Samsung, Sony sign patent cross-licensing agreement

Samsung Electronics and Sony have signed a five-year cross-licensing agreement covering a wide range of patents for digital products, reducing the potential for disputes between the companies and smoothing the development of new products, a senior executive said Tuesday.

The agreement covers about 11,000 patents filed in the U.S. by Samsung and just under 13,000 filed in the US by Sony, covering five basic areas, executive vice-president of Sony and senior general manager of its intellectual property division, Yoshihide Nakamura, said.

The five areas are: semiconductor technologies, including DRAM and flash memory technologies; compression technologies, including ATRAC (Adaptive Transform Acoustic Coding) and MPEG; communications technologies; patents related to international standards, such as those approved by the Institute of Electrical and Electronics Engineers; and patents related to formats, such as the next-generation optical Blu-ray Disc format.

The agreement became necessary because of the sharp rise in both the number of patents filed for digital and networking technologies over the last 10 years, and the increase in those filed by Samsung in particular, Nakamura said.

As an example of how patents have proliferated, he said that three companies held crucial patents for the VHS system, while about 35 companies hold important patents for DVD players.

"In the digital networked world, it is almost impossible for any one company to have a monopoly of the essential patents," Nakamura said.

Samsung ranked number nine in 2003 for the number of patents filed by a private sector organization to the US Patent and Trademark Office (USPTO), with 1313 patents, while Sony was tenth with 1311, according to the USPTO.

"Last year, Samsung entered the top ten. ... We have come to a situation where we have to recognize Samsung's potential," Nakamura said.

The agreement excludes patents that each company considers vital for differentiating its products from those of competitors, he said.

For example, Sony has patents for the Cell processor and PlayStation architecture which are not covered, as well as for LCD (liquid crystal display) and OLED (Organic Light Emitting Diodes) displays. Samsung's LCD and OLED patents, and those related to its home networking technology, also are not included.

Altogether, about 6 percent of Sony's patents filed in the US are excluded from the agreement, Nakamura said.

The arrangements agreed to in March by the two companies for S-LCD, the joint venture that is to begin producing LCD panels next year, are not subject to the agreement.

Sony approached Samsung about the cross-licensing deal, which was concluded after a year of negotiation.

The agreement will help prevent unnecessary friction between the companies, said Nakamura. "It is very costly to go to court and it consumes a lot of resources," he said.

The agreement runs from April 2004 through March 2009, a Sony spokesperson said.

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