Samsung Electronics lost a patent dispute with Apple for design patent infringement and was forced to pay a hefty amount of compensation, while its communication technology patent infringement claim was rejected. This case is similar to the Korean Empire’s loss of Hansung Electric Company because it was not properly prepared for technology transfer. This case highlights the importance of managing technology not just to develop it, but also to be able to assert international patent rights, and shows the need for thorough preparation.
On August 24, 2012, Samsung Electronics, South Korea’s largest electronics company, lost a patent dispute with Apple and was forced to pay a hefty sum in damages. On top of that, Apple filed a lawsuit to ban the sale of some of Samsung’s phones, which made the Korean industry nervous. The lawsuit began when Apple claimed that Samsung stole its phone designs. Samsung countered by claiming infringement of its telecommunications patents, citing Apple’s use of its own telecommunications technology in the phones, but the claim was rejected by a U.S. jury. This case made many people realize the value of design patents and that it’s not all about technology.
While there was no denying that there was design borrowing, there was one aspect of the case that left me disappointed. The fact that U.S. juries completely ignored Samsung’s claims of infringement of telecommunications patents. In the United States, home to Silicon Valley, the world’s center of technology development, it was hard to understand how such a technical point could be ignored. Every year, many Korean companies pay royalties to companies in the United States, Japan, and other countries for the use of their technology, and it seemed very unfair that they were not protected when their own technology patents were infringed. I wondered how it could be that a country, no matter how powerful it is, would make sure to collect royalties from its own companies, but would look the other way when its own companies infringe on other countries’ patents.
The attitude of the American jurors reminded me of the case of H. Collbran, an American engineer who took control of a company in exchange for introducing electricity to Korea and sold the company to Japan when it became deeply in debt.
After the opening of the port in 1876, Korea began to embrace Western culture in earnest, especially the West’s advanced science and technology, which was an object of admiration and wonder, and adopting these technologies was seen as an important way to avoid imperialist invasion. Electricity, in particular, was seen as a symbol of modernization due to its practicality and convenience, and the state was eager to adopt it. In 1887, seven years after the invention of the incandescent light bulb, the palace was illuminated, and in 1898, the construction of an electric railway began in Hansungbu. The company in charge was the Hansung Electric Company, which was wholly funded by the Korean imperial family.
The Hansung Electric Company was wholly funded by the imperial family as part of the Korean Empire’s food and industrialization policy, but ownership was soon transferred to an American. The American H. Colebran took over the management of the company, and without thinking about technology transfer, the company was left in his hands until it accumulated debts and was transferred to Japan without imperial permission. In the process of transferring Hansung Electric Company to Japan, the imperial family made a huge mistake. They didn’t quickly learn the technology and regain control of the company. One South Korean researcher summarized the Korean Empire’s handling of Hansung as follows.
“I would characterize it as a company that failed to prevent the monopolization of technology by the Americans due to an excessive belief in the practicality of Western advanced technology and the simplistic idea that technology transfer would take care of itself, and eventually transferred ownership.”
In other words, the naïve notion that once the technology was imported, it would transfer naturally led to the transfer of Hansung into Japanese hands. This leads to the following thought.
“Even though Gojong, the emperor of the Korean Empire, invested a huge amount of money in Hansung Electric Company, the imperial family ultimately handed the company over to the Japanese because they failed to take the necessary measures to own the technology.”
Like these historical examples, Samsung Electronics may have made a similar mistake. The naivety of the Korean Empire’s reliance on an American, H. Colbran, when it was isolated by Western powers and Japanese ambitions, and Samsung’s downplaying of Apple’s design patent lawsuit in the midst of international politics, only to claim that Apple infringed on its telecommunications patents after the issue escalated, seems not unlike the situation here. Samsung shrugged off Apple’s design patent lawsuit at first, and then, as the case escalated, it went on the defensive, claiming infringement of its communications patents, but it was apparently unprepared for the possibility that its technology might be protected in the United States.
This is not to say that the company was not prepared. However, it would have been wiser for the company to have considered all possible scenarios and asserted its rights, rather than assuming that its telecommunications patents would be protected. The company also had to consider the fact that the United States has a jury system. Juries are made up of citizens from all walks of life, not telecommunications technology experts. Samsung would have had to present them with clear evidence and arguments that “we didn’t copy” for the design patent infringement, and it is questionable whether it was right to try to muddy the waters by claiming infringement of the telecommunications patent. In the end, Samsung not only lost the case, but the telecommunications patent claim was dismissed.
The Korean Empire was not without its own problems with technology transfer. When Colebran tried to sell Hansung Electric Company to the Japanese, Emperor Gojong tried to buy it back and even asked the U.S. Embassy for help, but ultimately had no influence. Not only had Colebran driven the company’s finances into a deep deficit, but very few Koreans could work on tanks or electric lights, and the deficit was mostly due to the huge salaries paid to American and Japanese engineers. As a result of not building a school to train technicians, assuming that technology transfer would be a given, the company was eventually sold to Japan and no technology transfer took place. In this way, if you don’t thoroughly prepare the rights to technology, you will lose the initiative without having enough say in the matter, like Hansung Electric Company and Samsung Electronics. In the end, thorough management of technology is the only way to ensure sufficient say.
This perspective may seem a bit nationalistic and favoring Samsung Electronics, but this patent dispute is just one example, and what I ultimately want to emphasize is that technology management is just as important as technology development. It’s about being prepared to fully assert your rights to the technology you’ve developed, and being fully prepared to have a voice as the owner of the technology in the event of infringement. The more unstable the international situation, the more likely it is that a country-centered ruling will be issued, so it is necessary to prepare for this. Otherwise, like Hansung Electric, you may lose your technology leadership.
