Apple v Samsung Trial – Testimony of Philip Schiller – April 1, 2014

Testimony of Philip Schiller, Sr. VP of Worldwide Marketing at Apple

This is a trial report not a transcript. What I have done is attempt to summarize and paraphrase this part of the trial based upon my rough notes. This is far from a precise transcription. It’s an attempt to provide some information until official trial transcripts come out.

Direct Exam by Apple’s Attorney Mr. Mcelhinny

They went through the basics. Whether he was employed by Apple. What his position is. And what his responsibilities were.

Mr. Mcelhinny

Asked if Apple has something called an Executive Team, and whether Mr. Schiller was a member.

Mr. Schiller

Indicated he is on that Team, and testified that the Executive Team runs/is responsible for Apple. Mr. Schiller also testified that he reports to Tim Cook the CEO.

Mr. Mcelhinny

Asked for what he was involved in in detail.

Mr. Schiller

Responsed all marketing functions, product, international, etc.. Marketing, customer research, and I believe something to do with finance – perhaps product financing.

Mr. Mcelhinny

Asked if marketing is the same or different from PR.

Mr. Schiller

Responded that at Apple it is different. 

Mr. Mcelhinny

Asked if marketing is different than sales.

Mr. Schiller

Indicated it is very different.

Mr. Mcelhinny

Asked the witness to explain PR, marketing and sales.

Mr. Schiller:

PR

Marketing covers huge variety – like working on product, working on website. Launch of product around the world.

Sales – responsible for channels. Sales to end users as well as other partners who sell . Sales is very short term focused. Marketing is longer horizon. – trends. So on.

Mr. Mcelhinny:

Asked if Apple has a process by which products are developed. Asked if they had a fancy name for that.

Mr. Schiller

Answered yes and then said something about a new product process. And mentioned a cross-functional team.

Mr. Mcelhinny

Asked what the role of marketing was as such.

Missing Testimony

At this point I may be missing some testimony. There was a New York Times article by Biran Chen from November 23, 2011 – in that article there was pictures of what appeared to be some sort of exhibit, that looked like bus stop stations that may have depicted Steve Job’s patents.

There was some discussion of a book, which I believe drew objection from counsel for speculation and lack of foundation. I am not sure what the Judge said here. The attorney may have amended his statement. The opposing counsel objected again.

They got to sales figures of the iPhone. A chart was presented that expressed cumulative (not incremental) unit sales of the iPhone by quarter. It also presented corresponding figures for the iPad. 

I believe the Mr. Mcelhinny (but I’m not sure) mentioned or brought out that the iPhone started out doing 300,000 units in a quarter, and then talked about 170 million units being sold. I would note that cumulative, not incremental, unit sales were given my quarter. Either the attorney or the witness made a statement that there was a before and after with respect to the iPhone, and that the iPhone changed phones – it changed the market.

Either the attorney or the witness mentioned that when a customer buys one Apple product, they then tend to buy more Apple products. That if they had a great experience then they would go to the “ecosystem” accessories. They might uprage to another smart phone, or buy a computer – a mac. Also mentioned were network effects. For example, telling friends. Telling people at work. Mention of lots of ecosystem effects.

Mr. Mcelhinny

Turned to Ipad briefly. Asked what the genesis was.

Mr. Schiller

Indicated that in the beginning Apple kept trying to go more affordable than a computer – that the most profitable were its notebooks. But they did not want to drop their quality beyond a certain point to match their competition. So, there was the problem, how to compete on price while maintaining quality.

An answer was to get rid of the physical keyboard, mouse and trackpad. And that in turn lead Apple to look at multitouch technology. At this point a date was provided but I don’t know what it is referring to – the date was January 2010.

Mr. Mcelhinny

When was iPad released?

Mr. Schiller

In April, 2010.

Mr. Mcelhinny

What was the reception?

Mr. Schiller

Tremendous excitement.

Mr. Mcelhinny

Was the iPad investment considered gamble?

Mr. Schiller

Yes. He indicated it was now their fourth product. That they did not want to get spread to thin. And that others had tried tablets and failed. And that the iPhone was doing well – they were risking their reputation by doing another new speculative product.

Mr. Mcelhinny

How were sales?

Unclear

At this point, I believe Mr. Schiller directed back to the cumulative sales chart to look at iPad sales. But it might have been Mr. Mcelhinny that walked them back to the chart, I am not sure. (Note that the cumulative sales chart appeared to be for U.S. only).

Mr. Mcelhinny

Did apple seek patents?

Mr. Schiller

Yes.

Mr. Mcelhinny

Why?

Mr. Schiller

Well there are many reasons.

First, we have a lot of really bright engineers – lots of hours, lots of personal?? Inventions. Those are things created for Apple. We make products unique and special. That’s what we try to do. Inventions unique and special for our products to differentiate from other in the market. Patents are the way to do that. Also – things that people will recognize. To signal our inventiveness to customers.

Mr. Mcelhinny

Based on your job responsibilities – what are your views on why the iPhone was (is?) successful?

Samsung Attorney

Objection: calls for expert testimony

Missing Something Here

I may have missed something at this point.

Somebody at this point – it could have been the attorney or it could have been the witness – discussed that unique product solves problem in ?? way.

Also, something about the essence, and successfulness – (I missed some things here).

Mr. Mcelhinny

What are the reasons for the success of the iPad?

Mr. Schiller

In same way – create great product. Beautiful – does the things that need to be done in a fun and intuitive way. The user experience that we have created.

Mr. Mcelhinny (I think)

Please open to exhibit 122a.

Mr. Schiller

OK

Mr. Mcelhinny

What is 122a?

Mr. Schiller

This is a summary of questions asked to customers in a market research survey – iPhone buyers about experience of iPhone

Missing Testimony

At this point I missed some testimony I think.

There was some question about from 1st quarter of 2011 to the fourth quarter of 2012. The laywers clustered around looking at page 3 or 3rd item. A lawyer I believe mentioned to Judge Koh that it was an inappropriate summary – that it is not a complicated document.

Judge Koh 

Overruled the objection.

Internal Apple iPhone Buyer Survey

At this point this survey was brought on screen. I don’t know if it was the attorney or the witness that directed this. There was some sort of question about what market research is – at this point I began recording what was up on the screen. It appears the survey question was this or something very close to this:

“How important were each of the following features or attributes in your decision to purchase the iPhone [3GS/4/4S/5?]. The slide presented a stacked bar chart that I believe combined “very important” and “somewhat important” counts.

Mr. Mcelhinny

Who determines what questions asked?

Mr. Schiller

My (team?) does.

Mr. Mcelhinny

Are they considered confidential?

Mr. Schiller

(I did not record it – but I believe he answers yes here – or it is in any case an affirmative answer)

Mr. Mcelhinny

Why is that?

Mr. Schiller

Because any company has the need to speak to its own customers. We have an ability to speak to them and get ??? what they think. And we considerthat confidential.

Mr. Mcelhinny

Explain page 1 of the summary.

Mr. Schiller

Summary of 1 question asked over many years of time

Mr. Mcelhinny

How important was ease of use?

Mr. Schiller

Customers were asked to rank how impotant 1 to 5 – Top two very and somewhat. Combined top two.

Mr. Mcelhinny

Why do you use phrase ease of use

Mr. Schiller

I think ease of use is one of the most important ???

Mr. Mcelhinny

What is it based on your understanding that makes the iPhone easy to use.

Mr. Schiller

There isn’t one thing – it is cumulation all the things that make up experience with the product.  All these great software features so you can get what you want done ?? enjoy ?? experience.

Second Page

At this point they get to the second page of the slide. I am not sure who is doing the talking here. It looks like maybe the same data, but instead by idividual iPhone model – totaled for all that time.

Compared 4, 4S and 5 to see if it is different by product. Shows that there really isn’t a difference. Consistently in the 90’s.

(I am not sure what was being said here – that ease of use was very or somewhat important for over 90% for all three phones over the time period?).

Mr. Mcelhinny

Exhibit 123 – Can you tell me what that is?

Mr. Schiller

Survey from ?? other smartphone vendors on ease of use.

Mr. Mcelhinny

May I offer Juror water

Judge Koh

Decided to give a 20 minute break here.

Missing Testimony

I returned from break a little after testimony had begun again.

Mr. Schiller

Was talking about being copied.

Mr. Mcelhinny (I think)

Copying?

Samsung Attorney

Objection

Judge Koh

Overruled

I believe the following is from Mr. Schiller but not sure

1)?

2) Confuses consumers about the source of those tings as to who innovating. To extent this happens a lot so people might see Apple as innovator.

Mr. Mcelhinny

Are you generally familiar with 5 patents?

Mr. Schiller

Generally

I may have missed a Mcelhinny question here or just some of Mr. Schiller’s response

Mr. Schiller

I know there are five – what they are and am aware of them.  I am not a programmer – don’t know how to program them.

Mr. Mcelhinny

Are you as exec team are you gen fam with willingness to license ip yes or no

Mr. Schiller

Yes

Mr. Mcelhinny 

Take yourself to August 2011

Mr. Schiller

I will try

Mr. Mcelhinny

Asked about helping where – getting some guideposts? (I think I did not get the question down right here)

Mr. Schiller

Summer of 2011 what things we were working on that summer just introduced just ??? latest ios 5

We had a number of new capabilities. Icloud. Our internet services ?? iMessages, wireless synching. We were also working on the next iPad. Deeply involved. iPhone 4S. Other ?? Siri.

Clearly in ?competitive? market ?with? Samsung…

Mr. Mcelhinny

Can you describe in some detail what Apple’s competitive view of Samsung is in around Aug 2011?

Mr. Schiller

I was already experiencing shock – Samsung copy some of our products. Well aware strategy to come after Apple on products and marketing. ?? this company coming after products and customers. It wasn’t a good relationship and see it growing ?? ???

Mr. Mcelhinny

Had there been discussion of licensing?

Mr. Schiller

I think I might have missed a response here but not sure.

Mr. Mcelhinny (I think)

Would that have taken role in Apple decision?

Samsung Attorney

Objection on the basis that it requires expert testimony.

Mr. Mcelhinny (I think)

This is what is going on executive heads.

Judge Koh

Unknown response. Then it sounded like question was going to be changed – but then I think the reporter read back the question.

Mr. Mcelhinny (I think)

Samsung harmed? In what way

Samsung Attorney

Objection – Opininon

Mr. Mcelhinny (I think)

This is factual basis testimony

Let me ask the question

Has the Samsung infringement harmed in the market place?

Mr. Schiller

Yes

Samsung Attorney

Objection

Judge Koh

Overruled

Mr. Schiller

I believe this caused ?? in the marketplace – caused people to question some of the innovations we have created – Apple as innovator. Confused them as to which products – easy t0 use, best serve customers needs. Challenge made harder by copying.

Mr. Mcelhinny

There was suggestion in the opening remarks that Apple opposed fair competition.

Mr. Schiller

Not true. Competition is great. Better products helps customer. Compete to make better products. But the way cmpetitions happens matters. Companies need to create new products. Competition is great to the benrift of the customer

[Time is now 4:03]

Samsung Attorney Cross-Exam

Samsung Attorney

You were just talking about competition. I believe it was your testimony that in 2007 it was expected to be other smart phone companies

Mr. Schiller

Yes

Samsung Attorney

Your observation that companies tended to follow trends in smartphone industry.

Mr. Schiller

Not sure what you mean by trends

Samsung Attorney

You were interested in things in market.

Mr. Schiller

Flip phone yes not sure you were

Missing Testimony

This may have been a very important exchange. Unfortunately I don’t think I got a good picture of what happened down. I have notes that read the following – and I am not sure who said what:

“Sole right”

“Good competition.”

“Legal basis”

Samsung Attorney

I think your attorney asked you some questions about whether you were familiar with patents correct?

What patents do is they give company sole right to do a particular thing

Mr. Schiller

I believe so

Samsung Attorney

To find out to determine whether sole right you really have to look at patent claim right?

Mr. Schiller

??? lawyer claims mean

Samsung Attorney

OK well I guess what you  are telling me you are not in  a position to say whether Samsung to use a particular method for word suggestion, for slide-to-unlock because you are not a lawyer who has come to terms

Mr. Schiller

Yes I am not a lawyer and should not say whether a specific patent is legal or not that is for others.

Unclear Testimony

So for example apple in phone 20007 applaus (This is not clear and not sure who said it – applaus is not applause – it has something to do with Apple)

Apple made easy to use smartphone.

Samsung Attorney

You understand other companies were allowed to compete with Apple smartphone easy tto use as long as not use patetnts

Mr. Schiller

I believe yes.

Samsung Attorney

So wasn’t your understanding Google had to come up with something hard to use

Apple Attorney

Objection

Samsung Attorney

Didn’t you put up something about ease of use of Android?

Mr. Schiller

Yes

Samsung Attorney

And your understanding is that Android was created by Google.

Mr. Schiller

Yes

Samsung Attorney

It’s not your testimony that Google had to come up with something easy to use so long as it did not violate

Apple Attorney

Objection ?? Samsung not Google.

Judge Koh

Overruled

Samsung Attorney

Google could develop Android software that was easy to use so long as it did not do it in a way violate Apple’s rights?

Mr. Schiller

I believe so.

Samsung Attorney

So lets go back to that 2007 time frame – saw reviews of first iPhone. There was a lot of demand for that iPhone.

Mr. Schiller

Yes I believe.

Samsung Attorney

Now we know that patents asserted in this case at least 4 or 5 of them had nothing to do with demand for that first iPhone right?

I believe Apple Attorney (Mcelhinny) Advances to Bench or at Least Forward Here

Mr. Mcelhinny?

There is ??? witness has to answer honestly

Mr. Schiller?

Patents were what par??

Samsung Attorney

No that’s not my question. My question – patent claim in this case that those claims had nothing to do with iPhone in 2007 because that iPhone did not practice 4 of the 5 asserted claims.

Mr. Schiller

I am familiar with patents not individual claims – I am not suggesting I know individual assertions is claim.

Samsung Attorney

So what you are telling us is you are not familiar with actual patent claims that are being asserted in this case.

Mr. Schiller

The assertion of patent claims are not my areas of expertise no.

Samsung Attorney

When you were saying talking about the effect of – the effect of copying of iPhone.

Mr. Schiller

Yes

Samsung Attorney

When you were talking about that effect – you weren’t taliing about the effect of anyone using the particular claims you don’t even know what the claims are

Mr. Schiller

I was talking about totality not about a specific claim assertion

Samsung Attorney

You understand this case is about … 5 specific claim you understand that?

I may have missed something here

Samsung Attorney?

So lets talk about that 2005 iPhone which there was all this excitement about

Samsung Attorney?

It didn’t have a selfie Ellen Degeneris

Mr. Schiller

No I didn’t watch Oscars.

Samsung Attorney

?? ??? videos

Mr. Schiller

Did not videos.

Samsung Attorney

It didn’t have 3G correct?

Mr. Schiller

It was at&t etch? networking.

Samsung Attorney

That’s lower than 3G

Mr. Schiller

Yes it’s very complicated. It can be but it doesn’t have to be at the time.

Samsung Attorney

Pretty remarkable product ?you are? testifying ?about?

Mr. Schiller

I believe so

Samsung Attorney

If we look at that product I’ve got binder – other one toward the end demonstratives color picture.

Sds2312 (all the iPhones lined up with dates)

If you can tell me I jus twna tto goth through you cam with orignao iphon isn’t it true iphone did not use word rec ommendations (highlights original iphone)

Apple Attorney

Objection lack of foundation scope

Judge Koh

Sustained

Samsung Attorney

Let me ask if you know whether or not 1st iPhone practices the Apple patent ‘172 claim 18 that has been filed.

Apple Attorney

Objection

Judge Koh?

I’ll allow?

Mr. Schiller

No I am not expert of programming individual claims so I wouldn’t know.

Samsung Attorney

So I am going to try to shorten this down. So I went through every one of these actual phones – original to 5. If I went through those and aked you any of those phones practiced any of the specific claims in this case would you know the answer the that?

Mr. Schiller

No I would not ** **

Samsung Attorney

So in all those reviews about those wonderful device you can’t tell us whether those reviewer actually observed or saw any implementation of specific patent claims that were asserted in this case?

Apple Attorney

Objection – ?sp? claims

Judge Koh

Overruled

Mr. Schiller

I can’t say either way since I didn’t have knowledge asserted claims

Samsung Attorney

Now we ?? talk a little bit about well let me ask you this. With respect to types of features that you’re so proud of that Apple has. If you took away specific ease-of-use feature. Would that affect the sales of apple iPhone you believe?

Mr. Schiller

?? ?? importance we have a lot of thing ease of use but ?? ???

Samsung Attorney

Let me step back further than that you then ask yoru customers eas  of use important

Mr. Schiller

Yes.

Samsung Attorney

You don’t define any further than ease of use. In your surveys do you ask customers to compare whether one way of saying word recommendation is easier than doing another word correction?

Mr. Schiller

No

Samsung Attorney

What about syncing w heard before I think you said 2011 (?? notes) august 2011 that apple was first coming out with introduction wireless sync

Mr. Schiller?

Not ?? ??

Samsung Attorney?

If we could put that back up 2312 – some where around 4 4S apple first time came up with wireless synch

Mr. Schiller

Yes we had wire sync its not model. (I think what Mr. Schiller said was that at a certain point in time wireless sync came available but it was not model specific – older models could download the software and afterwards they would also be able to do wireless sync).

Samsung Attorney

You download that software?

Mr. Schiller

Yes.

Samsung Attorney

For example there has been ??

Mr. Schiller????

Before Apple you had to plug in to sync.

Samsung Attorney

You had some kind of responsibility to know what is in the market. You want to know what competitors are doing – ?? ?? HTC.

Mr. Schiller

Sometimes yes sometimes no.

Samsung Attorney

I’m going to ask you – so August 2011 prior to then didn’t one of your competitors already have wireless syncing?

Mr. Schiller

I don’ know either way.

Samsung Attorney

In any event, do you know how the Android system does background syncing?

Mr. Schiller

No I am not.

Samsung Attorney

Do you know what background syncing is?

Mr. Schiller

I can make a guess. I don’t know the specifics of what the technology is…

Samsung Attorney

Don’t want you to guess.

Now when you use the phrase ease of use – that term refers to hundreds of features.

Mr. Schiller

Yes it does.

Samsung Attorney

You said you could not write those hundreds of features for ease of use. And certainly 2013 July any kind of ranking of these features?

Mr. Schiller

Not aware we had no.

Samsung Attorney

I ask you if you take out one of these 100’s if it would effect Apple’s sales ?? ??

Mr. Schiller

It was possible I was talking generally about vague…

Samsung Attorney

Can you be more specific?

Mr. Schiller

Ease of use hundreds of features if you take out one could you assume that that’s going to impact to Apple sales. For example if I took out feature phone call – it would – so it depends – so have to talk about specific.

Samsung Attorney

So you can use broad categories about ease of use you need to look at specific feature impact consumers.

Mr. Schiller

Yeah ?? its not something I have to look at and study ease of use is not something I have to look at.

Samsung Attorney

OK so, let me ask you then what you have looked at that you and your marketing team as to what drives sales. And I think you probably agree with me that Apple iPhones are easiest to use.

Mr. Schiller

I believe so.

Samsung Attorney

Looking at one of the surveys in you direct examination which concerned use — new consumers brought into market do you remember that?

Mr. Schiller

Yes

Samsung Attorney

I think that was 21303 exhibit if we can put that up – (its 123) 3 of 4

60% 4 some odd percent

Mr. Schiller

Yes

Samsung Attorney

Obviously a lot of people before this time frame were using phones not smartphones. Is there

Mr. Schiller

Correct

Samsung Attorney

Is there a term?

Mr. Schiller

Feature phones yes.

Samsung Attorney

And you’ve got some expertise in doing surveys correct?

Mr. Schiller

Yes

Samsung Attorney

You’ve done most of your life?

Mr. Schiller

??

Samsung Attorney

So most of your life?

Mr. Schiller

Yes (laughter)

Samsung Attorney

There are good and better ways to do surveys?

Mr. Schiller

Often that is true.

Samsung Attorney

And what you’ve found is that you like asking questions bout what do you think open ended questions and try to learn from them.

Mr. Schiller

I’m sorry that is taking out of context. I don’ like menu questions as much but I think better specific list  I think made statement more referring to ask about what they think of their phone – versus things they don’t acknoweledge but that is marketing surveys

Samsung Attorney

In your surveys ask what you know about rather than tell them and then ask?

Mr. Schiller

Yes.

Samsung Attorney

And in fact you said you don’t try to create survey put into head and then get it out?

Mr. Schiller

?? difficult??

Samsung Attorney

You said you use that methodology instead of asking already knowldgeable about you have to tell them about you find that data is less reliable

Mr. Schiller

Depending on question it can be.

Samsung Attorney

When you say here is something you didn’t know now you tell me that is getting less reliable data –

Mr. Schiller

not always – would you be upset sun never came up.. reliability? (I think I missed some of his response here)

Samsung Attorney

And your talking about your experience doing surveys most if it with smartphones?

Mr. Schiller

No – I’ve been doing early 80’s medical research other things early 80’s.

Samsung Attorney

OK now then tell me what they already think than what they already

Mr. Schiller

I think that is true in many situations.

Samsung Attorney??

Putting something back looks like ???

You are saying the term you are showing us – 12??? You see those

Mr. Schiller

Yes

Samsung Attorney

You are getting a lot of people who have less knowledge than people already in market

Mr. Schiller

No. short period of time then owner for one or more years I would’tn say that ??

Judge Koh

We not going to be in session tomorrow or Thursday. You are excused

We’ll see you all Friday morning.

Jurors left – issues or should we adjourn?

Thank you Friday 9am
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