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Wednesday, December 15, 2004
Sony, Samsung to cross-license patents

Sony 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 on basic technologies. However, it will exclude key technologies that help differentiate their products, such as those related to Sony's hit PlayStation game consoles.

The move follows a string of legal actions between Japanese and South Korean electronics makers over alleged patent infringements.

"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 VP Yoshihide Nakamura told reporters.

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

Toshiba's action came on the heels of an announcement by Matsushita Electric Industrial, the maker of Panasonic products, that it had filed for an injunction to halt sales in Japan of LG Electronics' plasma panels, saying LG's panels infringed Matsushita's patents.

LG Electronics filed a counter-suit against Matsushita.

The cross-licensing agreement covers 94% of Sony's 13 000 US registered patents, and a similar percentage of Samsung's 11 000 US registered patents.

The remainder are viewed as "differentiation technology patents" and will remain the sole property of each company.

"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.

Nakamura said Samsung would pay an undisclosed amount to Sony as part of the agreement.

"We have been aware that Samsung's strength in technology and patents has improved dramatically in recent years. Both of us have been of the understanding that we need to form a cooperation in one form or another," Nakamura said.

Patents to be shared include technologies on data compression, DVD, DRAM and flash memory chips. The agreement excludes thin film transistor liquid crystal display and organic light-emitting diode display patents.

"In digital electronics, basic technologies are pretty much common. To retain competitiveness, we need to improve our differentiating technologies and offer value-added products," Nakamura said.

Sony and Samsung have an LCD joint venture that is scheduled to begin mass production of LCD panels by the end of June.

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