Friday, December 28, 2012

Android-Android war raging in Korea as LG seeks injunction against Samsung Galaxy Note 10.1

Dow Jones Newswires reports on a statement by LG Display according to which it has requested a Korean court to "completely stop the sale, manufacture, and importation" of Samsung's Galaxy Note 10.1 tablet computer over the alleged infringement of three display patents. The injunction request is apparently a response to a December 7 Samsung lawsuit alleging the infringement of seven liquid crystal display (LCD) patents.

Display technology patents are generally outside my focus, and I don't have first-hand access to information on Korean lawsuits (I can access official documents in the U.S., and attend court hearings in, or at least obtain and analyze rulings from, several European jurisdictions). So I won't follow this in detail, but I do want to share three observations, just quickly:

  1. Both Samsung and LG are members of the Open Handset Alliance (OHA), the Google-controlled consortium behind Android. [Update on January 1, 2013] LG Electronics asked me to clarify that LG Display, which is suing Samsung, is a separate legal entity from LG Electronics. While both are part of the wider LG group, they have different legal teams, including their own intellectual property groups. [/Update] LG is now trying to get a major Android tablet banned.

    Hardware differentiation among device makers distributing the same mobile software platform is key, and it's not only in Google's interest but also good for consumers. And if company A believes that company B steals its hardware innovations, the only legal recourse it has is to bring patent infringement actions. In the alternative, everyone would be free to copy, which would run counter to the idea of differentiation and would serve as a disincentive for continued innovation. Therefore, the fact that both companies are members of the OHA doesn't mean that an Android-Android hardware patent lawsuit is unacceptable.

    An Android-Android software patent dispute would be a different thing. Competition among Android device makers is extremely fierce, with only Samsung making serious money and all others, except for Google-subsidized Motorola Mobility, being involved in a race to the bottom that no one except ZTE and Huawei can ultimately win. One way for some companies to escape from this race to the bottom would be to assert patents against weaker rivals. In August ,2011 Motorola Mobility, just a few days before reaching an agreement with Google, indicated that it was going to use its patents in order to gain a competitive advantage over other Android device makers. The acquisition took care of that threat, at the price of $12.5 billion that bought Google very little leverage against Apple and Microsoft. It remains to be seen whether other Android device makers will look for ways to use patents in order to enhance their relative competitiveness within the Android ecosystem. Most Android device makers are extremely weak in terms of patents, but they aren't all equally weak, and for an example, I wouldn't rule out that Sony owns some patents that could really be leveraged. If someone finds he's a little less weak, he may consider bullying some others.

  2. The OHA's rules apparently don't prevent Samsung and LG from asserting hardware patents against each other's Android-based products (in the alternative, the OHA would probably be an illegal cartel). Google is sitting on the sidelines watching its allies -- both companies have built "Nexus" lead devices for Google -- fight each other over display patents. Ultimately the solution will be a license deal, which will come with payments and, possibly, some restrictions concerning patents that protect differentiation. If Google accepts and even benefits from display patent enforcement within the Android ecosystem, it should also respect the intellectual property of patent holders from outside that ecosystem, such as (in alphabetical order) Apple, Microsoft, Nokia, and Oracle. Or even the lesser-known ones such as Gemalto, whose Android patent infringement case (brought against Samsung, HTC and Motorola in 2010) will go to trial in a few months. If Samsung and LG can protect their display technologies, there's no reason why other companies shouldn't protect their IP as well.

  3. Samsung's meteoric rise has made the company a prime target of patent infringement lawsuits. To some extent, that's just normal, and Samsung has the resources and the sophistication to deal with this. But it's currently fighting a multi-front war: it just retaliated against Ericsson, received a Statement of Objections from the European Commission over its assertions of standard-essential patents against Apple, is embroiled in more than 50 lawsuits worldwide with Apple, and now it has this fight with LG going on. Samsung would be well-advised to resolve as many issues as possible through licensing and focus only on the strategically most important battles.

    One company with which Samsung should seek a license deal if it doesn't already have one in place is Nokia. In my commentary on last week's Nokia-RIM settlement I expressed my belief that Nokia and Samsung most likely have an SEP license agreement in place, but Nokia is increasingly monetizing and asserting certain non-SEPs as well. I can't imagine that Samsung doesn't use any of Nokia's non-standard-essential inventions, given the breadth, depth and strength of that portfolio, so a solution is needed (unless it's already in place without anyone knowing about it).

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