LG turns up pressure on Osram

By Kim Yoo-chul

LG Innotek, LG Group’s component-making unit, is sure of victory over Osram in a patent dispute, calling it a fight it can’t lose.

LG has accused the German lighting firm of illegally using its patented light-emitting diode (LED) applications.

``Innotek is dealing with the recent disputes very seriously and LG has secured evidence that may nullify the claim by Osram,’’ said LG spokesman Jung Jae-wook, Monday.

Another spokesman said, “There is no turning back because we know that we will prevail.”

One scenario is that LG receives royalties from Osram in return for permission to use LG’s LED chip- and packaging-related patents but some LG officials say that it is too early to say about any reconciliation, adding that they want a clear-cut court decision.

``Because the conversion technology has already been widely used, chances are currently low that Osram will win in courts in other countries,’’ said an LG source directly involved in the matter.

LG is the latest player, along with Samsung Electronics, to take Osram to court because the Korean consumer electronics giants are eager to expand their share of the LED market based on their competitive edge in semiconductor technologies.

And the advance by the Koreans is threatening the bottom line of traditional LED light-bulb giants, including the Netherlands’ Philips and Osram,.

LEDs are becoming increasingly popular because of their limited size and energy-saving capabilities. They also have a long lifespan and emit less heat than compact fluorescent bulbs.

The market is set to take off in line with governments’ so-called ``green initiatives.’’

``Philips and Osram have been diversifying their portfolios in LED-related businesses and the Koreans are aiming to break into the market, resulting in the disputes,’’ said one legal expert who is familiar with the matter asking not to be identified.

In response to the updated strategy by LG, Osram is considering entry into the extensive cross-license periods with LG, according to legal sources.

They said Osram will take action in the near future as the German company is still keen to use qualified LED chips and LED packaging technologies from Innotek, as well.

In April this year, Osram and U.S. LED maker Cree signed a cross-license agreement that covers patents from both companies in the fields of blue LEDs, white LEDs, phosphors, LED luminaries and lamps and LED lighting control systems.

``Signing a cross-license with LG for some of Osram’s patents is one possibility. Osram doesn’t rule out such a scenario because it’s quite reasonable to lift our LED-related businesses,’’ added another legal source, asking not to be identified as he wasn’t permitted to officially speak to the media.

Osram currently holds about 8,000 LED patents globally, while LG Innotek holds some 4,000.

``This is an attempt to obtain a better starting position (in LED businesses). We analyzed some LG patent portfolios very thoroughly,’’ said Osram in a statement to The Korea Times.

The cross-license move by LG comes after LG filed a complaint with the Korean trade commission against Osram earlier last month, seeking a complete ban on imports of Osram’s LED products into Korea.

This came after Osram filed a similar lawsuit in June, when the Siemens’ unit sued both Samsung and LG in the U.S. and Germany for hurting Osram’s patents for LED technology.

But Samsung spokesman Lee Jun-ho said his company will continue the litigation battle and added it doesn’t plan to strike a cross-license deal with Osram.

This legal battle is of particular interest to the capital market, as Osram is planning for an initial public offering (IPO) by the end of the year.