Exclusive SK hynix to battle with patent trolls
By Kim Yoo-chul
Min Kyung-hyun
SK hynix is willing to sign cross-licensing deals with competitors in order to minimize legal patent disputes and focus more on business, according to the head of the company’s legal department.
However, he added that the firm is ready to battle with any patent trolls that file lawsuits for any opportunistic purposes.
In an interview with The Korea Times, Monday, Min Kyung-hyun, head of the firm’s intellectual property division, said that SK hynix was open to such deals to limit legal disputes.
“Because we are the company that has fewer products but with mass-manufacturing capabilities, we can be affected by litigation issues. Licensing is a good way to limit this,” he said.
The interview was conducted a few days after the chipmaking affiliate of SK Group signed a cross-licensing deal with Samsung Electronics. Under the agreement, SK can access Samsung’s memory chip patents, while Samsung uses SK hynix’s patents. Min said the agreement was “no surprise.”
“We are not fully satisfied and I think Samsung also has something to say. The deal needs to be understood as condition wise. Top management at both companies believed the settlement was the right thing from the big picture,” said the executive.
Because SK hynix believes the home ground of patent trolls is the United States, the company is closely monitoring their moves by consulting with lawyers and conducting its own analysis.
The Korean firm has also been active in fine-tuning strategies to combat patent claim abuse over next-generation chips.
Interested parties are preparing to defend patents of next-generation chips. SK hynix is one of them as the chipmaker recently joined forces with IBM and Hewlett-Packard to develop next-generation chips.
"Patent trolling will definitely come,” said the executive.
He said money is the top consideration in licensing; however, he designated the settlement as an action to “purchase peace.”
Min, who is also the vice president of its corporate center, said that the company saw a steep rise in various patterns of litigation issues claimed by patent trolls.
“SK hynix is one of the few survivors in the industry, meaning that it’s inevitable for us to face off against patent trolls. Ironically, the industry’s new paradigm urges us to prepare better for patent disputes,” said Min.
The memory chip industry is posed to emerge into a low-growth but highly-concentrated, rational and value-creating industry following decades of value destruction, bankruptcies and exits.
In conventional DRAM chips to be used in traditional computing devices, a new order now prevails with three players controlling the market, SK hynix, Samsung and Micron Technology.
“In the Rambus case, the fight was very tough to handle as the dispute started more than a decade ago and continued even during the industry’s restructuring. The litigation burdened us. But SK hynix learned something. We are responding to issues case-by-case as litigation-related issues are hard to anticipate. I can say patents are a kind of art,” Min said.
Last month, SK hynix settled with Rambus to end the patent fight for $240 million. Rambus is considered a patent troll as it has no intention of selling its product or services.
Patent trolling involves acquiring patents from parties who hold intellectual licensing rights but do not intend to ever produce a product or provide a service covered by the patent.
“SK hynix respects the decision by a U.S. judge. We know the U.S. legal system and acknowledged all possible risks. The licensing deal was one rational option for us. There will be no further legal troubles with Rambus,” Min said.
The executive stressed other SK Group affiliates are asking the chip-making unit to share know-how and experience to better prepare for upcoming legal disputes. “As SK hynix earns profits overseas, we’ve been consistent in strengthening patent portfolios. The key point is how to hedge risks and to minimize damages from litigation,” said Min, who is also an attorney at law in New York.