Voip-Pal.com, Inc. v. Apple, Inc.

Filing 1

COMPLAINT against Voip-Pal.com, Inc. (Filing fee $400 receipt number 0978-3994067), filed by Voip-Pal.com, Inc.. Certificate of Interested Parties due by 2/19/2016. Proof of service due by 6/8/2016. (Attachments: # 1 Index, # 2 Exhibit A, # 3 Exhibit B, # 4 Exhibit C, # 5 Exhibit D, # 6 Exhibit D-(Chart 1), # 7 Exhibit D-(Chart 2), # 8 Exhibit D-(Chart 3), # 9 Exhibit D-(Chart 4), # 10 Exhibit E, # 11 Exhibit F, # 12 Exhibit F-Addendum 1, # 13 Civil Cover Sheet, # 14 Summons) (Bonds, Kurt)

Exhibit F

February 2016

APPLE ROYALTY MONETIZATION ANALYSIS
OVERVIEW
This Royalty Monetization approach illustrates the implied value owed to Voip-Pal.com, Inc.
(“VPLM”) based upon the application of modest royalty rates to historical apportioned profits
from infringing products and services sold by Apple beginning FY 2010.
The methodology underlying each analysis follows the methodologies of recent court cases
including VirnetX v. Apple, Summit 6 v. Samsung and others in which a reasonable royalty rate
is applied to apportioned profits (those specific to infringing features) on devices and services
that are found to have infringed.
We have selected a 1.25% royalty rate (applied to apportioned profit) based upon our analysis of
ten (10) recent major patent infringement court decisions. The weighted average court award (or
settlement) as a percentage of apportioned profits in the analyzed cases is, by our calculations,
9.88%. As such, we believe that a 1.25% royalty rate on apportioned profits (which is 87% less
than this weighted average) is reasonable if not conservative, particularly considering the very
foundational nature of the VPLM patents. See Addendum 1, attached hereto.
We recognize that the 1.25% royalty rate is almost twice the amount awarded in the recent
VirnetX litigation. The basis for this difference is the relative frequency of use of the VPLM
classification and routing patents as compared to the four VirnetX patents, which deal with
creating a Virtual Private Network (VPN), which is typically used in the Apple Products for a
video chat or some other secure communication. The data that was available on the usage of the
VPN patents suggested that they would be used approximately one fourth as often as the VoicePal classification and routing patents, which are used with almost all cellular and WiFi voice and
message communications.
Apple Royalty Monetization Analysis
This analysis illustrates Apple’s estimated historical profit from its iPhone, iPad and Mac devices
(for conservatism, we have excluded any figures from sales of iPod, Watch or Apple TV, and
iTunes/App Store). Average sale price is calculated as historical sales value divided by unit
sales, by device, over the period. An estimated profit margin percentage is then applied for each
device, based upon best available public information and research. An apportionment percentage
rate is then applied as follows, based upon estimated end consumer usage of key infringing
features for each device, including iMessage, voice calling, WiFi calling and Facetime:




iPhone – 55% apportionment
iPad – 35% apportionment
Mac – 10% apportionment

This results in an estimated apportioned profit per device. The 1.25% royalty rate is then applied
to such apportioned profits to arrive at a royalty figure per device, and this figure is multiplied by
units sold for each device to arrive at total royalties.
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February 2016

The table below provides a detailed summary of the Apple Royalty Monetization Analysis:

Sales ($)
Sales (Units)

iPhone
$549,815,000,000
853,801,000

For Period Beginning FY 2010
iPad
Mac
$140,262,000,000
$147,645,000,000
109,701,000
308,150,000

TOTAL
$837,722,000,000
1,271,652,000

Average Selling Price
Est. Average Profit Margin (%)
Est. Average Profit ($)

$643.96
65.00%
$418.57

$479.13
52.00%
$249.15

$1,278.58
25.00%
$319.65

$658.77
58.40%
$384.71

Apportionment
Apportioned Profit Per Device

55.00%
$230.22

35.00%
$87.20

10.00%
$31.96

46.27%
$178.01

Royalty Rate on Apportioned Profit

1.25%

1.25%

1.25%

1.25%

Royalty per Device

$2.88

$1.09

$0.40

$2.23

$2,456,985,781

$335,892,375

$43,831,875

$2,836,710,031

TOTAL ROYALTIES

This analysis does not reflect any amounts for royalties that may be owed to VPLM by Apple for iPod, Watch,
Apple TV, and iTunes and App Store revenues.

As an overall methodology note, we have applied these apportionments and rates to Apple
figures on a global basis, based upon (i) the place of device invention/design and (ii) the location
of company data centers that handle various data communications. In terms of invention and
design, all of Apple’s devices are designed in Cupertino, California (notably Apple’s
headquarters is in close proximity to the Silicon Valley USPTO). As far as data center locations,
all of Apple’s data centers are located within the United States Maiden, NC; Newark, Cupertino,
and Santa Clara, CA; Reno, NV; and Prineville, OR.

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