Lee International

LG Electronics, a Korean company, decided to withdraw from the mobile business on April 5, 2021 and completely terminated it as of July 31, 2021.  However, despite the termination of the mobile business, LG Electronics still possesses approximately 30 thousand mobile-related patents and patent applications, which are inclusive of more than 20 thousand mobile-related patents, in and outside Korea.

Prior to the termination of the mobile business, LG Electronics entered into cross-licensing agreements with other smartphone manufacturers based on its patents in order to smoothly develop and sell smartphones.  However, as LG Electronics withdrew from the mobile business, there is no need to maintain the cross-licensing agreements.  Therefore, LG Electronics is actively pursuing a new licensing business to receive royalties from other smartphone manufacturers based on its own mobile patents.  Actually, a foreign press reported that LG Electronics received approximately KRW 800 billion of royalties from Apple Inc. in August 2021.

Meanwhile, there is a concern that LG Electronics’ mobile-related patents may be handed over to NPEs.  In particular, there is a serious concern that once NPEs buy LG Electronics’ core patents, they may indiscriminately file lawsuits to attack smartphone manufacturers. 

Some experts in Korea said that in order to protect the domestic mobile industry, the Korean smartphone-related companies, such as Samsung Electronics, etc., should consider acquiring important patents from LG Electronics or amicably negotiating with LG Electronics.  However, Samsung Electronics is not interested in acquiring LG Electronics’ patents.

According to the Korea Intellectual Property Protection Agency, the number of cases where the Korean companies are involved in patent litigation by NPEs is reported to be around 100 cases per year, and the frequency of patent attacks from NPEs is increasing every year.  Even Samsung Electronics is no exception.  Actually, Scramoge Technology, a foreign NPE, attacked Samsung Electronics based on patents bought from LG Innotek in August 2021.

Considering the smartphone-related technology developed and possessed by LG Electronics and market shares thereof in the past, the influence of LG Electronics’ mobile-related patents cannot be ignored.  If NPEs buy LG Electronics’ mobile-related patents or obtain licenses thereon, it is expected that smartphone manufacturers in foreign countries, as well as in Korea, would be targets of the attack.  Accordingly, mobile device manufacturers will need to carefully monitor the whereabouts of LG Electronics’ mobile-related patents and prepare countermeasures.