Samsung, Sony Sign Sweeping Patent Deal

The companies, which reported negotiating the deal for about a year, said they would both benefit from one another's substantial patent portfolios. They highlighted digitization and broadband network technologies.

Martin Reynolds, research vice president at Gartner (NYSE: IT) , praised the patent agreement and said it will help foster innovation. But he also said the deal centered more on defense against patent infringement lawsuits.

"It's eliminating the need to sue each other for the littlest things," Reynolds told TechNewsWorld. "It's infringement defense. By doing that, it means they're free to innovate."

Basic Technologies

Samsung and Sony said that the agreement was created to enable more efficient product development and business growth for both companies.

"The goal was to construct a mutually beneficial relationship whereby Samsung and Sony could use each other's patent portfolios to effectively keep pace with the fast and sophisticated advancement of digital technologies," said a statement from the companies. "This indicates a new patent relationship appropriate for the broadband/network era."

The two electronics giants indicated the deal covers patents for what are considered basic technologies necessary for product development.

The agreement covers subsidiaries of both Japan-based Sony and Seoul-based Samsung.

Keeping Competition

Some key technologies, however, will not be included in the deal, "to foster the uniqueness of each company and healthy competition in the market," the companies said.

Sony and Samsung will not share patented technology related to Sony's Digital Reality Creation (DRC) and PlayStation architecture or to Samsung's Digital Natural Image Engine (DNIe) and home networking technology.

The companies also said TFT-LCD and organic light emitting diode (OLED) display patents were also excluded from the deal.

Infringement Issues

Gartner's Reynolds said that the companies are responding to increasing risks in the area of intellectual property.

Aggressive patent infringement suits, he said, are common in the software industry, where the practice has made innovation difficult.

On the hardware side, Reynolds said, there have been fewer problems because it is more difficult to determine whether a technology is infringing, particularly if it is embedded in silicon.

Nevertheless, the Samsung-Sony cross-licensing deal does indicate that companies are getting more concerned with the "administrative side" of technology, Reynolds said.

There is a need for patent reform given the basic, sometimes "trivial" technologies that are the basis of infringement suits, Reynolds said. In the meantime, cross-licensing deals are likely to continue.

"It's good," Reynolds said of the trend. "It tends to slow the effect of patent suits."

Such agreements have historically been limited to semiconductor technology, but the increased and faster consumer electronics market has forced a spread of the patent partnerships.