Patent trolls target Samsung Electronics

Tech giant urged to enhance in-company patent management, sign cross-licenses.

By Baek Byung-yeul

Samsung Electronics has increasingly become a target for non-practicing entities (NPEs), also known as patent trolls, who file lawsuits against the tech giant, demanding royalties according to their patents for similar technologies, according to industry analysts, Wednesday.

Concerns have been growing that Korean companies fall easy prey to these patent trolls, as a former Samsung executive who was in charge of intellectual property management, recently filed a lawsuit against Samsung.

Korean companies will continue to be embroiled in such lawsuits as they are at the top of the world in terms of the number of intellectual property rights, adding that the more patents they hold, the more lawsuits against them will increase, the analysts said

An NPE is a company or person who holds patent rights. Instead of manufacturing or exploiting patented inventions, NPEs generate profits by patent trolling, or seeking licensing deals via negotiation.

According to data by the Korea Intellectual Property Protection Agency, Samsung was sued for patent infringements 403 times in the United States from 2017 to May 2021. During the same period, LG Electronics was involved in 199 cases, Hanwha and Hyundai Motor were involved in 11 cases, and SK hynix in seven cases.

The latest lawsuits Samsung is fighting are patent lawsuits filed by a company led by former Vice President Ahn Seung-ho. The executive is a U.S. patent attorney who worked for Samsung’s patent law department from 2010 to 2019. After leaving the company, he established an NPE called Synergy IP and submitted 10 patent lawsuits in partnership with U.S.-based company Staton Techiya LLC.

Despite Samsung being embroiled in numerous lawsuits, this case came as unusual, as its former executive, who had served as head of the company’s patent management, is directly involved. The patent technologies claimed by Ahn are mainly related to wireless audio technologies. These technologies are applied to Samsung’s smartphones, wireless earbuds and its Bixby artificial intelligence platform.

A Samsung Electronics official said, “The lawsuit was made known to the public by a court in Texas, the U.S. It is our principle not to discuss any legal disputes we are currently going through.”

An IT industry official said that Korean tech companies ― especially Samsung ― that operate various businesses, such as semiconductors, smartphones, TVs and home appliances, have become good targets for patent trolls, as these high-tech industries are intertwined with a large number of patented technologies.

“As Korean companies have secured a lot of patents, they are increasingly facing lawsuits. Moreover, Samsung is the main target of NPEs as it occupies the largest shares of many IT sectors, such as phones, chips and others,” the official said.

To defend themselves from such lawsuits, companies here are increasing their defense capabilities by strengthening in-company patent management organizations and signing cross-licenses with global companies in various business areas.

Ryan Song, a law professor at Kyung Hee University, said that protecting patent-related rights is an important part of doing business in the West ― such as in the U.S. and Europe ― to ensure that companies in those countries continue to exert influence in the global market. In this regard, Korean companies should also increase their measures against patent infringement.

“Since Korea is technologically advanced and the number of patent applications here is large compared to that of other developed countries, many issues related to patents arise. I think the ability of Korean companies to combat infringement is not strong overall in the industry. In patent lawsuits, big law firms here lack techniques compared to overseas law firms ― perhaps because they have not participated in such areas much yet,” Song said.