Patent war escalates

Samsung Electronics and Apple are engaged in an intellectual property dispute in courts around the world that involve key devices like the Samsung Galaxy Tab 10.1, top right, the Galaxy S2 smartphone, bottom right, the Apple iPad, top left, and the iPhone 4. (Photo : Yonhap)

Korean firms entangled in global battles

Samsung Electronics’ recent setback in its intellectual property feud with Apple extends a disturbing streak of punches to the stomach Korean companies have taken in patent wrangling with foreign competitors.

The scorch-the-earth fight between the two technology giants has raised questions on whether the patent disputes between global companies are becoming pathological and pointless as well as sparking further debate on whether intellectual property laws are killing innovation instead of inspiring it.

But regardless of all the arguments on the absurdity of patent laws, Korean companies’ ineptitude under the current legal environment warrants legitimate concern, especially while they are strengthening their efforts to go global.

“From the applying of technologies to the listing of patents, protecting the rights and preparing for legal battles, you have to admit that Korean businesses have yet to build a working ecosystem in regards of intellectual property,’’ said Lee Hye-young, an official from the Korean Intellectual Property Office (KIPO).

“You need a balance between the abilities in business management, legal prowess and financial capabilities and most Korean companies have yet to acquire this balance, which doesn’t bode well for them in terms of global competitiveness.’’

Samsung now nurses a bruised ego and agonizes over the business ramifications of what increasingly appears a losing fight against Apple, which accuses its rival of copying iPhones and iPads in its own mobile Internet devices, a fate that has befallen numerous other local companies.

Kolon vs. DuPont

Kolon Industries is still reeling from the uppercut it took from iconic U.S. company DuPont, which was awarded around $920 million in damages by a jury in Virginia in a dispute over anti-ballistic fiber used in body armor for police officers and soldiers.

The jurors concluded that Kolon unlawfully obtained trade secrets related to Kevlar, DuPont’s brand of anti-ballistic fiber, through the American firm’s former engineers and marketers. The courtroom loss could prove significant for Kolon, which had researched anti-ballistic fiber for three decades before finally beginning mass production in 2006.

The products were seen as a building block for the company’s fiber business but it now faces a penalty that is about 300-times the 3 billion won (about $2.6 million) it earned from exports in the past five years. After the ruling in November last year, Kolon immediately announced it will appeal, but has yet to submit the papers.

LG Display, which competes with Samsung for the title of the world’s largest liquid crystal display (LCD) provider, is entangled in a patent dispute with U.S. firm Anvik over flat-screen technologies. LG Electronics is feuding with Toshiba Samsung Storage Technology over trade secrets about manufacturing optical discs.

SK hynix vs. Rambus

SK hynix, the world’s second-largest computer memory chipmaker, has been a rare success story as it continues to have the upper-hand in its legal dispute with U.S. technology licensing firm Rambus.

The fight between the two goes back to 2000 when SK hynix was still Hyundai Electronics. Rambus was then launching a slew of lawsuits against semiconductor makers, a list that included Japan’s Hitachi, accusing them of infringing on its semiconductor-related patents.

Hyundai took the fight to Rambus by suing first, alleging that the patents in dispute were invalid. The Korean company, then Hynix Semiconductor, ended up on the losing side of a verdict in 2009 when a North California court upheld two of the three Rambus patents and valued the damages at $397 million.

SK hynix appealed with considerable success and managed to convince the U.S. Court of Appeals to overturn the verdict in May last year by highlighting Rambus’ destruction of trial evidence. It subsequently won an antitrust case brought by Rambus against DRAM manufacturers when a court ruled in February this year that there was no proof of price fixing.

Its fight with Apple aside, Samsung is one of the Korean companies better-prepared for patent disputes, signing cross-licensing deals with companies like IBM, Microsoft and Kodak.

Sometimes, the matter is less about complicated technology debates and legal discussions than pure stupidity.

“There are endless stories of Korean firms botching opportunities despite having sophisticated technology,’’ said KIPO’s Lee.

“For example, Korean companies were earliest out of the gate in digital music players but now have nothing to show for it in a world reshaped by the Apple iPad. It’s baffling that some of these companies lost their patent rights through simple mistakes, like failing to pay fees. Then there are firms who failed to protect their patents from being gobbled up by patent trolls and found themselves paying royalties for the technology they originally developed.’’ <The Korea Times/Kim Tong-hyung>

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