Semiconductor Hegemony War, Patent Lawsuits, and Regulatory Tightening... Samsung Suffering Triple Hardships

Domestic Companies' US Lawsuits Up 34% to 129 Cases by Q3 Last Year
US Government Re-invites Samsung to Semiconductor Meeting...Investment Pressure
Domestic Moves to Strengthen Regulations Including K-Discovery Legislation

[Asia Economy Reporter Suyeon Woo] The recent shift of global patent trolls (global patent management companies·NPEs) toward semiconductor technology is due to the active development and patent filings in this sector. This also indicates that the global competition to secure new technologies in the semiconductor field is extremely fierce.

Among them, Samsung Electronics, a leading domestic semiconductor company, is suffering as it becomes a target of global NPE patent lawsuits. Samsung Electronics, standing in the middle of the semiconductor hegemony war without a leader, has to face global patent lawsuits, and domestically, the legislation of the Korean-style evidence collection system (K-Discovery) is being promoted, putting the company in a ‘triple hardship (三重苦)’ situation.

Rapid Increase in Semiconductor Patent Filings...Entering Intellectual Property Rights Securing Battle

According to the Korean Intellectual Property Office, Korea's international patent applications (PCT applications) surpassed 20,000 for the first time last year, ranking 4th in the world after China, the United States, and Japan. By company, Samsung Electronics ranked 2nd globally with 3,093 applications, following China's Huawei (5,464 applications). LG Electronics ranked 4th with 2,759 applications. The fact that two Korean companies occupy two of the top five spots in securing overseas intellectual property rights reflects the efforts of Korean companies in new technology development and their competitiveness in technology acquisition.

According to the World Intellectual Property Organization (WIPO) classification last year, semiconductor was the 5th most filed category among 35 fields in domestic patent applications. Along with major fields such as electrical machinery & energy, computer technology, e-commerce, and medical technology, semiconductors stand at the center of the patent war.

As of last year, the most active field for domestic intellectual property filings by large domestic companies was semiconductors (5,071 applications), and Samsung Electronics filed the most patents domestically among Korean companies with 7,446 applications. The top three companies filing patents with the Korean Intellectual Property Office from overseas were also semiconductor-related companies. The first was Japan’s semiconductor equipment specialist TEL, second was Taiwan’s foundry company TSMC, and third was Japan’s Semiconductor Energy Laboratory (SEL).

Samsung Caught in Semiconductor Hegemony War, Also Defending Patent Lawsuits

Samsung Electronics, which has entered the semiconductor hegemony war triggered by the US-China trade war, is facing difficulties as it gets entangled in the global patent war. With Vice Chairman Lee Jae-yong absent, the company must devise semiconductor strategies to compete against the US, China, and Taiwan, while also defending against technological attacks from overseas companies.

Samsung Electronics has been invited again after about a month to the US government's global semiconductor policy meeting scheduled for the 20th (local time). Since the meeting is held a day before the Korea-US summit, there is keen interest in what demands the US government might present to Samsung. At the same time, the US is also a battlefield where global patent lawsuits are actively conducted. Overseas NPEs operating in Europe and Israel mainly file lawsuits in US courts, where intellectual property rights concepts are well developed. This raises concerns that both the US government and courts could pressure Korean companies from both sides.

Rapid Increase in Domestic Companies Being Sued...‘K-Discovery’ Introduction Imminent

Recently, the number of patent infringement lawsuits filed against domestic companies has surged sharply. According to the Korea Intellectual Property Protection Agency, the number of patent infringement lawsuits filed against Korean companies in the US reached 129 cases by the third quarter of last year, a 34% increase compared to the previous year. About half of these were related to electrical and electronic patents, with a significant portion also in the information and communication field.

Lee Sang-hee, a specialist at the Korea Intellectual Property Protection Agency, advised, "If Korean products applying specific technologies are judged to have global market competitiveness and NPEs have secured those patents, related lawsuits will inevitably increase. Domestic companies also need to make full use of prior information to prepare in advance."

Additionally, there is a recent movement to strengthen regulations related to patent law domestically. The Korean Intellectual Property Office is promoting the legislation of the ‘Korean-style evidence collection system (K-Discovery)’ under the pretext of protecting patent holders, but the industry expresses concerns that this will provide overseas companies with another basis to file lawsuits against domestic companies. An industry insider said, "If K-Discovery passes, parties in patent lawsuits will be able to directly request related materials from each other and request on-site investigations by the court. It is obvious that lawsuits by overseas companies against domestic companies will surge."