Competition for patents is intensifying among global technology companies as growing technological convergence has blurred the boundaries that once separated them. This race for patents was recently well illustrated by Apple Inc. and Google Inc.
In June, Apple purchased some 6,000 telecom patents held by bankrupt Canadian company Nortel for $4.5 billion. The next month, Google went a step further by acquiring Motorola Mobility’s 17,000 patents and its handset manufacturing facilities for $12.5 billion. It also purchased patents from IBM.
These deals beefed up the two technology giants’ meager telecom patent portfolios, helping them improve their positions in the scramble for supremacy in the global smartphone market.
The smartphone is the prime example of technological convergence. It represents the convergence of three disparate technologies ― wireless, operating system and hardware. This convergence has led many technology companies previously engaged in different businesses to compete in the same sector, sending them scrambling for patents to establish technological superiority.
As the global patent arms race heats up, high-profile patent litigation is proliferating, reflecting the increasing tendency of technology companies to use their hard-won patents as a weapon to keep their rivals in check. They tend to file patent lawsuits against competitors to prevent them from launching new products or to force them to pay a license fee, which would make their products more expensive.
In this escalating global patent war, Korean companies are increasingly becoming the target of patent offensives from foreign technology powerhouses. The most prominent example is Samsung Electronics, which is staging a make-or-break fight against Apple.
On Wednesday, Samsung filed suits with courts in France and Italy to ban sales of the iPhone 4S, claiming that the U.S. company has violated its wireless patents. This signals that Samsung has started to mount a full-frontal assault against Apple, which launched a patent war against it in April. A company official said Samsung “will pay Apple back for what it has done to us.”
Last month, LG Electronics and its sister company LG Innotek also took action to fight off patent infringement lawsuits from Osram, a unit of German technology giant Siemens. They jointly asked the Seoul Central District Court to ban sales of cars from German companies BMW and Audi in Korea. They claimed that their cars use Osram’s light-emitting diodes for headlights, which violated their LED patents.
In June, Osram triggered a battle by seeking a sales ban on LCD TVs from LG Electronics and Samsung Electronics in Germany and the U.S. It said the Korean TVs used LED products from LG Innotek and Samsung LED that infringed its patents.
Foreign technology companies assault not only big Korean players but small and medium-sized enterprises as well. For instance, Nichia Chemical Industry of Japan, a leader in the LED industry, has been warning many Korean small LED companies to pay a licensing fee or face a patent suit. These SMEs have recently formed an alliance to promote a legal battle and invalidate Nichia’s LED patents.
Global patent wars are likely to keep raging as the application of disparate technologies to product development is increasing, multiplying the need for patents. This can be illustrated by the example of hybrid cars. According to a study, a carmaker needs as many as 58,000 patented technologies to produce hybrid cars. The huge number of required patents suggests that patent disputes could surge by the time hybrid cars enter the mainstream market.
The prospect of escalating patent wars has led the Korean government to set up a special committee tasked with creating, protecting and utilizing intellectual property, including patents. The establishment of the National Intellectual Property Committee is a welcome move, although it remains to be seen whether it can play the expected role.
In the first place, the committee needs to come up with measures to ensure that the nation’s massive R&D investment translates into more patents and copyrights. There is also an urgent need to reform the patent litigation system for a swift and fair resolution of patent disputes involving SMEs. In many cases, small companies that file patent infringement suits go bankrupt even before their disputes are resolved.
More than anything else, Korea needs to foster high-caliber patent research institutes that can provide up-to-date information on global patent trends and leading technologies developed by foreign companies. Such information would help domestic companies avoid becoming embroiled in patent litigation.
