Samsung, Apple Grab 4G Patents
By JUNG-AH LEE
SEOUL—Samsung Electronics Co. and Apple Inc. AAPL -0.33% are building up their patent portfolios for fourth-generation wireless network technology, an area that may become the next battleground for the two technology giants as they duke it out globally over intellectual property.
Telecom carriers world-wide are upgrading their networks to support more bandwidth for faster Internet access and data downloads on mobile devices, while smartphone makers are stepping up their rollout of handsets that can support so-called long-term evolution technology.
LTE technology promises faster data transfer speeds than conventional third-generation networks. Samsung's latest smartphone, the Galaxy S III, supports LTE. People familiar with the situation said that Apple's next iPhone, which the company is expected to unveil later Wednesday, also supports the technology.
LTE is widely expected to become the next wireless network standard, and holding a large number of patents will help companies shield themselves from potential litigation. The issue will be crucial for Apple and Samsung as they vie to become leaders in the fast-growing smartphone market.
The two companies are embroiled in more than 50 lawsuits spanning 10 countries. Last month, a U.S. federal jury awarded Apple more than $1 billion in damages, saying that Samsung violated six out of seven patents held by Apple. Samsung has said it would appeal the verdict.
According to data from the Korean Intellectual Property Office, which cites individual companies' filings to the European standards body called the European Telecommunications Standards Institute, Samsung held the largest number of LTE patents globally—at 819 at the end of June this year, up 21% from a year earlier. Apple held 318 patents related to LTE, up from none in 2011. Finnish handset maker Nokia Corp. had 389 patents.
"It's highly likely that Samsung will use its stronger position in LTE technology to continue to fight against Apple in the ongoing litigation," said Kim Hyoung-sik, an analyst at Taurus Investment & Securities.
A person familiar with Samsung's thinking said the heavy blow from the company's courtroom defeat in the U.S. hasn't diminished its appetite to continue, or even extend, the legal dispute.
The "fine itself may not be a huge problem for Samsung as it is expected to earn around 20 trillion won [$17.8 billion] in a year, but now, it all comes down to the matter of Samsung's reputation," the person said.
Apple acquired access to some 4G patents when it joined a consortium that bought Nortel Network Corp.'s patent portfolio last year, giving the Cupertino, Calif., company potential weapons to fight back.
Still, both companies may struggle to gain a victory from patents related to wireless standards. The jury in California found that Apple didn't infringe Samsung patents related to 3G wireless standards the company was using to defend itself. Jurors said they felt that since the technologies were part of a chip made by Intel Corp., INTC +0.34% which had a license for the patents, Apple wasn't infringing.
Analysts say attempts by Samsung to use its new technology standard patents may also come under the scrutiny of international antitrust regulators. The European Commission and South Korea's Fair Trade Commission are already investigating whether Samsung might have abused its position as a market leader in 3G wireless technology. Samsung has said it would cooperate with the European probe, while it has declined to comment on the South Korea probe.
Under the rules of an industry standards-setting body, electronics makers whose patents are in technology standards must license them to other companies in a fair, reasonable and nondiscriminatory manner, a concept known in intellectual-property circles as FRAND. Such patents are typically given a low monetary value by electronics companies in order to increase the affordability and appeal of the technical standard, and the likelihood of widespread adoption. But since the start of its litigation with Apple in April last year, Samsung has argued in courts around the world that its standards-related patents are undervalued.
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