In this blog post, we will look at the reasons why Samsung Electronics lost its design patent lawsuit in the United States and its telecommunication patent claims were dismissed.
On August 24, 2012, Samsung Electronics, the largest electronics company in South Korea, lost a patent dispute with Apple and was forced to pay a huge amount of compensation. In addition, Apple filed a lawsuit to ban the sale of some of Samsung Electronics’ mobile phones, which has led to a tense situation in the Korean industry. The lawsuit began when Apple claimed that Samsung Electronics had stolen its mobile phone design. Samsung Electronics countered by claiming that Apple’s mobile phones infringed on its communication patents, citing the fact that Apple’s mobile phones used its communication technology, but the claim was completely ignored by the American jury. This case made many people realize the value of design patents and the fact that technology is not everything.
Even if it cannot be denied that there was an element of borrowing in terms of design, one thing that was disappointing was the fact that the American jury completely ignored the claim of infringement of communication patents made by Samsung Electronics. It was difficult to understand how the technical aspects could be ignored in the United States, where Silicon Valley, the center of global technology development, is located. Every year, many Korean companies pay royalties to companies in various countries, including the United States and Japan, for the use of their technology. However, when their own technology patents are infringed, they are not protected, which seems very unfair. No matter how powerful a country is, it must collect royalties from its own companies and be lenient when its own companies infringe on the patents of other countries. I have a question about how this should be viewed.
Seeing this attitude of the American jurors, I was reminded of the case of H. Collbran, an American engineer who took control of the company in exchange for introducing electrical technology and then handed the company over to Japan when his debts mounted up during the period when the fate of the Korean Empire was on the decline.
After the opening of the port in 1876, Korea began to fully embrace Western culture. Among them, the advanced science and technology of the West was an object of admiration and wonder, and the acceptance of such technology was seen as an important way to avoid imperialist invasion. In particular, electricity was seen as a symbol of modernization because of its practicality and convenience, and the country was eager to introduce it. In 1887, seven years after the invention of the incandescent light bulb, electric lights were installed in the palace, and in 1898, construction of an electric railway began in the city of Hanseong. The company that oversaw this was the Hansung Electric Company, which was established with full investment from the Imperial Household of the Korean Empire.
Hansung Electric Company was established with the full funding of the imperial family as part of the Joseon Empire’s policy of promoting industry and commerce, but ownership soon passed to an American. When the company’s management rights were transferred to American H. Colburn, the company was left in his hands without any thought of technology transfer, and the company accumulated debt and was transferred to Japan without the permission of the imperial family. In the process of Hanseong Electric Company’s transition to Japan, the Korean Empire made a huge mistake: it failed to quickly acquire the technology and regain control of the company’s operations. A Korean researcher evaluated the Korean Empire’s response to Hanseong Electric Company at the time as follows.
“The excessive faith in the practicality of Western advanced technology and the simple idea that technology transfer will take place on its own have prevented the monopoly of American technology, and we want to evaluate the company whose ownership has been transferred.”
In other words, Hansung Electric Company was taken over by the Japanese because of the naive idea that technology would be transferred naturally once it was imported. This allows us to consider the following.
“Even though the Emperor Gojong of the Korean Empire invested a huge amount of money in the Hansung Electric Company, the royal family eventually handed the company over to Japan without taking the lead in electrical technology because it failed to take the necessary measures to secure ownership of the technology.”
Like these past cases, I wonder if Samsung Electronics has made a similar mistake. The naivety of the Korean Empire, which was isolated by the ambitions of Western powers and Japan, and its reliance entirely on American H. Colburn, and the situation in which Samsung Electronics downplayed Apple’s design patent lawsuit in the international situation and only claimed that Apple had infringed on its communication patent after the problem had grown, seem to be no different. Samsung Electronics initially reacted to Apple’s design patent lawsuit with a nonchalant response, but when the lawsuit escalated, it began to defend itself by claiming infringement of communication patents, but it appears that it was not prepared at all for whether the technology would be protected in the United States.
Of course, I don’t think the company didn’t take any action at all. However, it would have been wiser to claim their rights by considering all possible situations rather than being overconfident that their communication patents would be protected. They also had to consider the fact that the United States has a jury system. Jurors are not experts in communication technology, but are composed of citizens from various occupations. They had to present clear evidence and arguments that “we did not copy” in relation to the design patent infringement, and I question whether it was right to attempt to settle the case by claiming the infringement of the communication patent. In the end, Samsung not only lost the lawsuit, but also had its claim to the communication patent ignored.
The Korean Empire also did not take action in relation to technology transfer. When Kolbrane tried to sell Hansung Electric Company to the Japanese, Emperor Gojong tried to get the company back and even asked the US embassy for help, but he was unable to exert any influence. Kolbrane not only left the company in a serious deficit, but most of the deficit was caused by the huge salaries that had to be paid to American and Japanese technicians. As a result of not establishing a school to train engineers with the idea that technology transfer would be a given, the company eventually moved to Japan and the technology transfer did not take place. As such, if you do not thoroughly prepare for the rights to technology, you will be deprived of the initiative without even having enough say, as was the case with Hansung Electric Company and Samsung Electronics. In the end, thorough management of technology is the only way to ensure that you have enough say.
This point of view I am presenting may be seen as being nationalistic and taking Samsung Electronics’ side. However, this patent lawsuit dispute is just one example, and what I ultimately want to emphasize is the fact that technology management is just as important as technology development. The “management” referred to here is to prepare for the right to assert the rights to the developed technology to the fullest extent possible and to thoroughly prepare to ensure that the owner of the technology has sufficient say in the event of infringement. The more unstable the international situation, the greater the likelihood of a ruling that is in favor of the home country, so it is necessary to prepare for this. Otherwise, the company will lose its technological leadership, as happened to Hansung Electric.
