

A

12

OF MOBILE TOUCHSCREEN DEVICE.

13

BUILT THIS, THIS PARTICULAR SOFTWARE TO RUN ON THE

14

MICROSOFT POCKET P.C. PLATFORM, AND WE WERE USING

15

OFTEN AN H-P IPAQ PDA.

16

Q

IS THAT WHAT THIS IS?

17

A

YES.

18

Q

YOU'VE HAD EXPERIENCE WITH THIS DEVICE, THE

19

H-P IPAQ, SIR?

20

A

YES.

21

Q

LET ME JUST NOTE, I'M HOLDING UP WHAT'S BEEN

22

MARKED AS DX EXHIBIT 518.

23

AND A VIDEO WE'RE GOING TO SHOW.

24
25

IT WAS DESIGNED IN GENERAL TO WORK ON ANY KIND
IN PARTICULAR, WE

WE HAVE A SLIDE OF THIS

WHY DON'T WE PUT UP, RYAN, PLEASE, THE
SLIDE WHICH IS NUMBERED SDX 3951.001.

2232

1

IS THIS THE SAME AS THE DEVICE I'M

2

HOLDING UP, EXHIBIT 518, DX 518, DOCTOR?

3

A

YES, IT IS.

4

Q

DO US A FAVOR.

5

VIDEO.

6

NARRATE IT, CAN YOU JUST TELL US GENERALLY WHAT'S

7

SHOWN ON THE SCREEN ON THE IPAQ DEVICE ITSELF?

8

A

9

WHAT YOU'RE SEEING HERE IS WHAT WE CALLED AN

10

I WANT YOU TO NARRATE THE

OBVIOUSLY BEFORE WE START THE VIDEO AND

SURE.

THIS IS THE LAUNCHTILE APPLICATION, AND

INTERACTIVE ZOOM SPACE.

11

IT IS A COLLECTION OF 36 TILES WHICH ARE,

12

YOU KNOW, INFORMATION SOURCES.

13

BOTTOM RIGHT THERE'S SOME STOCK TILES.

14

MIDDLE, YOU MIGHT BE ABLE TO MAKE OUT THAT THERE'S

15

A LITTLE MAP, AND E-MAIL TILE, A CALENDAR, A PHONE.

16

THERE'S ALL KINDS OF INFORMATION SOURCES HERE.

17

YOU CAN SEE ON THE
IN THE

AND THEN AS YOU'LL SEE IN THE VIDEO, YOU

18

WOULD -- YOU'LL BE ABLE TO SEE THAT YOU CAN ZOOM IN

19

AND OUT AND INTERACT WITH THESE FILES.

20

Q

21

NARRATE IT FOR US AS IT PLAYS.

22
23
24
25

LET'S SHOW THE VIDEO, AND WHY DON'T YOU
OKAY?

(WHEREUPON, A VIDEOTAPE WAS PLAYED IN
OPEN COURT OFF THE RECORD.)
THE WITNESS:
SOMEONE TOUCH THE VIDEO.

SURE.

SO FIRST YOU CAN SEE

IT ZOOMS INTO A REGION I

2233

1

CALLED A ZONE.

2
3

YOU ZOOM IN FURTHER TO AN APPLICATION
TILE.

4

YOU CAN TOUCH THE BACK BUTTON.

IT'LL

5

ZOOM OUT TO THAT MIDDLE ZONE LEVEL, AND YOU CAN

6

ZOOM OUT FURTHER BACK TO WHERE YOU STARTED WITH

7

WORLD VIEW IN THE ZOOM SPACE.

8

BY MR. DEFRANCO:

9

Q

OKAY.

AND I THINK THERE'S ANOTHER SLIDE THAT

10

GOES ALONG WITH THIS.

11

YOU DESCRIBE GENERALLY WHAT'S SHOWN ON THIS SLIDE?

12

A

13

THE VIDEO.

14

STARTED.

15

THE TILES.

SURE.

THIS IS SDX 3951.003.

CAN

SO THIS IS SHOWING YOU WHAT WE SAW ON
ON THE LEFT IS THAT WORLD VIEW WHERE WE
THIS THE ZOOM SPACE THAT CONTAINS ALL OF

YOU CAN TAP ON ANY ONE OF THOSE LITTLE

16
17

GROUPS OF FOUR TILES CALLED A ZONE, AND IF YOU TAP

18

IN THAT MIDDLE GROUP, THAT MIDDLE ZONE, THAT TAKES

19

YOU TO THE ZONE VIEW WHERE FOUR TILES ARE SHOWN.

20

THERE'S MORE INFORMATION DISPLAYED ABOUT EACH ONE.

21

YOU CAN THEN TAP AGAIN AND IT'LL TAKE YOU

22

INTO THE APPLICATION VIEW.

23

Q

24

DETAIL ON SOME OF THE TERMS, SOME OF THE THINGS YOU

25

EXPLAINED TO US IN THIS DEVICE THAT USES

LET'S -- I WANT TO FOLLOW UP WITH A LITTLE

2234

1

LAUNCHTILE.

OKAY?

2

A

OKAY.

3

Q

YOU USED -- YOU TALKED ABOUT THE ZOOM SPACE

4

GENERALLY.

5

A

6

COLLECTION OF TILES, IN THIS CASE 36 TILES, WHERE

7

YOU COULD ZOOM IN AND OUT TO OR, AS YOU'LL SEE,

8

OTHER WAYS TO ACCESS THE INFORMATION.

9

Q

WHAT IS THE ZOOM SPACE AGAIN, PLEASE?

SO A ZOOM SPACE IS JUST A SINGLE COHERENT

OKAY.

NOW, THIS, THIS WAS A -- THE SOURCE

10

CODE -- THE CODE ON THIS, FOR LAUNCHTILE, THAT'S

11

SOMETHING THAT YOU ACTUALLY SUPERVISED?

12

A

13

DEVELOPMENT OF THIS APPLICATION.

14

Q

15

MORNING?

16

A

YES.

17

Q

AND FOR EACH ONE OF THOSE TILES, YOU GAVE US

18

SOME EXAMPLES EARLIER ABOUT E-MAIL APPLICATION, THE

19

ABILITY TO OBTAIN STOCK, I THINK I SAW NASCAR IN

20

THE CORNER.

21

YES.

I CREATED THE -- I SUPERVISED THE

WITH THOSE FOLKS YOU MENTIONED EARLIER THIS

WAS THERE ACTUALLY OPERATING CODE

22

UNDERLYING EACH ONE OF THOSE TILES IN THE

23

LAUNCHTILE PROGRAM AT THAT TIME?

24

A

25

BEING ZOOMED IN AND OUT OF AND NAVIGATING WITHIN

SO, YOU KNOW, EVERY TILE FULLY WAS CAPABLE OF

2235

1

THE ZOOM SPACE, BUT THE TILES THEMSELVES, IF YOU

2

WENT ALL THE WAY INTO THE APPLICATION VIEW, NO,

3

MANY OF THEM -- MOST OF THEM WERE NOT IMPLEMENTED

4

BECAUSE THE GOAL WAS TO FOCUS NOT ON THE

5

INTERACTING WITH THE DETAILED DATA, BUT WAS TO

6

EXPERIENCE THE NAVIGATION.

7

MR. DEFRANCO:

YOUR HONOR, AT THE MOMENT,

8

BEFORE I FORGET, I'D LIKE TO MOVE IN DX 518 AND

9

SLIDES 3951.001, .002 AND .003.

10

THE COURT:

11

ANY OBJECTION?

MR. JACOBS:

OBJECT TO .003, YOUR HONOR.

12

IT CONTAINS ARGUMENTATIVE CONTENT ON IT RELATED TO

13

CLAIM INTERPRETATION AND THIS WITNESS IS NOT

14

QUALIFIED TO ARGUE THAT.

15

MR. DEFRANCO:

YOUR HONOR, I'LL REPRESENT

16

THE WITNESS IS NOT GOING TO -- THIS WAS A SLIDE

17

THAT WAS ALSO USED IN OPENING.

18

WANTED TO USE IT FOR CONTINUITY.

19

BUT THE WITNESS --

20

THE COURT:

THAT'S WHY WE

21
22
23

THE FIRST BOX AND THE SECOND

BOX SHOULDN'T BE ON THIS, SO THAT'S DENIED.
BUT DX 518 IS ADMITTED AND SDX 3951.001
AND .002 ARE BOTH ADMITTED.

24

(WHEREUPON, DEFENDANT'S EXHIBIT NUMBERS

25

518, 3951.001, 3951.002, HAVING BEEN

2236

1

PREVIOUSLY MARKED FOR IDENTIFICATION,

2

WERE ADMITTED INTO EVIDENCE.)

3

MR. JACOBS:

JUST TO BE CLEAR, YOUR

4

HONOR, YOU SAID DENIED, BUT THE OBJECTION IS

5

SUSTAINED?

6

THE COURT:

7

EVIDENCE.

8

BY MR. DEFRANCO:

9

Q

YES, .003 IS NOT COMING INTO

10

LET'S TALK ABOUT -- YOU MENTIONED THE ZOOM

FUNCTIONALITY?

11
12

MR. JACOBS:

YOUR HONOR, CAN WE HAVE THAT

TAKEN DOWN?

13

THE COURT:

THAT'S FINE.

14

BY MR. DEFRANCO:

15

Q

16

HOW THE APPEARANCE OF A TILE -- WHAT HAPPENED TO

17

THE APPEARANCE OF A TILE IN YOUR LAUNCHTILE PROGRAM

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AS YOU WOULD ZOOM IN ON A TILE?

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A

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MORE SPACE AVAILABLE FOR EACH TILE.

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THAN JUST PURELY GEOMETRICALLY MAKING THE TILES

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LARGER, WE WOULD USE THE SPACE TO SHOW MORE

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INFORMATION.

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ZOOM FUNCTIONALITY, DOCTOR, CAN YOU EXPLAIN

SURE.

SO AS YOU ZOOM IN, YOU GET MORE AND
AND SO RATHER

SO IN THE E-MAIL TILE, FOR EXAMPLE, WHEN
YOU ZOOMED OUT, IT WOULD JUST SAY SOMETHING LIKE 11

2237

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UNREAD, MEANING 11 UNREAD MESSAGES.

AND IF YOU

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ZOOM IN FURTHER, IT WOULD SHOW SOME INFORMATION

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ABOUT THE E-MAIL IN YOUR INBOX; AND THEN WHEN YOU

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ZOOMED IN ALL THE WAY, THEN YOU GOT A FULL LIST OF

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E-MAIL MESSAGES, WHO THEY'RE FROM AND THEIR

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SUBJECTS AND SO ON.

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Q

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CHANGE THE APPEARANCE OF A TILE AS YOU ZOOMED IN ON

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IT?

WAS THERE A REASON WHY YOU TEAM DECIDED TO

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A

YEAH.

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WOULD HAVE WORKED, BUT THAT WAS VERY SIMPLE AND

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WOULD NOT HAVE USED THE SCREEN SPACE VERY

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EFFECTIVELY.

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AS I SAID, USING PURE GEOMETRIC ZOOMING

SO THE IDEA OF SHOWING DIFFERENT VISUAL

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REPRESENTATIONS AS YOU GOT CLOSER WAS A NATURAL WAY

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TO TAKE ADVANTAGE OF THE SPACE, AND ALSO THE KIND

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OF THING I'D BEEN TALKING ABOUT IN MY RESEARCH FOR

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TEN YEARS PREVIOUS.

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Q

IS THERE A NAME FOR THAT TYPE OF ZOOMING?

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A

YES.

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Q

AND AGAIN, THE DIFFERENCE BETWEEN GEOMETRIC

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AND SEMANTIC ZOOMING?

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A

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CLOSER, IT GETS LARGER.

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WE CALLED IT SEMANTIC ZOOMING.

SO GEOMETRIC IS PURE VISUAL SCALING.

YOU GET

SEMANTIC ZOOMING IS AS IT GETS LARGER,

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CERTIFICATE OF REPORTER

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I, THE UNDERSIGNED OFFICIAL COURT
REPORTER OF THE UNITED STATES DISTRICT COURT FOR

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THE NORTHERN DISTRICT OF CALIFORNIA, 280 SOUTH

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FIRST STREET, SAN JOSE, CALIFORNIA, DO HEREBY

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CERTIFY:

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THAT THE FOREGOING TRANSCRIPT,

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CERTIFICATE INCLUSIVE, CONSTITUTES A TRUE, FULL AND

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CORRECT TRANSCRIPT OF MY SHORTHAND NOTES TAKEN AS

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SUCH OFFICIAL COURT REPORTER OF THE PROCEEDINGS

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HEREINBEFORE ENTITLED AND REDUCED BY COMPUTER-AIDED

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TRANSCRIPTION TO THE BEST OF MY ABILITY.

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/S/
_____________________________
LEE-ANNE SHORTRIDGE, CSR, CRR
CERTIFICATE NUMBER 9595

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DATED:

AUGUST 14, 2012