Sony and Samsung to Cross-License Patents Dec 14, 2004

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Sony Corp. and Samsung Electronics have agreed to share patents on basic technology to speed up product development and avoid adding to a growing number of cross-border patent disputes.

The cross-licensing deal allows the Japanese and South Korean electronics giants to tap each other's vast patent portfolios of basic technologies. However, it will exclude key technologies that help differentiate their products, such as those related to Sony's popular PlayStation game consoles.

The move follows a string of legal actions between Japanese, South Korean, and Taiwanese electronics makers over alleged patent infringements, underscoring the heated battle for market share in flat-screen televisions and other key digital consumer products.

"With this agreement with Samsung, we aim to keep clear of unnecessary conflicts and compete only in those areas where we really need to compete," Sony Executive Vice President Yoshihide Nakamura told reporters.

Toshiba Corp., Japan's second-largest electronics conglomerate, filed a suit last month against South Korea's Hynix Semiconductor Inc. in the U.S. and Japan, claiming infringement of patents related to memory chips.

In another recent spat, Matsushita Electric Industrial Co. Ltd. filed for an injunction to halt sales in Japan of LG Electronics Inc.'s plasma panels, saying LG's panels infringed its patents. LG Electronics filed a countersuit.

Sony and Samsung started negotiations on the cross-licensing deal in December 2003. The agreement is broad, covering 94 percent of Sony's 13,000 U.S. registered patents, and a similar percentage of Samsung's 11,000 U.S. registered patents.
The remaining patents are viewed as "differentiation technology patents" and will remain the sole property of each company. They include patents on the PlayStation's architecture and Samsung's home networking technology.

"It removes uncertainty from the products they are developing, and they won't have to waste money fighting in the courts over patents that are inconsequential to their main strategic objectives," said Damian Thong, technology analyst at Dresdner Kleinwort Wasserstein. (Reuters)

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