Monday, December 13, 2004

Sony and Samsung agree to cross-license

In marked contrast to the ongoing patent fight between Matsushita and LG over plasma displays, Japan's Sony Corp. and South Korea's Samsung Electronics said on December 14, 2004 that they had signed a cross-license agreement to share patents on basic technologies necessary for product development in the general areas of basic semiconductor technologies and industry standard technologies. The companies said that the agreement includes the subsidiaries of both companies but EXCLUDES thin film transistor liquid crystal display (TFT-LCD) and organic light emitting diode (OLED) display patents. [It is also true that Sony and Samsung have a LCD joint venture called S-LCD, which is scheduled to begin mass production by the end of June, 2005.]

We have a tale of two different models here, one of litigation and one of licensing.

Recall in the old days of videotape players, it was Sony that took a strongly proprietary approach with betamax, and Matsushita shared technology on VHS. In the still older days when videotape technology was getting off the ground, Sony cut a deal with Dolby and friends in Redwood City. Contrary to a footnote by Mark Lemley (in, among other places, the University of Chicago Law Review), all concerned were quite familiar with the commercial possibilities of personal (as opposed to studio) tape units. They just went in different directions. In a different vein, RCA/Sarnoff developed the blue LED long before the Japanese. RCA decided not to run with it. A commercial decision should not be confused with lack of technical understanding.

It's separately true that the co-operation between Sony and Samsung undercuts the patent race imagery. Rather than the "spend huge money to win the race" image of Judge Posner, we see that corporate entities work together in a "a good way to share knowhow without using human and financial resources."


from the Japan Times, Dec. 15, 04:

Sony Corp., the world's second-largest consumer electronics maker, and Samsung Electronics Co., the world's second-largest chip maker, said Tuesday they have agreed to share about 24,000 patents, fortifying an alliance between two of Asia's biggest technology companies.

The agreement involves 11,000 patents from Samsung and 13,000 from Sony, including Internet and "basic" semiconductor technologies, said Cho Sung In, a spokeswoman for Suwon-based Samsung. She declined to specify technologies covered by the deal.

Sony is reorganizing its business as rising competition in the electronics industry hurts profits. Sharing patents might help Sony reverse sliding profits at its electronics unit, said Kazuya Yamamoto, an analyst at UFJ Tsubasa Securities Co. in Tokyo.

"It helps them to bring products to market faster," Yamamoto said. It's also "a good way to share knowhow without using human and financial resources" and might help cut costs.

Samsung said the deal will help the two companies strengthen their position in the global market.

"The goal was to construct a mutually beneficial relationship whereby Samsung and Sony could use each other's patent portfolios to effectively keep pace with the fast and sophisticated advancement of digital technologies," Samsung said.

"This indicates a new patent relationship appropriate for the broadband and network era," it said of the agreement, the culmination of yearlong negotiations for the cross-licensing accord.

The agreement excludes "differentiation" technologies, including Samsung's patents for liquid crystal displays and Sony's PlayStation game console, Samsung said.

The companies are teaming up to build a liquid crystal display plant that will be the industry's biggest when it begins production next year.

Profit at Sony's electronics unit fell 83 percent to 7.2 billion yen in the second quarter to Sept. 30.

Sony and Samsung have been deepening cooperation. They established a joint venture in South Korea earlier this year to manufacture large LCD panels.

Major LCD makers have been increasing capacity to meet booming demand for flat-screen televisions and computer monitors.

Samsung's aggressive investment came as domestic rival LG Electronics remains locked in a dispute with its Japanese partner, Matsushita Electric Industrial Co., over display panel patents.


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