Is the patent system working?
The recent wins and losses in Samsung and Apple’s ongoing patent war have rekindled an age-old debate about the nature of innovation. At what point does inspiration become flat-out imitation? And do patents do more to stifle new thinking than promote it?
Though overshadowed by the $1 billion judgment against Samsung in the U.S. on Aug. 25, it was a Seoul court’s ruling a day earlier that shone a light on Korea’s patent regime.
|Signs advertise Samsung’s Galaxy S3 and Apple’s iPhone 4S at a store in COEX in southern Seoul. (Yonhap News)|
Finding both Apple and Samsung to have infringed each other’s patents, Seoul Central District Court imposed a sales ban on a number of products of each firm, including Apple’s iPhone 4 and iPad 2 and Samsung’s Galaxy S and Galaxy SII. Crucially, however, the court did not find Samsung to have copied the design of the iPhone, unlike in the U.S. ruling.
A casual observer might be inclined to see the Seoul court’s ruling, which awarded modest damages to each side, as balanced if nothing else. That was not so with Florian Mueller, an intellectual property expert and consultant to Microsoft and Oracle. Shortly after the ruling, he wrote on his blog FOSS Patents that Korea had become a “rogue state” with regard to standard-essential patents.
“I do realize that this was a provocative statement, but I stand by it in the sense that Korea is the only country so far to have granted Samsung an injunction against Apple based on standard-essential patents,” Mueller told The Korea Herald.
“Since standard-essential patents can, by definition, not be worked around, any injunction based on such patents is effectively an embargo: It shuts someone out of a market, with respect to the affected products. I consider this a worrying situation. By contrast, injunctions over non-standard-essential patents are not so bad because they can be worked around.”
Standard-essential patents are considered necessary for the implementation of industry standards, such as Wi-Fi and USB. To prevent monopolization of the market, standard-essential patent-holders must license their patents to other companies on “reasonable and non-discriminatory terms.” In Mueller’s view, Samsung has been hypocritical to argue that patents are restricting innovation when the company itself seeks injunctions based on the most comprehensive patents of all.
“Google, Samsung and others can’t credibly criticize the patent system in general as long as they engage in the most problematic use of patents, which is the pursuit of injunctive relief based on standard-essential patents,” he said.
“They’re basically advocating disarmament while fighting with chemical weapons against other companies’ more powerful but conventional weapons.”
Jay Erstling, a professor of law at William Mitchell College of Law in St. Paul, Minnesota, said that the Seoul ruling may indicate that the principal that a patent holder has to license on fair terms may not fully apply in Korea. Nevertheless, Erstling maintained that Korea’s approach to patents is among the best in the world.
“The Korean government understands the important role that a well-functioning patent system can play in a country’s economy, and it has tailored the Korean system to take maximum advantage of the benefits of a patent regime,” said Erstling, who has studied Korea’s patent regime as an example for developing countries.
“The Korean Patent Law is both strong and well balanced. The Korean Intellectual Property Office is among the most technologically advanced and efficient patent offices, and its examiners are among the most qualified. … Korea’s patent policy was certainly not the only reason, but it was one of the important reasons, I believe, why the Korean economy went from one of the poorest to one of the wealthiest, most advanced, in the world.”
KIPO, established in 1949 as the Patent Bureau, did not reply to The Korea Herald’s inquires on the nation’s patent law and the Samsung-Apple case in time for publication.
Critics of the judgments both here and in the U.S. have honed in on the granting of injunctions on the sale of products as detrimental to consumer choice. Whether Samsung or Apple triumphs, they say, the customer ultimately loses if products are taken off the shelves.
“Generally, a reluctance to grant injunctive relief is a good thing ― especially but not only over standard-essential patents,” said Mueller. “There comes a point when patent holders should be entitled to injunctions, but the hurdle should be high.”
Erstling, however, argued that a long-term view bears out the need for patent-holders to have the right to seek sales bans.
“While consumers may be hurt by not having access to infringing products in the short term, the view is universally held that consumers would be more hurt in the long run if remedies like injunctions were not available: The proliferation of infringing goods would destroy the incentive to produce new and innovative goods, and the quality of all goods would suffer.”
Some observers, in fact, believe that Korean courts are far too lax in enforcing patent rights.
“We should strengthen the patent protections,” said Kim Kook-hyun, a patent attorney at Kasan IPN & Law Firm. “I think the Korean court should be more proactive about patent protections. Everybody says that the Korean court is reluctant to protect patents compared to the American court.”
A chief reason for this, he said, is the “follower” nature of Korean tech companies.
“Basically, Korean companies are followers; they are not in the position of the pioneer group, so strong patent protection is against the Korean companies’ interest. So courts are a little bit reluctant to give strong patent protection. If they protect the patent strongly in Korea, probably many Korean companies (would have to) pay royalties to the patentee. Many patentees are foreign companies in Korea.”
However the law is interpreted, the fact that national courts are the ones to make rulings on disputes between domestic and foreign firms has been controversial in and of itself. Much of the Korean media questioned the impartiality of the jury in the American ruling, claiming a nationalistic bias. On FOSS Patents, Mueller noted that the only country to grant Samsung injunctions was Korea, where the conglomerate makes up more than 20 percent of gross domestic product. But whatever the limitations of national courts, trying patent disputes on a global scale would be hugely challenging, said Erstling.
“In an ideal world, it would be wonderful if an international tribunal could try all patent cases involving litigants from different countries, but patent systems are national in scope, and enforcement systems have as a result also conformed to national boundaries,” he said.
“The closest forum we have to an international body is the World Trade Organization’s TRIPS (Agreement on Trade-Related Aspects of IP Rights) Dispute Settlement Body, which deals with allegations that one country lodges against another that the country is violating the terms of the TRIPS Agreement. The world has been debating the advantages of a global patent system for at least 150 years, and I think it still remains a very distant dream.”
By John Power (firstname.lastname@example.org)
Patents in Korea ...
As a person who is into South Korea’s technology or knows about what products that South Korea manufactures and exports to other countries, my response to this question is that the country is doing okay. Though there are mistakes which the country can improve on which I will explain later. But first, I will respond on how the patent system is working well.
South Korea has done a great job when it comes to developing products in which people will not be disappointed and return it for a refund. An example is the cellphones: Samsung has done a good job when it comes to making phones and then exporting them around the country by having the three words “Made in Korea” on it.
People are satisfied with the products and give them good comments and ratings. They also know that the product is made in Korea because the country makes sure that their products are patented by only South Korea and that no copyright is infringed by another company in another country. Though of course mistakes happen and consequences occur in which a product might have the same feature as another product, which occurred when Samsung violated Apple’s patent system by having the same features as the iPhone. The Chosun Ilbo explains in an article on Samsung how this issue can threaten other products as well as the future of Samsung when it comes to them exporting their products overseas. There is a quote from Apple that mentions this, which the company stated, “Apple will not only seek court orders to ban sales of Samsung’s products but could apply to the U.S. Trade Commission seeking to ban imports of Samsung’s products.” (Chosun Ilbo) So, based on this, Apple wants to ban all products in the United States as well as any products that are exported to the United States.
Though, in the coming weeks, we will see if Samsung can find a way to negotiate a deal with Apple and that Samsung’s violation can be forgotten. Hopefully, Samsung will learn from this and make sure that none of their products unlawfully copy either Apple or another company. Lastly, that South Korea can manufacture more products which will help the country’s economy in the future.
― James Buhain, Reno, Nevada, USA
What a surprise that the Yanks find the Koreans the guilty party and vice versa. How about an impartial judge and jury?
― Matthew Tildesley, Seoul, via Facebook
Both courts decided their cases on their respective merits and the respective laws in each country. The U.S. has long placed an over-emphasis on protecting a patent, and this case provides some momentum for the pendulum to swing the other way. Korea is realizing how important patents can be ― especially in international courts ― and larger companies will need to be ready to play ball on a different court.
― Chris Backe, Seoul, via Facebook
Samsung got hammered with an insane amount of money because they copied Jobs’ patent that is a rounded square design. What do you think? I’ll leave that for you.
― SK Boom Lee, Sydney, Australia, via Facebook