This article has been written by Ashutosh Singh, a student of BA.LLB (Hons), at Amity Law School, Amity University Kolkata. The article analyses the Solas OLED patent infringement suits against LG and Sony.
Solas shares directors and the same office address in Dublin with other companies such as Data Scape, Aris Technologies, and Arigna Technologies. These companies do not produce anything of their own and instead fight for alleged breach of patents they have acquired with the other companies. The companies are managed by Atlantic IP Services and backed by Magnetar Capital. Scramoge Technology, which is another company managed by Atlantic IP Services, has acquired more than 100 patents from LG. This came post-Solas victory over LG after which LG agreed to license Solas’s patent portfolio, allowing it to legally use its patents in the products it makes both for itself and other consumer electronics companies such as Sony and Panasonic.
Aoife Butler (General Counsel & VP of licensing with Atlantic IP Services Ltd) said that infringement of Intellectual Property is a serious matter and its impact ranges far beyond the parties who are directly involved in lawsuits. The range includes inventors whose inventions may be stolen or researchers whose projects are denied the requisite funding because of lost sources of revenue. This article explains the two lawsuits (Germany and the US) that Solas OLED filed against LG group of companies and Sony group of companies, which bent them to accept licencing with Solas OLED.
According to WIPO, a patent is an exclusive right permitted for an invention. The new invention has to be a product or a process that offers a new way of doing something or proposes a new technical solution to a problem. For getting a patent, a patent application has to be filled with technical information about the invention and it must be disclosed to the public. The patent owner has the exclusive right to prevent others from the exploitation of his/her patented invention.
In practice, patent protection of an invention means the following:
- It cannot be commercially made.
- It cannot be used.
- It cannot be distributed.
- It cannot be imported or sold by others without the patent owner’s consent.
Patents are territorial rights. The patent owner’s exclusive rights are applicable only in the country or region in which a patent has been filed and granted, under the national law of that country or region. The protection is granted for a limited period, which is generally 20 years from the date of applying.
Solas, an Irish company has been a leading licensor and owner of technology that focuses on the OLED market which covers a range from the smallest OLED watch to the largest OLED TV. The intellectual property of Solas is essential for having the design, circuitry, and manufacturing of OLED displays, which will be of use in the future too. One of the most wide-ranging OLED portfolios in the world is being assembled by Solas which provides for new competitors in the OLED market. The competitors are given the freedom to operate, which gives the existing companies the power to defend their market positions. In the Solas portfolio, there are already existing licensees which include market leaders in the OLED display, computer, digital camera, and the smartphone market. Solas has continued to pursue, evaluate and acquire patents in the OLED space.
About LG group of companies
LG is headquartered in Seoul. It is a South Korean electronics manufacturer which was founded as Goldstar by Koo In-Hwoi in 1958. The company started to manufacture home appliances and consumer electronics for the local market after the Korean War. It was the first company to produce televisions, washing machines, radio equipment, televisions, refrigerators, and air conditioners in South Korea. Initially, the company operated under the Goldstar branding, but later it merged with Lucky Chemical and LS Cable, and LG group companies in 1995. In 1982 the company first set up its overseas production facility in the US. Goldstar officially became LG Electronics in 1994. To expand its holding in the US, LG had acquired a US-based television manufacturer Zenith and in 1995 launched the world’s first CDMA digital mobile phone. The company had made a joint venture with Philips in 1999, which is now known as LG Display, for designing and developing the liquid crystal displays better known as LCDs. LG Electronics has made a huge contribution to the world’s consumer electronics and home appliances industry time and again. It became one of the top 100 global brands in consumer electronics in 2005. The LG Display manufacturing unit had become the world’s largest LCD panel manufacturer in 2009. The company has been making solar solutions, energy storage systems, stylers, commercial display solutions, lighting products, energy management solutions apart from motors and compressors.
About Sony group of companies
Sony Group Corporation is commonly known as Sony. It is a multinational conglomerate of Japanese origin headquartered in Konan, Minato, Tokyo. Being a major technology company, it runs and manages one of the world’s largest manufacturers of professional as well as electronic products, the largest video game console company, and video game publishing company. Sony Entertainment Inc. is now one of the largest music companies as it is the largest music publisher and the second-largest record label. It is also one of the largest film studios, which makes it the most wide-ranging media company.
In Japan, it is the biggest media conglomerate in size which has overtaken the privately held, family-owned Yomiuri Shimbun Holdings, which is the largest Japanese media conglomerate by revenue. Sony has a huge image sensor market and ended 2020 with a 40% market share in the image sensor market making it the largest manufacturer in image sensors. It is the second-largest manufacturer of cameras too. It is one of the biggest players in premium TV and also the second-largest TV brand by market share in 2020. In 2004 Sony had first introduced the Triluminos Display, which enhances the colour reproduction technology and it was featured in the world’s first LED-backlit LCD televisions. This technology was widely used in most of Sony’s products, including laptops, smartphones, and computer monitors. Sony had released a new and improved version of the technology in their television products, which merged the quantum dots in the backlit system in 2013. This was the first time quantum dots were being used for commercial purposes. The company also introduced a prototype of the ultrafine RGB LED display, which was called the Crystal LED Display.
Meaning of OLED technology
OLED (Organic Light-Emitting Diodes) is a flat light emitting technology, which is made by a series of organic thin films which are placed between two conductors. When the electrical current is being applied, a bright light is emitted. OLEDs have such a light display system that it does not require a backlight. Therefore, they are thinner and more efficient than LCD systems which require a white backlight. OLED display systems also provide the best image quality ever which can be made flexible, foldable, transparent, rollable, and stretchable soon. OLEDs represent the future of display technology. OLEDs have an amazing picture quality with a fast response rate, infinite contrast, brilliant colours, and wide viewing angles.
AMOLED production worldwide is done by the Samsung company, which makes over 400 million displays in a year, which is mostly related to smartphone-sized AMOLEDs that are rigid and flexible. LG has been the world’s leading OLED TV panel maker and has now started to produce small-sized flexible OLEDs. Besides Samsung and LG, there have been several other display makers that are starting to mass-produce small-sized OLED displays. What makes OLED unlike anything else is itself-lit pixels technology. The self-luminous display technology makes most of the difference in the customer’s viewing experience. The LG OLED TVs are capable of showing extreme unique design and realism in the display as compared to the LED TVs which are restricted by the backlight technology.
German Patent Law
- Through the direct filing of a national patent application with the German Patent and Trademark Office (DPMA),
- Through the filing of a European patent application, or
- Through the filing of an international application under the Patent Cooperation Treaty followed by the entry into either the European phase or the national (German) phase of the said international application, The German patent has a term of 20 years.
The unique thing about the German patent litigation system is that it is one of the few patent systems where the issue of patent infringement and patent validity are dealt with by different courts. The district courts deal with patent infringement. The Federal Patent Court is in charge of deciding the validity of patents. This kind of system is every so often dubbed as ‘Bifurcation System’.
Patentability jurisdiction in Germany
In Germany, patentable inventions must involve a step that is inventive and it must be new and must have an industrial application. The German Patents Act mentions the novelty criteria under Sections 1 to 3. Section 1 of the Patent Act, does not consider the following as inventions:
- Discoveries, scientific theories, and mathematical methods;
- Ecstatic creations;
- Schemes, rules, methods for performing mental acts,
- Playing games,
- Doing business and computer programs, and
- Presentations of information.
Only when protection is desired for the subject matter or activities referred to as such, this provision is applicable.
All Intellectual Property rights that include patents are subject to territoriality, which means that they only have effect in the country or territory for which they were granted. Therefore, rights conferred by a patent granted by the DPMA can only be asserted in Germany. It is of course also possible to extend a patent application at the German Patent and Trade Mark Office (DPMA) to other countries.
Patent infringement (Germany)
In Germany, patent litigation proceedings are held before courts dedicated to patents in civil courts of the first and second instance with one or more dedicated chambers for patent litigation. Procedural law requires that the competent court for a given case is decided based on the place of business of the alleged patent infringer or based on the location where the alleged patent infringement took place. However, plaintiffs are not tied to a specific location, but can generally choose the patent court. The most frequented courts for patent litigation are the four regional courts in Düsseldorf, Munich, Mannheim, and Hamburg.
The German patent law does not allow the infringement court to decide about the validity of the patent. It cannot declare a granted patent invalid. Only the Patent Office (in opposition proceedings) or the Federal Patent Court has the authority to decide to revoke a granted patent or declare it invalid. To overcome this hurdle, after being served with an infringement claim, the alleged patent infringers usually file nullity suits with the Federal Patent Court (Munich). This separation of the assessment of infringement on the one hand and validity, on the other hand, is called “bifurcation” and is a distinguishing feature of German patent law.
Solas’ infringement suit against LG and Sony in Germany
Irish organic diode (OLED) IP firm Solas, won a violation action in Germany. The judgment alleged that the defendants had infringed Solas’ German patent concerning an impression circuit for light-emitting diodes called OLED. The technology in question is utilized in screens in certain LG and Sony OLED televisions. The Dublin based Solas OLED licensor of technology that focused on the OLED market won a case in Germany against:
- LG Display Co,
- LG Display Germany GmbH,
- LG Electronics Inc,
- LG Electronics Deutschland GmbH,
- Sony Europe BV.
The detailed judgement which consisted of 43 pages was delivered on 6th November 2020, within the Mannheim District Court in Germany.
After the decision, Ciaran O’Gara, manager of Solas, said that they were pleased with the Court’s decision, particularly the Court’s appreciation of the efforts of patent licensing companies like theirs. Also, the decision by the Court allowing an injunction to the defendants, in this case, would encourage infringers to acquire a license and be a part of the system and also of the applicable legal and economic order. She further added that It is through this method that innovators are rewarded and encouraged to continue innovating.
The defendant companies are obliged to follow the given acts, as a result of the decision in this case:
- Cease and desist from marketing infringing products in the territory of Germany.
- All infringing products will have to be recalled from commercial customers.
- They are going to have to explain and give to Solas, detailed accounts to establish damages owed by the defendants for sales of infringing products in Germany dating back to April 2009.
- The defendants are also obliged to pay to Solas the security as instructed by the Court.
The Court also added that it is an incontestable fact that the plaintiff isn’t active within the market as a manufacturer, but rather exploits the research and development work undertaken by the University of Stuttgart. This doesn’t constitute an illegitimate business purpose but instead, the plaintiff directly/indirectly provides financial support to the university’s research and development activities in favour of the commercial technology market.
Post the judgement, Solas OLED Ltd. has entered into a Settlement and License Agreement with LG Display Co. resolving several patent infringement actions brought by Solas against LG Display and a certain number of its customers, including Sony Corporation. The patent license not only creates space for the OLED TV marketplace for LG Display, but also for the customers of its OLED panels, which include Sony and Panasonic. The licensing of the Solas patent portfolio means that the true innovators that are the scientists at Stuttgart University, are recognized for their ingenuity and the University gets to participate in the great success of the protected technology so that it can continue to create and develop exciting new technologies.
United States Patent Law
A patent equips the holder of the patent with exclusive rights to exclude others from making, using, importing, and selling the patented product for a limited time. The United States patent law is codified in Title 35 of the ‘United States Code‘.
The US Constitution, by the provision in Article 1, Section 8, Clause 8 (1789), authorizes the US patent system. The Constitution on the matter states that Congress shall have the authority to promote the progress of science and other useful arts, by safeguarding for a limited duration of time the exclusive right to authors and inventors, for their writings, works, and discoveries. However, for this exclusive right, immediate disclosure of the patented information to the U.S. Patent and Trademark Office (PTO) is required. The time the protection has expired, the patented innovation enters the public domain. These exclusive rights of the patent holder begin on the date that the patent is issued, and usually expire twenty years from that date. The patent term may be extended under certain circumstances where a lot of time has been spent in regulatory review or for delays due to certain PTO procedural failures.
Requirements for patentability
The five primary requirements for patentability in the US are as follows:
Patentable subject matter
- Any new machine;
- New and useful processes;
- Manufactured articles;
- Compositions of matter;
- Any new and useful improvement.
However, the Supreme Court holds that the given provision contains inherent exceptions to patentability, such as:
- Data structures;
- Laws of nature;
- Natural phenomena;
- Electromagnetic signals;
- Non-functional descriptive material like books or music;
- Abstract ideas.
It should have utility
A utility patent is a patent that covers the creation of a newer or improved version which is a useful product, process, or machine. A utility patent, generally known as a ‘patent for invention’, forbids other individuals or companies from making, using, or selling the invention without authorization from the patent holder. When most people refer to a patent, they are presumably referring to a utility patent. Utility patents are very valuable assets because they offer inventors exclusive commercial rights to producing and utilizing the most recent technology but utility patents are difficult to procure because they are cumbersome, hard to write, maybe time-consuming, and expensive to undertake. Also, their complexity makes them difficult to understand. The nature of a utility patent is covered in Title 35, Part II, Chapter 10, Subsection 101 of the U.S.C. Utility patents are issued by the US Patent and Trademark Office (PTO) and last for up to 20 years. The United States PTO claims that more than 90% of all patents granted are utility patents.
It should have novelty
Novelty is another requirement for a patent claim or a product to be patentable. An invention is not considered new and therefore not patentable if it was already known to the public before the patent application date, or before its date of priority if the applicant claims priority of a previous patent application. The purpose of the novelty requirement is to prevent prior art from being patented again. Essentially 35 U.S.C. Section 102, which sets forth the doctrine of anticipation by requiring novelty of the invention, requires the patent applicant to establish that the invention is new. The US is a “relative novelty” country meaning that the US patent laws have a provision for a one-year grace period from the time of public disclosure or commercial use within which an inventor may be allowed to file a patent application and still obtain a valid patent.
The Supreme Court and Novelty
The Supreme Court has emphasized time and again that ideas that aren’t novel or useful, are as a result, not patentable. They are:
- Laws of nature;
- Ideas that are abstract in nature;
- Products resulting from natural phenomena.
The following four categories are, however, patentable:
- Compositions of Matter;
- Articles of Manufacture;
The non-obviousness factor
The most complex and challenging requisite for acquiring a patent is non-obviousness. It is outlined in 35 U.S.C. Section 103, and generally it requires the United States PTO to establish if an invention would be obvious to a normal person in the field. In other words, it means that a person who has a general understanding of the field but not necessarily a person who has the same degree of expertise as the applicant. However, it requires more than not being obvious to the ordinary person or a person with an average education. An inventor must also do the following before applying for patent rights. They are:
- Conduct a patent search.
- Study the prior art to predict whether an examiner will find his or her invention non-obvious.
The examiner in the United States PTO will decide whether the invention would be considered obvious to a normal person which can be a difficult analysis since it involves a review of previous patents of inventions similar to the invention for which the inventor seeks a patent. The complexity lies in the next step where the examiner will try to combine two or more patents and in a combination check similarity to the previous patents. If the examiner is successful in finding a combination, then the invention becomes an obvious combination.
The enablement requirement
Enablement looks at placing the subject matter of the claims generally in the possession of the public. The requirement is outlined in 35 U.S.C. Section 112. It provides that once the first four patentability requirements are satisfied the applicant must describe the invention with enough particularity/clarification in a manner that those skilled in the art will be able to understand it and be able to make and use it. This requirement has three major parts. They are:
- The enablement requirement.
- The best mode requirement.
- The written description requirement.
Enablement looks at placing the subject matter of the claims generally in the possession of the public.
Patent Infringement (US)
35 U.S.C. Section 271 provides that anyone during the term of the patent, is infringing the patent if they do the following:
- Offer to sell or sells any patented invention domestically;
- Import a patented invention into the US during the term of the patent;
- Actively induce someone else to infringe the patent.
Similarly, anyone who offers to sell, or sells, or imports a material component of something that is patented, is also liable as a contributory infringer. To take action against an infringing product, a patent owner will have to sue the infringer in a civil lawsuit. To know whether there was an infringement involves a two-step check by the court. They are:
- Claim construction is made based on the claim language, the written description of the specifications of the patent, the patent prosecution history, and extrinsic evidence to understand the patent. Claim terms are generally given their ordinary meanings unless the specification describes a special definition.
- Each of the elements that the patent claims will be compared with the invention that is claimed to be infringed.
After these elements are verified and found to be matching the elements of the invention, an infringement will be found.
Solas infringement suit against LG and Sony in the US
Complaint about infringement
Solas OLED Ltd. filed a patent infringement complaint of US Patent No. 7,432,891
(entitled-Active matrix drive circuit) against Defendants:
- LG Display Co;
- LG Electronics, Inc;
- Sony Corporation.
The infringed products are OLEDs- organic light-emitting diode (OLED) television displays and televisions incorporating such OLED displays. LG Display designs produce and sell the infringed OLED television displays. Defendant LG Electronics designs produces and sells the televisions incorporating the infringed LG OLED displays and Sony sells and also designs and produces these infringed televisions that incorporate these LG OLED displays. Solas asserts claims for violation of patent rights against the defendants under the patent laws of the US, including 35 U.S.C. Section 271 and Section 281.
The Court has original jurisdiction over Solas’ patent infringement/violation claims under 28 U.S.C. Sections 1331 and 1338(a). The defendants were accused of persistently and tenaciously indulging in activities directed at the US, in particular, the accused OLED Case 6:19-cv-00236-ADA televisions for selling to distributors and end-users within the US and selling and directing marketing efforts to support such sales. The defendants, in this case, are jointly and severally accountable for infringing the asserted patent. Defendants’ liability arises out of a similar transaction, occurrence, or series of transactions or occurrences. The accused product features are about the driving circuitry for pixels of the accused OLED display particularly, the compensation functionality and associated circuitry for measuring and compensating for changes in driving transistor characteristics.
Claim for infringement
On October 7, 2008, the US Patent and Trademark Office issued US Patent No. 7,432,891, entitled “Active-matrix drive circuit”. Solas is the owner of this patent with full rights to pursue recovery remedies for infringement, full rights to recover past and future damages, and royalties too. A point to be noted here is that the claim of the 7,432,891 patent is valid, enforceable, and also patent-eligible. The defendants have offered for sale, sold, and used accused products that infringe the 7,432,891 patent and continue with these activities in the United States. The defendants have also imported the infringing products into the US. The 7,432,891 patent claims priority to the German patent “Active-matrix drive circuit” under 35 U.S.C. Section 119(a), allowing a claim this time of US priority, under certain conditions, for an application for a patent for the identical invention in a foreign country”. The defendants have infringed the 7,432,891 patent and still do so by supplying material parts of the invention within the United States, in particular, the circuitry designed specifically for performing the compensation functionality described in Sections 10, 11, and 12, including circuitry for measuring the driving current, conducting a voltage comparison, and providing a compensating voltage signal. Solas demanded trial by jury of all issues.
The relief requested by Solas
- A judgment and order requiring that the defendants are asked to pay Solas the compensatory damages including expenses and costs, and prejudgment and post-judgment interest for its infringement of the accused patents, as provided under 35 U.S.C. Section 284.
- A judgment that the defendants have willfully infringed the 7,432,891 patent so that Solas is entitled to augmented damages as a result of such wilful infringement.
- An injunction prohibiting the defendants from further acts of infringement of the 7,432,891 patent.
- A finding that this case is special under 35 U.S.C. Section 285, at a minimum due to Defendants’ willful infringement, and an award of Solas’ reasonable attorney’s fees and costs.
A settlement between Solas OLED and LG
Solas OLED Ltd. has given licenses to consumer electronics manufacturers post the Solas OLED case against LG and Sony. It has announced that it has entered into a settlement and license agreement with LG Display Company. This has resolved a number of patent infringement actions brought by Solas against LG Display and a certain number of its customers, including Sony Corporation. The terms of the agreement, however, are confidential, but it brings to an end the respective patent litigation between Solas and LG, and also, counter-actions, concerning Solas’ OLED technology in Germany, China and the United States.
Post the patent infringement case judgments in favour of Solas, LG Display has taken a license to the Solas patent portfolio. The biggest advantage is that the patent license frees up the OLED TV marketplace for LG Display. It also does the same for the customers of OLED panels, including Sony and Panasonic. As a result of the licensing of the Solas patent portfolio, the true innovators, that is the scientists at Stuttgart University, are recognized for their ingenuity and invention. The University gets a boost and it is participating in the great success of the protected technology so that it can continue to create and develop exciting new technologies. In business decision-making processes, patents play a significant role since they show strategies and development trends and are an inducement for the development of innovations and technology. Patents can also be an important factor in the evaluation of companies because the patent portfolio of a company is a valuable asset and uncovers the innovative potential of a company. Patent protection strengthens the position of an enterprise in the global market and is a very important location factor too.
Multinationals and mammoth companies tend to bully court proceedings to turn it into their favour and it is commendable when courts are willing to dig in to reach the correct decision despite that and smaller companies are given equal footing against gigantic companies in a court of law.
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