Samsung, Apple Amass 4G Patents for Battle
By JUNG-AH LEESEOUL—Samsung Electronics Co. 005930.SE +3.03% and Apple Inc. AAPL +1.39% are building patent portfolios of fourth-generation mobile-network technology, an area that is likely to become their next battleground over intellectual property.
Telecommunications carriers world-wide are upgrading their networks to support more bandwidth for faster Internet access and data downloads on mobile devices. Smartphone makers meanwhile are speeding the rollout of handsets that support long-term evolution 4G technology.
LTE promises faster data-transfer speeds than conventional third-generation networks. Samsung's latest smartphone, the Galaxy S III, supports LTE. Apple's iPhone 5, which the company unveiled Wednesday in San Francisco, also will support the technology.
LTE is expected to become the next wireless-network standard, and holding a large number of patents for the technology could help companies shield themselves from potential litigation. The issue will be crucial for Apple and Samsung as they vie for leadership in the fast-growing smartphone market.
The two companies are embroiled in more than 50 lawsuits spanning 10 countries. A U.S. federal jury last month awarded Apple $1.05 billion in damages, saying that Samsung violated six patents held by Apple. The South Korean company said it would appeal the verdict.
Samsung held the largest number of LTE patents globally at the end of June, 819, up 21% from a year earlier, according to a Korean Intellectual Property Office survey of filings with the European Telecommunications Standards Institute. Apple held 318 LTE patents, up from none last year. Finnish handset maker Nokia Corp. NOK1V.HE +1.84% had 389.
"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.
The blow from Samsung's courtroom defeat in the U.S. hasn't diminished the company's appetite to continue, or even extend, its legal dispute with Apple, a person familiar with Samsung's thinking said. The "fine itself may not be a huge problem for Samsung, as it is expected to earn around 20 trillion won [or roughly $18 billion] in a year, but now, it all comes down to the matter of Samsung's reputation," the person said.
Apple declined to comment.
Apple acquired access to some 4G patents when it joined a consortium that bought Nortel Network Corp.'s NRTLQ -10.00% patent portfolio last year, giving the Cupertino, Calif., company potential weapons in a battle with Samsung.
Still, both companies could 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 because they were part of a chip made by Intel Corp., INTC -0.64% which had a license for the patents.
Analysts said attempts by Samsung to use its new technology standard patents could come under scrutiny by antitrust regulators globally. The European Commission and South Korea's Fair Trade Commission are investigating whether Samsung abused its position as a market leader in 3G wireless technology. Samsung said it would cooperate with the European probe and declined to comment on the South Korean investigation.
Industry rules dictate that electronics makers whose patents are part of technology standards must license them to other companies in a fair, reasonable and nondiscriminatory manner. Such patents are typically given a low monetary value by electronics companies to increase the 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 world-wide that its standards-related patents are undervalued.
—Jessica E. Vascellaro
in San Francisco
contributed to this article.