Evidence shows Samsung Electronics use mobile technology without paying patent fees

Posted on : 2018-05-23 16:56 KST Modified on : 2019-10-19 20:29 KST
Intel has paid 10 billion won in patent fees for same technology
The Samsung Galaxy S7 (Hankyoreh archives)
The Samsung Galaxy S7 (Hankyoreh archives)

On May 22, evidence came to light that Samsung Electronics used key mobile technology for three years without paying patent fees and then, when it found itself at a disadvantage in litigation, contacted a national university that employed the professor who is the patent holder and induced it to file a countersuit claiming the patent rights. Unlike Samsung Electronics, Intel has paid this professor 10 billion won (US$9.27 million) in total fees to use the patented technology.

This story begins back in 2001, when a technology called bulk FinFET was invented through a joint research project between the Korea Advanced Institute of Science and Technology (KAIST) and Wonkwang University, which was then the employer of Lee Jong-ho, a professor of electrical engineering at Seoul National University. Bulk FinFET is a three-dimensional transistor technology used in smartphones and tablet computers that speeds up mobile devices through high performance and low energy consumption.

Normally, patent rights belong to the organization to which researchers belong at the time of invention, but public documents submitted to a US court show that Wonkwang University declined these rights, citing its inability to fund the patent application. KAIST also only applied for the domestic patent and declined to pursue patents overseas because of funding issues. After Lee transferred to Kyungpook National University (KNU) in Mar. 2002, he asked the university to apply for an overseas patent, but KNU also rejected his request.

In the end, Lee applied for an overseas patent under his own name and then transferred the patent rights to KIP, a subsidiary of KAIST that was established to manage patent rights.

It was in 2012 that this technology began to gain attention. After Lee and KIP learned that Intel was using their technology, they requested and received 10 billion won in total patent fees. But even though Samsung Electronics has also been using this technology on devices since the Galaxy S6 in 2015, it has stubbornly refused to pay patent fees, unlike Intel.

Negotiations over fees fell through after Samsung Electronics made a ridiculously low offer, and then in 2016 KIP sued the company for patent infringement in the US District Court for the Eastern District of Texas. At the end of 2017, KIP filed the same lawsuit about the domestic patent. “We had no choice but to file the lawsuit because Samsung Electronics has ignored several requests to pay patent fees,” said a KIP spokesperson.

Samsung tried to invalidate Lee’s patent rights

Samsung was galvanized to take action after the patent lawsuit in the US began to go against it.

In Oct. 2017, the US Patent Trial and Appeal Board dismissed an injunction filed by Samsung Electronics to invalidate Lee Jong-ho’s patent rights. After that, Samsung Electronics argued before the court that the patent rights had been improperly determined, but the court found this argument groundless in February. “In such cases, normally the next step is to settle” because of the high likelihood of losing the trial, explained an American attorney who specializes in US patent law. If the court rules against Samsung Electronics, the damages resulting from its failure to pay royalties for three years are likely to add up to tens of billions of won.

But instead of settling, Samsung Electronics opted for another approach. Since the end of January, company staff have met with KNU about a dozen times and asked the university to confirm that it has the rights to Lee’s patent. This has prompted suspicions that Samsung Electronics is attempting to sway the trial by mobilizing the university to dispute the rights to the patent. If a court concludes that the plaintiff in a patent infringement lawsuit is not the actual patent holder, it can throw out the lawsuit.

“Samsung Electronics has been asking us whether this patent belongs to the university,” acknowledged Choi Je-yong, director of KNU’s industrial and academic cooperation team, in a phone call with The Hankyoreh.

After granting Samsung Electronics’ request, KNU sent Lee a contents-certified letter on May 4, shortly before the district court was scheduled to make its ruling on June 11. The letter said, “The related regulations and the national R&D agreement confirm that the US patent should belong to Kyungpook National University. Please submit a statement transferring the American patent to the university.”

During this process, the university rejected Lee’s offer to discuss the matter with an attorney or another expert.

The problem is that KNU is not in a position to plausibly claim ownership of the patent. The university’s claim is based on the fact that Lee was a professor at the university when he submitted the patent to the US and because of the provisions in a R&D project agreement related to technology patents. This agreement, which was signed in July 2002, states that when research produces industrial intellectual property rights and other intangible results, a portion of those results corresponding to the share of government investment belongs to the university.

But because Lee invented the patented technology while he was employed by Wonkwang University, KNU’s argument may not hold water. Lee transferred the patented technology to KAIST, which was a co-sponsor of the research project, in Dec. 2001, before he started working at KNU, and after KAIST applied for a domestic patent in Jan. 2002, it even gave Lee written confirmation that it had returned the overseas patent rights to him. Furthermore, the research project report that Lee submitted to KNU in 2003 states that Lee had already applied for a US patent for the technology in question.

“There were dozens of patents, and the person who was checking his projects couldn’t have checked them all. Even we weren’t aware of this [at the time],” said an administrator at KNU.

“When a university gives up its rights, those rights belong fully to the professor in question. If [the university claiming ownership] didn’t contribute to the research leading to the invention of the technology in question, the mere fact that the professor was employed there when he applied for the patent doesn’t give the university the right to claim ownership,” said an official at the Ministry of Education who is in charge of matters related to government research projects and patents.

“Because the agreement [that KNU has cited as evidence for its ownership] was drafted in July 2002, after the invention was completed, and because the period of the research project in question began on July 1, 2002, an invention that was already completed in Jan. 2002, before that period began, cannot be regarded as being subject to that agreement,” said Jung Yeon-taek, a lawyer who reviewed this case at KIP’s request, in a written opinion.

Kyungpook National University’s main administrative building in Daegu’s Buk District (Hankyoreh archives)
Kyungpook National University’s main administrative building in Daegu’s Buk District (Hankyoreh archives)

Samsung suspected of forcing KNU to take legal action

This has raised suspicions that Samsung Electronics’ request forced KNU to take legal action despite the low chances of winning. The dozen or so meetings between Samsung Electronics and KNU between January and March are detailed in public documents that KIP submitted to the court in April. These documents also state that Samsung’s lawyer submitted documents in March that could only be reviewed by KNU’s lawyers. “This suggests that Samsung Electronics could have offered KNU compensation,” KIP said.

“I was aware [of the litigation between KIP and Samsung Electronics], but this has nothing to do with Samsung Electronics. We are acting according to our rules. When we inquired with our legal service, we were told that the American patent rights likely belong to KNU,” Choi Je-yong said.

But when presented with the fact that KAIST had already transferred the overseas patent rights to Lee, another patent official at KNU said they “aren’t aware of that.” This essentially demonstrates that KNU embarked on litigation without understanding a crucial fact related to the patent ownership.

“Our understanding is that the ownership of the patent belongs to the relevant organizations, including Kyungpook National University. We cannot go into details because of the pending trial,” said a spokesperson for Samsung Electronics when asked by The Hankyoreh to clarify the facts of the case.

By Song Chae Kyung-hwa, staff reporter

Please direct comments or questions to [english@hani.co.kr]

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