Overseas Lawsuits Threatening Korean Exporters

Korean exporters, the growth engine of the country’s economy, are mired in overseas lawsuits. Following industrial and technology wars, legal wars are now adding to Korean companies’ difficulties.

For one remote control manufacture located in Gumi, North Gyeongsang Province, the past three years have been a nightmare. The world’s top consumer electronics company, Philips, filed for damages of 250 billion won against the company in a U.S. court in 2002. Philips is claiming that the Korean firm violated its patent on remote control technology.

Large corporations such as Samsung and LG are also facing similar problems. LG’s third quarter business report lists 169 overseas lawsuits against the company, which entail $500 million in damages.

Samsung Electronics and Hynix Semiconductor reported facing 15 and eight overseas lawsuits respectively, but the legal circle estimates the numbers to be much higher.

Since the establishment of the World Trade Organization (WTO) in 1995, Korea has faced 207 anti-dumping lawsuits and 14 countervailing duty lawsuits, becoming the country facing the second highest number of lawsuits.

Korean lawyers analyze the reason behind such a great number of lawsuits against Korean firms as the overseas companies’ strategy of countering the threat posed by Korea’s industrial and technological development.

This year, the U.S. Department of Justice imposed a $300 million fine on Samsung Electronics and a $185 million fine on Hynix for conspiring to fix D-RAM prices. This can take away more than half of Hynix’s third quarter net earnings, which was 378 billion won.

“The recent years have seen an escalating number of overseas lawsuits against Samsung Group’s subsidiaries. Lawsuits are being filed against the company not only in the U.S., where it is easy to file a lawsuit, but also in Europe, Middle East, and Southeast Asia,” said one Samsung official.

According to the Electronic Industries Association of Korea, as of October 2005, there has been a steep increase in the number of patent lawsuits in the electronic industry. Since Texas Instrument of the U.S. filed a technology patent lawsuit against Samsung Electronics in 1986, there have been 34 patent lawsuits against Korean firms till 2000. In comparison, there were 61 overseas lawsuits filed from 2000 to October of this year. Since this figure is based on the number voluntarily reported by companies, the actual number is suspected to be much higher.

“Lawsuits filed by overseas companies have become so aggressive since 2000 that Korean SMEs’ very survival is under threat,” says Chung Jae-kwan, the head of the patent support center of Electronic Industries Association of Korea.

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