Attacks on Samsung Electronics by patent trolls are becoming increasingly cunning. These entities are focusing on purchasing patents with broad scopes that can be applied to various products and then targeting companies that release related products. Among global information technology (IT) companies in the semiconductor, smartphone, home appliance, and telecommunications equipment sectors, Samsung Electronics, which has the widest range of product lines, has become their primary target.
According to the patent information analysis firm Unified Patents on March 17, Samsung Electronics has faced 404 patent infringement lawsuits in the United States alone over the past five years (2019-2023), which equates to one lawsuit every 4.5 days. Over half of these cases, 208 in total, were filed by Non-Practicing Entities (NPEs).
The targeting of Samsung Electronics by NPEs is clear from the numbers. Over the past five years, the number of patent infringement lawsuits filed by NPEs shows Samsung (208 cases) significantly leading over Google (168 cases), Apple (142 cases), LG Electronics (85 cases), and Amazon (74 cases).
The patent infringement lawsuit filed against Samsung Electronics by KP Innovations2 on Feb. 19 has several peculiar aspects. First is the target of the lawsuit. While Chinese companies like Huawei and Xiaomi, as well as Google and Motorola, have released foldable phones, the NPE targeted only Samsung Electronics.
The content of the infringement is also questionable. KP Innovations2 took issue with Samsung’s foldable phones having two displays and cameras each, a seemingly obvious necessity due to the nature of foldable phones. However, they claimed this basic structure as their own. With Samsung holding a 66.4% share of the global foldable phone market last year, from KP Innovations2’s perspective, targeting Samsung alone seemed sufficient. An industry insider commented, “From the standpoint of the targeted large corporations, reaching a settlement is often the only option because, in the worst-case scenario, product sales could be banned, or they could end up paying a significant amount in damages after a lengthy lawsuit.”
The fact that Samsung is a company with a broad ‘frontline’ is also one reason why it becomes prey for NPEs. From memory semiconductors to smartphones, Samsung produces almost all products handled by the electronics industry. In particular, home appliances, smartphones, and PCs, which are not just simple components but set products, incorporate numerous technologies, making them ripe targets for NPEs.
The problem is that the tactics of NPEs are becoming more sophisticated. There is an increasing trend of acquiring patents that, while not based on groundbreaking technology, have broad scopes and can be applied to various products, then using these patents in lawsuits.
According to a study published in December last year in the Journal of Intellectual Property titled “A Study on the Qualitative Characteristics of NPE Litigation Patents,” NPEs filed an average of 6.2 lawsuits per patent. In contrast, manufacturing companies that develop their technology directly filed an average of only 1.8 lawsuits per patent. Researcher Lim So-jin analyzed, “The patents involved in NPE lawsuits have broader scopes and higher technical uncertainty than those of manufacturing companies.” Essentially, it’s a strategy of purchasing patents that are suitable for litigation at a low cost.
There are also NPEs that focus exclusively on a particular technology for their lawsuits. Texas IP Ventures’ subsidiary KT Imaging buys only image sensor technology from small-scale research and development (R&D) companies and sues large corporations like Samsung and Apple. Image sensors are used in a wide range of fields, including smartphones, tablet PCs, autonomous driving, and the Internet of Things (IoT), offering numerous opportunities for litigation. In 2022, the company purchased seven patents from the Taiwanese company Kingpak Tech and based on these, filed lawsuits against five corporations, including Samsung Electronics.
‘Boomerang patents’ are another issue. These are patents owned by domestic small and medium-sized enterprises that are purchased by American NPEs and then used to attack domestic companies. According to the Korean Statistical Office, a total of 890 Korean patents have been transferred to American companies. Among the 1,317 patents used by foreign NPEs in lawsuits against domestic companies from 2013 to 2022, 52 were such boomerang patents.
Samsung is responding by accelerating its patent applications. According to IFI Claims, Samsung Electronics filed 6,165 patents in the United States last year, ranking first. Including its subsidiary Samsung Display (2,564 patents), the total reaches 9,000 patents. This surpasses the second-place Qualcomm (3,854 patents) and third-place TSMC (3,687 patents) by a significant margin. Cumulatively, Samsung Electronics holds the most patents in the United States, with a total of 93,327.