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Tech Industry

Samsung, Sony cross-license their patents

The enemy of my enemy is me, but there's no reason to go to court over the issue. That's the essence of the patent license.

Samsung and Sony have entered into an extensive cross-licensing agreement that will help them fill gaps in their patent portfolios and potentially avoid lawsuits.

The deal between two of Asia's largest IT companies covers most of the several thousand patents held by the companies but excludes "differentiation technology patents" that relate to distinct products made by both companies, such as Sony's PlayStation 2 and Samsung's home-networking technology.

The deal also excludes patents relating to emerging technologies such as organic light-emitting diodes (OLED), an energy-efficient screen technology coming to the market now.

Still, armed with each other's patents, each consumer electronics powerhouse ideally would be able to take advantage of research performed by the other. In recent years, Japanese companies have created joint ventures and alliances with other companies and even rivals to cut development costs and make themselves more competitive internationally.

Samsung and Sony, for instance, created a joint venture to manufacture LCD panels last year. Nonetheless, both are intense competitors in the TV market.

The deal should also ward off litigation between the two companies. Patent litigation suits have exploded in recent years and led to large, multimillion-dollar settlements. Historically, Japanese companies have been averse to long, drawn-out lawsuits, preferring to settle.

Large companies with extensive patent portfolios have in the past cut similar deals to stave off suits. There are approximately seven companies, for instance, that have a license to make a microprocessors exploiting Intel intellectual property, but only Advanced Micro Devices actually makes such chips. Most of the deals were cut to prevent legal entanglements.

Not only have tech companies complained loudly about the proliferation of patent suits, but patent attorneys now privately say judges grumble about the length, stakes and complexity of patent cases.