This blog post examines why Samsung Electronics lost a design patent lawsuit in the U.S. and why its communication patent claims were disregarded.
On August 24, 2012, Samsung Electronics, South Korea’s largest electronics company, lost a patent dispute with Apple and was ordered to pay substantial damages. Furthermore, Apple filed a sales ban lawsuit against some of Samsung’s phones, creating a tense situation for the relevant Korean industry. The lawsuit began when Apple claimed Samsung had copied the design of its phones. Samsung countered by arguing that Apple’s phones infringed on its communication patents, citing the use of its communication technology. However, this argument was completely dismissed by the U.S. jury. This case led many to recognize the value of design patents anew and realize that technology alone isn’t everything.
While it’s undeniable that design elements were borrowed, one disappointing aspect lingered: the fact that the U.S. jury completely disregarded Samsung’s claims of communication patent infringement. It was hard to understand how the U.S., home to Silicon Valley, the center of global technology development, could so dismissively ignore such a technical aspect. Every year, many Korean companies pay royalties for technology usage to firms in the US, Japan, and other countries. Yet, when their own technological patents are infringed upon, they receive no protection. This felt profoundly unfair. No matter how powerful a nation is, how should we view the practice of rigorously collecting royalties from its own companies while being lenient when those same companies infringe on foreign patents?
Observing this attitude of the American jurors, I recalled the case of H. Collbran, an American engineer who, during the waning years of the Korean Empire, took control of a company in exchange for introducing electrical technology, only to hand it over to Japan when debts mounted.
After opening its ports in 1876, Korea began actively embracing Western civilization. Among these, Western advanced science and technology were objects of admiration and wonder, and adopting such technology was seen as a crucial way to avoid imperialist invasion. Electricity, in particular, was regarded as a symbol of modernization due to its practicality and convenience, and the state also sought to introduce it urgently. Just seven years after the invention of the incandescent light bulb, in 1887, electric lights were lit in the royal palace. By 1898, construction began on an electric railway in Hanseong-bu (present-day Seoul). The company overseeing this project was the Hanseong Electric Company, established with full investment from the Imperial Court of the Korean Empire.
Although the Hanseong Electric Company was established as part of the Korean Empire’s policy to promote industry and commerce, with the Imperial Household providing all the capital, ownership soon passed to an American. When the operational rights transferred to the American H. Colbran, the company was controlled at his whim, with no thought given to technology transfer. As debts accumulated, it was sold to Japan without the Imperial Household’s permission. In the process of Hanseong Electric Company’s transfer to Japan, the Korean Imperial Court made a significant mistake: it failed to rapidly acquire the technology and regain control of the company’s operations. A Korean researcher assessed the Korean Empire’s handling of Hanseong Electric Company at the time as follows:
“Due to an excessive belief in the practicality of Western advanced technology and the simplistic notion that technology transfer would occur naturally, they failed to prevent American technological monopoly. Ultimately, the company is assessed as having transferred ownership.”
In other words, the Hanseong Electric Company fell into Japanese hands due to the naive notion that technology would naturally transfer once it was brought in. This leads to the following reflection:
“Despite Emperor Gojong of the Korean Empire investing massive funds into the Hanseong Electric Company, the imperial court ultimately failed to gain control over the electrical technology and handed the company over to Japan because it did not prepare the necessary countermeasures to secure ownership of the technology.”
This past case makes one wonder if Samsung Electronics has committed a similar mistake. The naivety of the Korean Empire, isolated by Western powers and Japanese ambitions, placing complete trust in the American H. Colbran, seems strikingly similar to Samsung Electronics’ situation. Samsung downplayed Apple’s design patent lawsuits amid the international landscape, only to later claim Apple infringed on its communication patents after the issue escalated. Samsung Electronics initially reacted casually to Apple’s design patent lawsuit, but as the litigation escalated, it shifted to a defensive stance by asserting infringement of its communication patents. However, it appears the company made no preparations whatsoever regarding whether that technology could be protected in the U.S.
Of course, I don’t believe there was absolutely no corporate-level response. Still, rather than acting out of arrogance that their communication patents would definitely be protected, it would have been wiser to consider all possible scenarios before asserting their rights. Furthermore, they should have considered the existence of the jury system in the U.S. Juries are composed of citizens from diverse professions, not communication technology experts. They needed to present clear evidence and arguments to the jury regarding design patent infringement, stating “We did not copy.” It is questionable whether attempting to deflect the case by asserting communication patent infringement was the right approach. Ultimately, Samsung not only lost the lawsuit but also saw its communication patent claims dismissed.
The Korean Empire was not entirely without response regarding technology transfer. When Colbran attempted to sell the Hanseong Electric Company to the Japanese, Emperor Gojong sought to reclaim the company and even requested assistance from the American embassy. However, he ultimately failed to exert influence. Not only had Colbran driven the company into severe financial deficit, but there were also very few Korean technicians capable of handling electric trams or lighting. The financial deficit was largely due to the enormous salaries that had to be paid to American and Japanese technicians. The company failed to establish a school to train technicians, assuming technology transfer would naturally occur. Consequently, the company was ultimately transferred to Japan, and no technology transfer took place. This demonstrates that without thoroughly securing rights to technology, companies like the Hanseong Electric Company or Samsung Electronics risk losing control without even gaining sufficient leverage. Ultimately, only rigorous management of technology guarantees sufficient leverage.
This perspective I’m presenting might seem overly nationalistic or biased toward Samsung Electronics. However, this patent lawsuit dispute is merely one example. What I ultimately emphasize is that technology management is just as crucial as technology development. The ‘management’ referred to here means preparing to fully assert rights over developed technologies and meticulously preparing to secure sufficient voice as the technology owner when infringement occurs. The greater the instability in the international situation, the higher the likelihood of country-centric rulings, making preparation essential. Otherwise, one risks losing technological leadership, just like Hansung Electric Company did.
