[‘Korean Companies Hunting Ground’ Texas District Court - ① Litigation Status] Samsung Electronics, Hyundai Motor, LG, SK, 783 Patent Lawsuits Since 1997

Number of Patent Lawsuits by Major Korean Export Companies
More Than Three Times That of the Six Major US Big Tech Firms
Utilizing Court Tendencies Favorable to Patent Holders
Focused Litigation Against Korean Large Corporations

The U.S. Federal District Court for the Eastern District of Texas is becoming a ‘patent lawsuit hunting ground’ for major Korean export companies. This is because ‘NPEs (Non-Practicing Entities, patent management firms),’ known as ‘patent trolls,’ are filing lawsuits primarily against Korea’s leading export companies such as Samsung, Hyundai Motor, LG, and SK in the Texas court, which tends to be favorable to patent holders.

[Image source=Beomryul Newspaper]

According to a comprehensive analysis of patent lawsuits in the U.S. Federal District Court for the Eastern District of Texas conducted by Law Times using CourtLink, a database for searching U.S. court complaints and rulings, major Korean export companies including Samsung Electronics, Hyundai Motor, LG Electronics, and SK Hynix have faced a total of 783 patent lawsuits from the first case filed in February 1997 up to June 14, 2024. The breakdown is as follows: △Samsung Electronics 511 cases △LG Electronics 248 cases △Hyundai Motor 18 cases △SK Hynix 6 cases. Among these, 670 cases have been closed, and 113 cases are still ongoing.

The number of patent infringement cases filed against Korean companies far exceeds those against U.S. companies. The total number of patent lawsuits filed against six major U.S. big tech companies?Apple, Google, Amazon, Microsoft, Meta, and Tesla?in the Eastern and Western District Courts of Texas is 242, which is only 30% of the number of cases filed against the four major Korean companies. For example, Apple, which competes with Samsung Electronics for the top spot in the global smartphone market, has faced a total of 66 patent lawsuits in the same court, which is about one-tenth (12.9%) of Samsung Electronics’ cases.

In the U.S., most patent infringement lawsuits are filed by NPEs. NPEs purchase patents from patent holders and then demand large royalty payments from companies. If these demands are refused, they file lawsuits to obtain substantial settlements or damages. According to an analysis by the Intellectual Property Protection Comprehensive Portal, there are over 600 major NPEs worldwide that hold patents and engage in litigation.

In this context, Korean companies have become prime targets for concentrated attacks in the Eastern District Court of Texas, which is known for its pro-patent holder stance. The Eastern District of Texas is also where former Samsung patent executive Seungho Ahn, after leaving Samsung, established an NPE and filed lawsuits against Samsung. On May 9, the court’s Chief Judge J. Rodney Gilstrap dismissed Ahn’s claims and ruled in favor of Samsung Electronics. This ruling is considered a ‘rare’ case of a Korean company winning in the Texas court, largely thanks to evidence submitted by Korean prosecutors who uncovered through digital forensics that Ahn had illegally taken Samsung’s confidential information.

Even when Korean companies win patent lawsuits against NPEs, it is often described as a ‘Pyrrhic victory.’ In the U.S., even if a party wins, each side bears its own litigation costs, which are known to reach $8 million to $10 million (approximately 11 billion to 13.7 billion KRW) per case. The longer the litigation lasts, the higher the costs. Korean conglomerates reportedly find it difficult to bear the litigation costs and time, so they often end up settling by paying large sums reluctantly to conclude the lawsuits.

Yoonji Hong, Sungkyu Lee, Hyun Ahn, Jinyoung Lee, Law Times reporters

※This article is based on content supplied by Law Times.