The Comparison between Apple and Samsung s Patent Portfolios

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3 Introduction In April 2011, Apple filed patent lawsuits against Samsung for infringement on a number of Apple s technology patents and design rights. The legal tussle between Apple and Samsung continues to evolve. In August, the US District Court in San Jose awarded Apple more than $1billion in compensation after concluding that Samsung had infringed on Apple s patents (six of them) including design rights of its mobile devices. Apple won the patent infringement lawsuit against Samsung in US, but lost in Korea, Japan, and UK. Apple and Samsung have been involved in more than 50 lawsuits around the world, with billions of dollars in damages claimed between both companies. WIPS analyzed both Samsung and Apple s patent portfolios with its online patent search engine, WIPS Global Advanced (WGA). WGA allows one to take a closer look at both companies patent possessions and strategies. [Figure 1] Company Search Result of WIPS Global Advanced (WGA) 3

4 The Methodology of Patent Portfolio Analysis WGA company search feature was used to identify Samsung and Apple s patent status during the last 10 year period from 2002 to 2011, strategies of securing patents, concentrated technology area, and open innovation strategies. Subject Analysis Company Application Period Patent Status Number of Pate nt Application Samsung Jan 1st, 2002 to Dec 31 st 2011 Korean Application 94,293 Apple (10 Year period) US Application 5,205 In general, companies file international applications after filing the domestic applications because general patent system follows the respective territorial precedent local filing principle. For this reason, the analysis used the number of domestic applications as an indicator, which means identifying domestic patent application activities in a specific year to understand the competitor s patent application activity. Through the joint application and patent assignee information, both Samsung and Apple s patent transactions are analyzed. The analysis also took into consideration both companies technology patent purchasing strategies based on WGA s US patent assignee/ assignment information. Main Analysis Samsung and Apple s patent application activities for the last ten years (2002 to 2011) Samsung and Apple s recent technology areas of focus Samsung and Apple s patent transaction activities; such as, joint patent applications and patent purchasing activities 4

5 Patent Application Status of Samsung and Apple The number of national (Korea) patent applications of Samsung was 94,293, and the number of national (US) patent applications of Apple was 5,205 between the year 2002 and Quantitatively, Samsung applied 18 times more patents than Apple did. The R&D investment of Samsung has been increased from 2.7 billion dollars (2002) to 9 billion dollars (2011). The amount shows that the R&D investment of Samsung has increased to 15% per year until it reached the peak point in 2005, following a decreasing trend thereafter. Samsung s international application rate has constantly increased between the year 2002 and 2010 from 30% to 80%. Samsung was putting a great deal of effort into securing international patents during that period. Apple is actively filing patent applications in order to increase the number of its existing patent size. Apple has been trying to expand its patent portfolio quantitatively after the patent trial loss battle against Microsoft in SAMSUNG APPLE <R&D Investment versus Patent Application Trend> <Domestic Patent Application versus Patent Family ratio Trend> [Figure 2] Samsung versus Apple: Yearly Patent Application Status 5

6 The Technological Strategies of Samsung and Apple To see how both companies patent strategies have been changing, comparison was made with both companies patent application status during 2002 to 2006 and 2007 to 2011 (Figure 3). The result showed that Samsung s patent application has been increasing sharply in the field of Wireless Communication Networks (IPC code: H04W), whereas similar uptrend can be seen in Apple s Touch-Screen Display and Icons (including User Interface technology) patent application (Locarno Classification 14-04). Samsung filed a total of 1,142 cases of patent application in the field of Wireless Communication Networks during the last ten-years. During 2007 to 2011, the number of Wireless Communication Networks patent applications was nearly 14 times more than during 2002 to It is a radical growth size in this field compared to Samsung s semiconductor technology. Samsung semiconductor technology is the main business activity of Samsung, but its patent application has decreased by 74% during the year 2002 to Instead of the Semiconductor area, Samsung s mobile patent applications field; such as Wireless Communication Networks (3G LTE), Near Field Communication (WIFI), and Cellular Phone Web Browsing Technology (WAP), have increased during those 5 years. It is also worth noting that fields such as Fuel Cell, Robot, Image Processing, and Nanotechnologies have also increased rapidly. These technologies are highly related to Samsung s top five future business activities, namely Solar Cell, Automobile, Battery, LED, Bio-medicine, and Medical Devices applications. In contrast, Apple has been concentrating on securing design patent rights after launching i-phone. Apple applied 99 cases of patents related to screen displays and icon design field (Locarno Classification 14-04) and 186 cases of patents relating to data processing equipment as well as peripheral apparatus and devices design field (Locarno Classification 14-02) for the last ten years. It is 6

7 worth noting that the design patent including UI parts has increased 9 times during 2007 to 2011 than 2002 to SAMSUNG APPLE [Figure 3] Classified Patent Application status by Technology fields Samsung and Apple have shown some differences in open innovation strategies (Figure 4). Samsung s joint patent application rate is only 4% among entire patent application portfolio. Samsung s joint application or joint research status was mainly with domestic universities and public organizations whereas Apple s joint application is less than 1% of its portfolio; which is a fraction comparing with Samsung respectively. [Figure 4] Samsung s joint application trend Patent assignment activity shows that Samsung assigned 1 million cases of US patent in last 10 years. Figure 5 shows that purchased patents are mainly related to Mass 7

8 Storage Device, Visual Display System, and Semiconductor field. Figure 5 shows Samsung mainly acquired patents from HP, AST Res., Xerox, Honeywell, and Hitachi. On the other hand, Apple assigned approximately 2,600 patents during the past 10 years. Although the number of assigned patents is not as high as Samsung s, it comprises a large proportion of entire Apple s patent portfolio: 50% of the Apple s entire patent applications and 30% of Apple s patent portfolio. Most Apple s assigned patents are transferred from Object Tech Licensing Corp., Taligent Inc., Intrinsity Inc., and P.A., SEMI. Apple also purchased patents from mobile specialized NPEs (Non-Practicing Entity) and CVON Innovations Ltd. (Figure 6). Apple is securing its patents and technologies through various routes. SAMSUNG APPLE [Figure 5] Main Technology Fields Assigned Patents: Samsung and Apple SAMSUNG APPLE [Figure 6] Main source of assignment: Samsung and Apple 8

9 Conclusion This report provides an insight of the overall technology strategies and strategic patent reserves of both companies based on their patent application procedure using WIPS Global Advanced (WGA), the premium online patent search engine, over the last ten years. Samsung has been reducing the domestic patent applications and securing international patent applications. Apple is seen improving its inadequate existing patent portfolios by expanding the number of patents. In addition, Apple is strengthening technology portfolios by using corporate transactions; such as, M&A, joint ventures, and minority investments. It is worth to monitor the competing situations between Samsung and Apple in the field of wireless network technologies because both companies have increased the patent filling rate significantly. The analysis also shows both companies fields of concentration during 2007 to 2011; Samsung has focused on fuel cell, Bio-medicine, LED, and medical devices, and Apple has focused on design related patents such as UI respectively. With analysis based on WGA search result, we can conclude that Samsung will improve its design and UI related technological investments; and Apple will try to secure more wireless network technologies Intellectual Property rights to supplement its technological vulnerability. 9