By Kim Yoo-chul
Two key affiliates of LG Group ― LG Electronics and LG Innotek ― have formed a united front in a legal move to block sales of all BMW and Audi cars as the patent battle between German-based Osram and LG shifts up a gear.
The retaliation comes after lighting group Osram recently filed a complaint in Korea against LG, as well as Samsung, for patent violations ― a move it has already taken in four other countries including China and the United States.
``LG sued Osram at the Seoul Central District Court for purportedly infringing on LG-owned patents such as LED chips and packaging technologies that are widely used in LED light bulbs and cars,’’ said Lim Young-min, a senior LG spokesman.
``Because local branches of BMW and Audi are using Osram’s LED applications that infringe on LG patents, LG is seeking a complete ban on BMW and Audi car sales in South Korea,’’ said the spokesman, Wednesday, adding Osram has infringed on seven LG patents.
In July, LG Electronics and LG Innotek separately filed with the South Korean trade commission to ban imports of LED products from Osram.
``Although BMW and Audi are LG’s new targets, Osram is the company’s top priority. LG will expand the ongoing court battles in other countries,’’ said Lim.
In a statement, LG said LG Electronics and LG Innotek have collectively secured some 4,000 patents in LED applications globally.
Representatives of local BMW and Audi branches weren’t available for comment, while Osram officials here declined to speak on the issue.
The formula is quite complex.
Osram has demanded LG continues paying the royalties that LG had rendered for several years. For Osram, the cash-flow was terminated with LG aggressively pushing its LED-related businesses.
For LG, paying heavy royalties is no longer necessary.
Important LED patents are held by many firms that engaged in research early on. Apart from Osram, companies include Nichia and Toyada Gosei of Japan, Philips Lumileds of the Netherlands and Cree of the United States.
LG is not among these firms, however, it needs this knowledge for its flat-screens.
``Because LG was quite late to the LED field, we had been paying sizable royalties to Osram in return for using some of its key patents, however, we no longer need to pay because situations are quite different,’’ said a high-ranking LG executive familiar with the matter, asking not to be identified.
``There are many market players, meaning that LG is better positioned to negotiate with other LED companies for various tech-related partnerships with favorable conditions.’’
But the executive said it’s too early for talk that LG may see a comprehensive cross-licensing period with Osram.
LG declined to unveil the amount it pays to Osram on an annual basis.
The ongoing legal battle between Osram and LG is focusing on LED technologies that relate to electrical and thermal connection structures as well as to phosphor-based conversion technology used to make white LEDs.
LG is one of the world’s leading LED manufacturers.
For 2010, Strategies Unlimited’s ranking of leading LED makers placed LG Innotek in sixth position, while Osram Opto Semiconductors ranked third.
White LEDs are used extensively for display backlighting for TV sets and monitors, both of which are product categories that are also manufactured by LG.
``Since a number of LED makers have signed royalty-bearing licenses to use Osram’s patents on conversion technology, it is reasonable for LG to make a stronger stance,’’ said another LG official on the condition of anonymity.
LG is not alone in fighting Osram as it joined Samsung LED to countersue Osram, after the German firm previously said in June that it had filed lawsuits against the two Korean industrial giants in the United States, Germany and Japan and another against LG in China.