Plasma deal paves way for warring tech firms

A LEGAL settlement between two of the world’s biggest electronics manufacturers is likely to serve as a model for other technology companies embroiled in patent fights.

South Korea’s LG Electronics and Panasonic- owner Matsushita, which has its global headquarters in Japan, have agreed to bury the hatchet over plasma display technology and to cross-licence patents regarding plasma, personal computers and DVDs.

The deal closes the chapter on just one of a series of legal disputes over intellectual property among Japanese, Korean and Taiwan technology firms, which are currently battling it out for a leading position in the burgeoning market for digital electronics.

Experts say the settlement could pave the way for further similar agreements. It also comes hot on the heels of a deal between Sony and Samsung to share patents on basic technology.

John McKinley, an Edinburgh-based technology specialist at legal heavyweight DLA Piper, said: "There’s a huge pace of change that these companies are struggling to keep up with, and the technology itself is becoming increasingly complex. It’s very difficult for one organisation to have all the answers. Companies are increasingly trying to share these patent technology pools."

LG and Matsushita filed lawsuits against each other last year, claiming infringements of patents related to plasma technology. The suits led to a halt of imports of LG panels into Japan and Matsushita panels into South Korea. The two companies have now dropped all legal actions, opening the door to imports again.

They also hope to expand on a tie-up that began about four years ago, with an agreement to exchange parts and materials for air conditioner compressors.

"As a result of the settlement, the companies reconfirmed continued co-operation in other business areas," Matsushita and LG said in a joint news release, adding they had plans to establish a committee to explore further alliances.

In addition to sharing plasma display technology, Matsushita and LG said they would also swap patents related to microprocessors, the central operating chips in personal computers, and those involved in making DVD-related products.

Plasma panels are the key component in plasma TV sets, a market that research firm DisplaySearch expects to more than quadruple in size to 12.3 million sets by 2008 as consumers trade in traditional cathode-ray tube models for the latest slim-line designs.

LG was the world’s leading supplier of plasma panels in the final three months of 2004, with a market share of 23.6 per cent, according to DisplaySearch.

Samsung SDI was second, with 22.8 per cent, and Matsushita third with a 21.7 per cent slice of the market.

Matsushita filed a lawsuit in Tokyo in November last year, claiming LG’s panels infringed on its patents concerning heat radiation technology. But the Korean group promptly filed a countersuit in Seoul and a lengthy battle ensued.

Analysts said at the time of the Sony/Samsung deal in December that the agreement could be the start of a trend - sharing patents on basic technology to prevent costly and protracted legal battles that may hurt a company’s competitive position even if it won the lawsuit in the end.

One legal expert suggested it may be the "precursor to a lot of companies doing the same".

Last month, it emerged that Edinburgh-based chip developer Wolfson Microelectronics had settled its patent dispute with US-based Cirrus Logic.

Cirrus filed a lawsuit against the city firm for two alleged patent infringements just days before Wolfson’s October 2003 flotation.

Under the final settlement, both parties have agreed to withdraw all outstanding claims and counterclaims.