Samsung argues for reduction in damages

Samsung Electronics says Apple’s patent-infringement claims of $2.19 billion are 57 times higher than what the Galaxy maker should pay if a jury finds it infringed smartphone technology.

Samsung called on a Yale University business school professor on Monday to make its case to a federal jury in San Jose, California, that if it has to pay anything, the amount should be as little as 35 cents a phone - a stark comparison to Apple’s demand for more than $40 a phone.

Judith Chevalier’s testimony builds on a Samsung lawyer’s argument at the outset of the trial that Apple’s multibillion-dollar figure is a “gross exaggeration” and an “insult” to the intelligence of jurors. According to Samsung, Cupertino, California-based Apple’s damages are inflated because the five smartphone features at issue are of marginal value.

The second U.S. trial between the world’s top two smartphone makers follows legal battles on four continents to dominate a market that was valued at $338.2 billion last year, according to data compiled by Bloomberg.

Samsung, based in Suwon, Gyeonggi, had 31 percent of industry revenue compared with 15 percent for Apple.

“It is generally in the patentee’s best interest to present as large a figure as possible without appearing unreasonable, just as it is in the accused infringer’s best interest to present a figure as small as possible without appearing unreasonable,” Brian Love, a law professor at Santa Clara University, said in an interview.

Chevalier, an economics and finance professor at the Yale School of Management, was called by Samsung to contest a report produced for Apple by Christopher Vellturo, an Massachusetts Institute of Technology-trained consultant based in Boston.

In patent law, to calculate damages, companies are asked to recreate a “hypothetical” license negotiation, according to Love. Vellturo’s damages estimates assume Samsung would “capitulate” and “roll over” to Apple’s royalty demands, Chevalier said. She argued that Apple’s patents at issue in the case are of such marginal value that the company hasn’t lost profits due to Samsung’s infringement.

“My analysis compensates Apple through a reasonable royalty and zero lost profits,” Chevalier told jurors. “When Samsung sells a phone, Apple may be losing out. But that is not the same as saying that Apple loses sales because Samsung infringes Apple’s patents.”

Bloomberg