Apple Presents Its Patent Case, Samsung Starts Up By Asking Judge to Dismiss (Live Blog)

Apple calls its financial expert to the stand to discuss how he calculated potential damages/royalties Samsung should pay if its found to have violated Apple's iPhone/iPad design and utility patents. Samsung says damages will be way less if Samsung found to only infringe on utility patents. Apple concludes its part of the case. Samsung calls for the judge to rule in its favor and dismiss all Apple claims, saying it hasn't proven any of its infringement or trade dress claims. Judge says she won't chuck the case as she's seen enough evidence for the jury to make a decision.

Apple and Samsung resumed their courtroom battle today, which U.S. District Court Judge Lucy Koh saying she expects closing arguments on Tuesday, Aug. 21.  Apple is expected to finish calling its witnesses today.

Apple kicked off the day by interviewing its patent license chief to discuss some of the talks the company had with Samsung in 2010 (before it filed suit in 2011), in which it says it accused Samsung of copying its design patents for the iPhone and iPad.

The trial began at 9am California time. Refresh this page to see updates.

• 9:05: Borks Teksler, Apple’s director of patent licensing strategy, retakes the stand to answer questions about Apple’s user interface patents and under what circumstances the company licenses them. Apple said it doesn’t license its user interface patents. He then explains a cross-license agreement over patents between Microsoft and Apple which does cover design patents. However, he says that Apple specifically added a provision that “We couldn’t copy each others products. Even though there’s peace between the companies, there’s an anti-cloning position.”
• What rights are you not giving to Microsoft with respect to the design patents?  There was no right to build clone products of any type. He says they don’t want anyone copying Apple products.
• Teksler then talks about the presentation he prepared for Apple to show how the company felt Samsung’s products infringed on the iPhone.  “We were trying very hard to come up with an amicable resolution with Samsung…wanted to get properly compensated and get them to respect our design.”
• Did Apple’s offer to Samsung include rights to Apple’s user experience patents? He says no. “We still had yet to discuss very specific “untouchables.” What we wanted them to acknowledge is that they needed a license.”
• What are untouchables? Teksler says that they are specific proprietary features - the Apple unique user experience patents.
• Looking at a screen with an Aug. 4, 2010 presentation called “Apple Copying iPhone.” Teksler created slides that showed the “remarkable similarities” between layout of icons, calendar, events, clocks, bezel, the note application and the keyboard arrangement between iPhone and Samsung phones. Teksler said he also documented the “out of box” experience between iPhone and Samsung devices – the packaging – to show that Samsung’s out of box was similar to Apple’s.
• Samsung cross-examination: Did Apple ever offer any design patents to Samsung for licensing? No.
• 9:20: Apple now calls, via video deposition, Jun Won Lee, Director of Licensing for Samsung (via video deposition on March 5, 2012). He said he met with Apple three times in 2010 before Apple filed its lawsuit.
• Q: What happened in the meetings?
• A by Lee: “Samsung was mostly listening to what Apple said in the first meeting. Apple was talking about Samsung’s smartphone infringing Apple’s phone patents and designs, so they were complaining about our infringements about Apple’s patent and design in their phone.
• Q: Do you recall Apple stating that Samsung had copied Apple’s products?
• A: Yes.
• Now showing an exhibit, a presentation called  “Samsung’s Use of Apple Patents in Smartphones.”  Lee is being asked if this is the presentation he was shown at his first meeting with Apple. Lee says basically yes.
• Samsung lawyer now takes over: Q: What did Samsung say in response?
• A: Samsung contended that there was no such infringement and also requested the evidences for the contention of the infringement.
• Q: In those first two meetings you attended, did Apple mentions its trade dress?
• A: I cannot remember everything exactly, and also I’m not confident if I heard everything that they said. As far as I could remember or as far as I know, I don’t know if there was such assertions.
• 9:31:Apple now calls, via video deposition, Dong Hoon Chang, head of Mobile Design Group at Samsung.
• Q: Where you aware of design patent, any Apple patents, when you were designing the Galaxy phone. A: Yes (But he says far as the design aspects, they did not take into consideration anything like that.)
• Q: What Apple patents did you pay attention to? For instance, such things as bounce – the bouncing effect, what you referred to earlier, those things we did consider.
• 9:35: Samsung lawyer brings up a different part of the video deposition. Chang is asked: Did you ever consider any Apple patents when you were designing the Galaxy phone?
• A: When we doing our design work, we never thought that this looked like the iPhone, so we did not…we did not consider anything like that.
• Apple calls, again by video deposition, Timothy Benner, who is the senior manager of Consumer Insights and Analytics for Samsung. Benner is asked if the physical appearance is an important factor in the purchase decision of a smartphone. Benner says it is, but he can’t rate the importance across consumers because it varies by consumers. But he acknowledges that appearance is one of the reasons that consumers choose a smartphone.
• Benner is being asked about a Samsung Galaxy Tab commercial and ensuing consumer study, which in effect showed that many people thought it was actually an Apple ad. Benner agrees that many consumers thought it was an Apple ad for its iPad tablet.
• Q:  Benner is again asked about how important design is in choosing a smartphone? A: It’s of relative importance. It is an aspect. Benner says that other factors also come into play, prices, operating system and appearance. He also says there are elements such as brands, tie in with specific carriers, operating system features, screen quality, speed of processors, ratings on the phone, word of mouth, salesperson.
• Q: Was the misattribution that occurred between the Samsung Galaxy Tab and Apple because the advertisements were similar and therefore confusing? Benner says it wasn't that the ads were confusing it was that the iPad was very firmly established in the marketplace and so when consumers saw a large tablet, they assumed it was an iPad. Very few people knew that Samsung was making those products. So the Galaxy Tab commercial was to make people aware.
• Next video deposition is with Timothy Sheppard, vp of finance and operations for Samsung’s U.S. company. His team is responsible for importing Samsung devices.
• Q: Does Samsung’s US group have a role in setting wholesale prices He says no, the corporate company sets the price of devices being sold to carriers.
• 9:52: Apple calls Terry Musika, a certified public accountant for about 40 years. He says his role, as an expert financial witness, is to assume that Samsung has infringed Apple’s patents and then make a calculation as to what Samsung would have to pay Apple for the purposes of the trial. (Brief courtroom break to fix some equipment.)
• 10:10: Musika says in his analysis, he says Apple is entitled to damages of between $2.5 billion to $2.75 billion. He know is explaining how he came at those numbers, assuming again that there were patent violations and that Apple's intellectual property was stolen (though again, Musika doesn't know that to be the case -- he just makes the assumption for the purposes of determining damages). So his estimate is based on how much Samsung might have made by taking advantage of Apple's patents.
• Musika's damages are "very large" because we are dealing with a very large quantity of sales. The combination of smartphone and tablets over two years is what he looked at. He found that Samsung has sold 22.7 million smartphone/tablets (30,000 sales a day) and that totaled $8.16 billion in revenue (or $10.7 million  a day). These are sales numbers that were provided by Samsung. He says its breaks out to 21.251 million Samsung phones, generating $7 billion in sales, and 1.4238 million Samsung tablets, adding up to $644 million in tablet sales. These are U.S. sales of Samsung products.
• Musika is now looking at Samsung's U.S. smartphone market share over time - before and after the supposedly infringing smartphones were released. The chart shows a big gain for Samsung after they introduced their new phones." It's a rather dramatic demonstration that Samsung was losing marketshare." Then after they introduced their first accused phone, he says their marketshare took an "abrupt" upswing. This is based on IDC data.
• Musika says he looked both trade dress and design patent to determine his damages. He looked at Apple's lost profit, as well as what he considers a reasonable royalty.
• Apple lawyer is asking Musika if he used certain legal tests to determine design patent damages. Musika says he did, but again he says he makes no determination on whether Samsung did or didn't infringe Apple's patents, just how he has calculated the damages if we assume they did.
• Musika says he made the calculation on a phone by phone, and tablet by tablet, basis. He applied three forms of damages to the 22 million phones/tablet sales and he looked at it in terms of Samsung's profit gain; Apple's lost profits and the reasonable royalties. He says of the 22 million phones/tablets, he and his team estimates that 17 million phones/tablets went to Samsung's profit gain. Two million reflect Apple's lost profits and 3 million units were reasonable royalties.
• Musika says he had a team of over 20 people working over  1.5 year to calculate the damages. It cost $1.75 million.
• He's now going through the formula to get to the $2.241 billion in profit he believes Samsung made on the supposedly infringed products. (Overall sales of 17 million devices, minus costs). He says he used publicly available numbers from Samsung, but he says that Samsung will argue that their costs where higher than the ones that Musika and his team used because Samsung says there were additional costs. Musika's calculations are based on infringing starting in June 2010.
• 10:34: Musika is now providing a detailed look at what expenses he added into his costs calculations and which he didn't (ie: R&D expenses). He says he encountered other "red flags" that led him to exclude expenses from the cost of goods sold. The red flags: He says he couldn't find independent verification of the numbers that Samsung provided and reconcile them with published reports; he found many errors in the numbers; he said some of the numbers were prepared "solely for litigation" purposes rather than from accounting statements they use in the normal course of business. He says he had a difficulty obtaining data and there were 'unexplained cost allocations' that Samsung couldn't/didn't explain.
• Musika says that Samsung's parent company, SEC, sells phones to its U.S. subsidiary, STA. For every $100 in U.S. sales, the STA U.S. subsidiary is required to send 97 to 98 percent ($97 to $98) back to the SEC parent in Korea. So STA's sales of $2-$3 a phone is not an accurate reflection of how much the phones actually made.
• Musika is now going back to his overall calculations and he says that he looked at Apple's lost profits on the 2 million units that Apple lost in sales. He says that adds up to $488.8 million. He based the 2 million in lost sales units of iPhones/iPads was based on the fact that there was demand for Apple's products and if Samsung's devices hadn't existed, then Apple would have gotten the sale.
• Did you look at any internal Samsung documents that looked at demand issues around smartphones? Musika says yes and now looks at a Sept. 2007 document that Samsung produced on smartphone market trends. It says: "Our research has identified four key factors that we expect will shape handsets in the coming five years: These factors are: the iPhone.
• The document also has three pages called the 'iPhone Effect Analysis."  The reasons cited by Samsung for the iPhone's effect include its "easy and intuitive UI that covers all user classes, including male/female, young and old...beautiful design."
• Musika is now looking at a March 2, 2010 email between Samsung executives. In it, Samsung executive says: "I am not saying to make a UX that is exactly identical to the iPhone...but to recognize the standard that was set by them already."  Musika says he used this document to help him in his calculations on the number of Samsung phones may have infringed on Apple's patents.
• 11:07: Musika is explaining what he means by "reasonable royalties." He looked at Apple's utility and design patents and whether Apple wanted to license them; how much money Samsung made; how much Apple lost; what the perceived value of the patents are, etc. Musika identified an individual rate for each patent: $3.10 (Patent 915- Apple design patent), $2.02 (Patent 381) and $2.02 (Patent 163). Apple has come into the market on the basis of its design...and its designs are of critical economic importance to Apple."
•  With design patent and trade dress, Musika got to $24 per unit in royalty payments. If you just got calculated damages based on royalty payments, it's about $540 million.
• Musika's damages range is $2.5 billion to $2.751 billion.
• 11:20: Samsung lawyer Bill Price will now question Musika. He's asking Musika if his analysis is unbiased and objective, and that he would get the same number no matter which side hired him to calculate damages. Musika says yes.
• Price is now showing Musika the damages slideshow he created and asking him why he chose certain graphic images of Samsung phones. Now he's being asked why he didn't use an image of a Galaxy phone that accounted for 36 percent of lost iPhone sales, or the Droid phone.
• Price is now looking at U.S. smartphone market share chart with IDC data, and he says the uptick in Samsung's marketshare includes sales of both infringed and non-infringing phones. Musika says probably.
• Price is now giving a hypothetical about what if the jury finds no design patents are infringed - only the utlility patents (bounce back feature), for instance --  the damages will be less than $2.5 billion. Musika agrees. He says the jurors have the tools for calculating damages if they don't find all of Apple's patents valid but that the was not asked to calculate that when he was hired as an expert by Apple.
• Price insists that if only the bounce back  patent (a utility patent) is deemed violated (Is that a hint of Samsung's thinking?) then damages could be less than $2.5 billion. Musika says he did his calculations assuming that all of Apple's patents were infringed on, as he has been saying since the outset of his testimony.
• Samsung now shows Musika an Apple document. "Smartphone Market Study U.S." and to a page that says Drivers of Android consideration and  purchase and now a page that says "Top reasons for buying an Android among those who considered iPhone?" Service provider was one of the considerations, as was preferred Google brand and Google app marketplace, and turn-by-turn navigation.
• Musika says he calculated the average iPhone selling price at $656 at a specific point in time (first quarter 2011) - that was a sale to carrier.
• Noon: Lunch break for an hour.
• 1:00: Samsung lawyer Bill Price resumes his cross-examination of Apple's financial expert Terry Musika. Price is questioning Musika's assumptions about Apple's lost market share because of the release of Samsung's Galaxy phone. He calls up a Samsung document called "Feasibility Review on Standalone AP Business for Smart Phone Market" (which Apple used earlier). Price brings up the "iPhone Effect Analysis" section and notes a line which he says that Samsung was looking to sell more smartphone processors and to do that, they wanted other phone makers to come out with multimedia-enabled phones.
• Price tells Musika to not look at the Apple defense team. He then asks him whether the document talks about design and if Samsung was telling its rivals to copy the iPhone. Musika says he's not qualified to comment on design/copying issues. I'm not a lawyer, I'm not an engineer. I'm not a design expert. I'm a financial expert."
• Now Price says that competitors should learn from each other and that there's nothing wrong with that.
• 1:28: Apple lawyer returns to the stand to ask Musika a few more questions. She brings up the iPhone Effect Analysis and asks Musika what he relied on in this report. Musika says he looked at the document to undertand the design element as a function of demand and that's what Samsung's document talked about. He reiterates that he's not commenting on the issue of design and copying.
• Apple says what would happen if jury found that some patents were infringed on and not -- which tools does he provide for the jury to help calculate variations in damages. Musika refers to the document he prepared on how he calculated the royalty numbers per device for patents that has all his math. He says that for a violation of design or trade patent, it's a $24 royalty patent. Then there are individual numbers attached to the three utility patents in question.
• 1:35: Samsung's Price asks Musika about the dates his damages calculations refer to. Musika says some go back to the notice date -- the date that Apple first alerted Samsung of its infringement claims -- Aug. 4, 2010.
• 1:42: Musika is excused (but he may be called back at another time.)
• The jury is excused from the courthouse because Apple and Samsung needed to argue over some objections before the judge.
• Samsung is asking the judge, under Rule 50, to rule that Apple hasn't proved any of its points regarding infringement of its utility or design patents or that it's trade dress has suffered, and that it hasn't shown that Samsung willfully infringed on Apple's products. Samsung also says there has been no proof of damages on a case-by-case basis, and therefore the court should dismiss damages.  Our view is that they haven't proven their case."
• Samsung says there has been "zero evidence" that some of the infringing phones were sold in the U.S. Lawyer says that Apple hasn't provided the proper legal evidence. "Apple has to prove that the similarity is such that it would deceive the ordinary" consumer in a purchasing context.  He says Apple has not done so. Now he's going through each of the design patents that Apple has claimed have been infringed to show that Samsung phones have differences. He says Apple's expert design witness -- Susan Kare -- did not consider prior art in her defense of Apple's designs. He says that she says there was a design influence, but Samsung doesn't believe that's enough under the law.
• I'm told this is pretty typical -- that when one side is done calling its witnesses and presenting its case, the other side tries to have the judge put an end to the trial by saying "They called their witnesses and they didn't prove anything."
• 2:08: Apple's lawyer Harold McElhinny now rebuts Samsung's move for dismissal. He says Apple has shown that Samsung was aware of that Apple had design and utility patents, that it needed to copy design elements in order to make its phones more competitive, and that the iPhone and its design had changed the nature of the smartphone market. He recaps testimony of Phil Schiller, Apple's marketing chief, about the unique approaches Apple takes  in its advertising and its "product as hero" ad/marketing philosophy. Apple is saying that it did provide Samsung notice that it was infringing on its patents, copying its design and harming its trade dress before it filed suit in 2011.
• Samsung is back at the podium, arguing that some of the phones Apple has claimed are infringing are not even sold in the U.S. Apple counters that a Samsung witness testified they were sold "globally," which would include the U.S.
• Samsung is now saying the damages calculation doesn't really cover infringement on a product by product, patent by patent basis, as Apple, he says, is required to do.
• Judge Koh grants Samsung's motion that three of its phone be excluded from the infringement case: Samsung Ace, Galaxy S i9000, Galaxy S IIi9100.
• Based on what the court has seen based on evidence, Judge Kohn is rejecting Samsung's motion to chuck the case at this point. She says there is enough evidence for jury to decide the case. She says that based on everything she's seen, there's enough evidence for a jury to make an ultimate decision.
• 3:05: Samsung calls its first witness, Benjamin Bederson, professor of computer science at University of Maryland. He is chief scientist at a mobile-apps company he co-founded called Zumobi Inc. He helped develop an application called LaunchTile, a zoomable user interface for mobile touchscreen devices that ran on Microsoft's PocketPC software on an HP iPAQ handheld computer. Bederson speaks to prior art -- that is, Samsung is claiming that some of Apple's patents are invalid because others had created the technologies/design innovations before Apple did. Bederson said his zoomable user interface in which the screen was broken down into 9 zones of four tiles each that could be clicked on and which the user could zoom in/out.
• Is there a name for that kind of zooming? He says his application was based on semantic zooming (versus geometric zooming, in which tile just gets bigger or smaller). Bederson said he wrote a paper about semantic zooming.
• Bederson is being asked if there were other methods of zooming. He says yes -- after clicking on the zone, you could use your finger to move right, left, up or down. If you drag up or down but don't go far enough, it will snap back to the original tile. The purpose of that was so that you wouldn't be stuck halfway between zones. Also, users don't have high precision when they're using their fingers, the system can help take them where they want to go. "And it added up to be fun," Bederson said.
• LaunchTile was developed in the summer of 2004 by Bederson and his team. It took about 3 months to create the application. It was running on the HP iPaq in November 2004.
• Bederson, under contract with Microsoft, did an update to the LaunchTile software called  Xnav. Snap back feature and zooming worked almost identically in LaunchTile and Xnav.
• 3:25: How did Bederson and his team get the word out on LaunchTile to the public? "We developed the code in the summer of 2004 and it was completed by Sept. 2004. We wrote a paper and submitted it to a conference" (CHI conference published the paper in April 2005).  Bederson's team did a video presentation at the April 2005 CHI Conference.
• 3:31: Apple gets to cross-examine Bederson, who says he is also testifying against Apple in another case. Apple says there are three levels of zoom -- World View (you see all 36 tiles), Zone View and Application View - and asks Bederson how snap back functionality works. LaunchTile code actually measures the distance of movement and then performs the snap back once the user has moved a certain distance. Bederson agrees.
• Jury is shown a video of how the zones work.
• Application view is being shown. When you tap on a tile, or go deeper into the tile, it would serve up more information -- more detailed information.
• Bederson is now being looked at an email application that works in LaunchTile. A discussion about how the snap back feature works.
• Bederson says his work was being sponsored by Microsoft. When the code was finished, Bederson transmitted it to Microsoft, which had rights to keep the invention confidential for a while before the University of Maryland could discuss it. Bederson says he discussed it at the CHI Conference and another conference in May 2005. But he doesn't know what was demonstrated.
• Samsung lawyer returns to question Bederson, and asks about an Aug. 25, 2005 email from Bederson to Microsoft, sending them an encrypted version of LaunchTile code.
• 3:51: Apple lawyer gets back up and asks that the videos of how LaunchTile works be included in evidence.
• Bederson is excused after saying he is being paid for his time. $450 an hour.
• Samsung calls its next witness. Adam Bogue helped popularize DiamondTouch touchscreen table, which was developed in 2001. Bogue said he was the business development guy for the Mitsubishi Electric Research Laboratories. He first showed it outside of MERL to hardware engineers at Apple headquarters in 2003.
• Now showing an email in Nov. 2003 from Bogue to Apple engineers, referring to the meeting he had in which he showed them the DiamondTouch system. Says he didn't ask Apple to sign a confidentiality agreement, but that Apple made him sign one saying that anything he showed them wasn't confidential.
• Bogue prepared a video of an application running on the touchscreen table in 2004 called Fractal Zoom. When you touch on the app icon for Fractal Zoom, it shows instructions on how to run the demo and use your fingers to zoom in, zoom out and move things around. The purpose was to show off the multi-touch features of the system (multiple fingers making multiple contact points on the screen).
• Bogue said he demonstrated the DiamondTouch tablet and Fractal Zoom software at conferences starting in October/November 2004 and continuing into 2005.
• Fractal Zoom was software included as part of the DiamondTouch table to anyone who bought one of the tables. There were two models of the table sold, in different sizes. The tables were shipped with four applications. A price list for the tables is being shown. The price list was created in 2005.
• Bogue is showing an invoice of the sale of a DiamondTouch table to SAIC, a government reseller. Bogue says it was one of their first sales. Invoice is dated Jan. 2006.
• Now showing an application called Tablecloth, with a snapback system. It was first demonstrated in the lobby of the MERL lab, where a DiamondTouch table was set up, in January 2005. Soon after that, there were meetings outside of MERL and demonstrated it in public venues - New School in New York and trade shows.
• What was the purpose of putting the DiamondTouch table in the lobby of MERL? Bogue said it was his idea to showcase the work being done in the lab. It was an open lab. Any visitors to the lobby could see it. During normal business hours, the lobby was open and anyone could come in and see it in 2005. In January 2005, Bogue said he demonstrated the DiamondTable with apps to Sen. Bob Kerrey, who lead the New School. The demo included Fractal Zoom and Tablecloth.
• Bogue says he is being compensated for his time -- $400 an hour for 40 hours.
• Apple now gets to examine Bogue and asks him where the DiamondTouch tables are. Bogue says he sold two tables to Quinn Emanuel Urquhart & Sullivan, Samsung's law firm, including the DiamondTouch table that was in the lobby of MERL. One of the tables (not the original one from the MERL lobby) is now being wheeled into the courtroom. There's a projector on a tripod that sits above the DiamondTouch table and aims down on to the surface of the table. All applications are projected on to the table top (never on to a wall -- Apple lawyer asked Bogue about this). Users sit around the table and then use their hands to manipulate the software on its touchscreen.
• Bogue is now discussing how the table works. The chairs around the DiamondTouch table are connected to the table to identify which users were touching the screen. There was also anti-static maps that came with the table. He says there were applications that took advantage of the multi-touch applications of DiamondTouch and others that took advantage of multi-users ability.
• Bogue says that Fractal Zoom (also known as Mandelbrot) was not shown to Apple in that initial meeting.
• Apple lawyer asks Bogue about the Tablecloth applications and the snap back feature that was built into. A finger is touching down on an image, dragging the image down. When the finger lifts up, the image snaps back to where you started.
• 4:33: Judge Koh calls a halt to the testimony. Apple will continue questioning Bogue tomorrow when the trial resumes at 9am California time. Jury leaves the courtroom and now judge is listening to some objections from Samsung and Apple.
• Each side gets 25 hours to argue its case. Judge Koh says Apple has used 14 hours and 10 minutes, Samsung has used 14 hours and 58 minutes.  The trial is over for today and resumes tomorrow.