[Viewpoint] Apple’s lawsuit serves as alarm bell

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[Viewpoint] Apple’s lawsuit serves as alarm bell

The Apple Corp.’s “copycat” lawsuit against Samsung, filed on April 15, is a reminder of the cruel reality of global competition. The two companies are fierce rivals in the smartphone market. At the same time, Samsung is the largest supplier of components to Apple. If Samsung decides to stop the supply, Apple will also suffer enormously. That’s why many were shocked by Apple’s decision to attack the company.

“We felt the mobile communications business of Samsung had crossed the line, and after trying for some time to work through the issue we decided we needed to rely on the courts,” Apple’s Chief Operating Officer Tony Cook said on April 20. He made it clear that no violation of patent rights would be tolerated.

Apple is already in smartphone patent wars against Nokia of Finland, Motorola of the United States and HTC of Taiwan.

The smartphone patent lawsuit is just an example. Whenever a new product comes out, the global war over patents intensifies. Korean companies, which largely rely on exports, have to be combat-ready at all times.

Samsung Electronics has 450 workers devoted to handling the patent issue, while LG Electronics assigned 200 for the same task. Between 2004 and 2010, foreign companies have filed 460 patent lawsuits against Korean firms, but the Korean Intellectual Property Office has determined that there are many more cases because the lawsuits are often not disclosed publicly.

What we must pay attention to now is that more and more lawsuits are being filed by non-practicing entities. Nicknamed “patent troll,” a non-practicing entity buys up patents from around the world, particularly focusing on information technology, and files lawsuits against companies in violation.

When a rival company files a patent lawsuit, often a counter suit is filed by finding its weakness in order to settle cases, but money is only one way out of a patent lawsuit filed by a non-practicing entity because it does not engage in any manufacturing business.

There are hundreds of NPEs, and they are subjects of horror for the manufacturing industry.

According to “Patent Freedom,” an U.S. Internet site providing information on NPEs, the top 25 lawsuits filed by NPEs from 2006 to 2010 were all against electronics and communications companies.

Of the Korean firms, Samsung had faced 51 lawsuits, which put it in seventh place, while LG faced 46 lawsuits, ranked at ninth. Last year alone, LG faced 15, and Samsung 12.

It is unclear how much Samsung and LG have paid to settle the cases or for the patents, because most contracts are confidential.

Although Korea is a strong exporter, it has long suffered deficits in the technology trade. The amount was $3.1 billion in 2008, but went up to $4.9 billion in 2009. During the first half of last year alone, the loss had already reached $4 billion.

No matter how good you are at producing goods, you are only making other people rich if you don’t have patents. It is precisely why the government needs to pay attention to the issue and come up with a fundamental solution.

Countries are beefing up their efforts to strengthen policies on intellectual property rights, including patents. Japan in 2002 established an act governing intellectual property. The U.S. and China also have established intellectual property laws.

To deal with the global trend, the Lee Myung-bak administration drafted a bill to establish a basic act governing intellectual property, at the initiative of the prime minister’s office, and submitted it to the National Assembly last October.

The bill, however, has been stalled in the legislature. Although the lawmakers are reviewing the bill during this month’s session, they cannot guarantee that it will be approved.

Three bills with similar contents had already been sponsored and submitted by lawmakers during the 17th National Assembly term, but they were never voted on and were automatically killed.

The situation is extremely frustrating. It is unclear whether the National Assembly does not understand the seriousness and urgency of the global patent war or is simply ignoring it. Apple’s declaration to start a war against Samsung over the smartphone patent should be an alarm bell to the National Assembly.

*The writer is the JoongAng Ilbo’s senior reporter for industrial news.

By Cha Jin-yong
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