Apple overstates potential damages: Samsung expert

Higher costs, lower margins?

A financial expert said Apple overstates the profit margins earned by Samsung for mobile products, an issue that goes to the heart of the high profile patent trial between the two tech companies.

Michael Wagner, an accountant who testified on Thursday for Samsung, said the Korean company's profits from the smartphones and tablets targeted in the case should be calculated at about 12 percent, or about US$519 million ($494 million).

Earlier in the trial, an Apple expert witness testified the US margin was closer to 35.5 per cent.

Apple and Samsung are going toe-to-toe in a patents dispute that mirrors a bigger struggle for industry supremacy between the rivals that control more than half of worldwide smartphone sales.

Apple accuses Samsung of copying the design and some features of its iPad and iPhone, and is asking for a sales ban in addition to monetary damages.

South Korea's Samsung, which is trying to expand in the United States, says Apple infringed several patents, including some for its key wireless technology.

If the nine member jury finds that Samsung violated Apple's design patents, the damages Apple might recoup will partly depend on how much profit Samsung earned during the period it knew it should not be using the technology.

Earlier this week, Apple expert Terry Musika said Samsung earned 35.5 percent margins from mid-2010 through March 2012, or $8.16 billion in US revenue. Apple is seeking over $2.5 billion overall in the case.

However, Wagner testified on Thursday that Musika did not take into account many of Samsung's costs, including marketing, which reduced the profits. His 12 percent figure assumes a period beginning in April 2011 for most of the mobile products.

Under cross examination from Apple attorney Michael Jacobs, Wagner acknowledged the cost information on which he relied had been prepared by Samsung specifically in response to the Apple litigation.

However, Wagner said Samsung had never needed to break out such specifics before.

"I have no problem with the way they allocated costs," Wagner added.

(Editing by Andre Grenon)