Kakao and Naver, Faced with Attacks from Global Patent Troll
27 Jun 2016 The Electronic Newspaper
Kakao and Naver have become embroiled in a series of patent infringement lawsuits filed by global “patent trolls.” A target for these patent litigations is mobile messenger, which is their major business basis. It is pointed out that a thorough response will be required to stamp out the damage since a lengthy legal battle is expected.

UNILOC Corporation, a global non-practicing entity (NPE), recently filed a patent infringement lawsuit against Kakao and Line Corporation, a subsidiary of Naver Corporation, in the United States District Court for Eastern District of Texas, according to an industry observer on 27th. UNILOC is accusing two mobile messengers, Kakao Talk and Line, of its patent infringement.

UNILOC sued Kakao twice for patent infringement on its seven patents on 30th last month and 14th this month. It also filed the same patent infringement lawsuit against Naver on 14th.

At the heart of a series of patent infringement litigations is the Voice Talk function. UNILOC alleged that functions of voice calls through their messaging application (app) and voice group calls with over three people infringed its patents. The list of alleged patent infringement included a technology of displaying the connection status of other available users ready for voice calls on a messenger and a file manager function that allows a user to save and erase a certain voice message.

The patents claimed by UNILOC cover technologies that are not specific to a certain company but are commonly used in messengers. The UNILOC’s lawsuits appear to be a strategy to earn a massive amount of compensations from major global messenger tech companies. UNILOC not only sued Kakao and Naver but also Wechat developed by Tencent over the same patent infringements.

UNILOC is a global patent troll based in Luxembourg, a tax haven. The patent troll filed a patent infringement lawsuit against Microsoft Corporation in 2009 for software (SW) technology used to deter piracy. It eventually won as much as $388 million in royalty compensation. The computer security software company used this legal precedent to receive more royalties from other businesses. Recently, this patent has become invalid, and it is time for UNILOC to look for a new source of profit.

Lee Chang-hoon, a patent attorney at AJU Kim Chang & Lee, said, “Although UNILOC is not obliged to return the settlements that it won in the past, it has decided to find a new source of profit since it cannot raise a profit like it did in the past.”

The litigations will take at least one to two years. Some expect that it will be an uphill battle for Kakao and Naver to wrestle with UNILOC for its numerous patents at stake and its opponent's history of winning streaks in legal battles including one with Microsoft. It is known that the majority of patents held by UNILOC were applied for in the early 2000s.

Kakao and Naver have barely experienced lawsuits filed by global patent trolls thus far. Kakao is launching various online-to-offline (020) services associated with Kakao Talk, and Never Line is expected to go public in the Japanese and American stock markets scheduled for next month. They have become the targets of UNILOC’s patent attacks due to their expansion of mobile messenger businesses.

The best strategy for Kakao and Naver would be to actively take actions in response to patent litigations and at the same time open a line of communications. Risk should be minimized by making a compromise with UNILOC regardless of whether compensations will be awarded.

“Only 7% of patent lawsuits will go to the verdict of the first trails.” said attorney Lee and added, “Since hiring patent attorneys alone costs billions of won, efforts are required to actively take actions against the lawsuits while minimizing the period of legal brawl.”

Kakao and Naver are planning to get to the bottom of this issue first and handle it based on their analysis.

One official from Kakao, said, “I am aware that UNLOC has filed a lawsuit even though we have not received their complaint yet.” and added, “We will handle it as soon as we receive and confirm the complaint.”

One official from Naver commented, “It appears that UNILOC has started to file patent litigations against major global messenger companies.” and added, “We are seeking for countermeasures.” He also stated “We are also considering a joint responsive measure in cooperation with other defendants.”

Reported by Oh Daesuk
Source: http://www.etnews.com/20160627000350