Samsung’s Patent Spat With Apple Spurs U.S. Lobbying Push
Samsung Electronics Co. (005930) has doubled mobile-phone sales in the U.S. since 2008. As the company faces anti-dumping measures and a protracted court battle with Apple Inc. (AAPL), its U.S. lobbying bill is growing even faster.
Samsung boosted spending on lobbyists to $900,000 last year from $150,000 in 2011 as it tries to influence the federal government on issues ranging from intellectual-property infringement to telecommunications infrastructure, regulatory filings show. The company also hired Sony Corp. veteran Joel Wiginton to run a new government-relations office in Washington.
The higher spending comes as the South Korean company is embroiled in patent disputes with Apple on four continents as the two struggle for dominance in an industry expected to double to $847 billion in sales by 2016. In a U.S. lawsuit, Apple was initially awarded $1 billion in damages after a jury decided Samsung copied the iPhone maker’s designs for mobile devices.
“Samsung is being sued left and right,” said R. Polk Wagner, a professor of intellectual-property law at the University of Pennsylvania Law School. “A major component of their business is smartphones, and this is becoming a very litigious area.”
Last year’s lobbying expenditure was the biggest for Samsung in a single year, according to a U.S. government database of lobbying disclosure filings dating to 1999. The previous high was $370,000 in 2008.
In a statement, Samsung said the expanded effort is “a prudent step as part of day-to-day business operations, our growing presence outside of our headquarters country, and our commitment to transparency.” The company declined to comment further on its lobbying expenditures.
Samsung’s increased spending is small compared with some rivals, though it’s growing faster than many. Apple spent $2 million on U.S. lobbying last year, down 13 percent from 2011, and Sony spent $3.3 million, a decrease of 10 percent, according to the Center for Responsive Politics, a Washington group that tracks lobbying.
Google Inc. boosted its spending 88 percent last year to $18.2 million, while lobbying expenses at Facebook Inc. (FB) jumped to $4 million from $1.4 million in 2011, according to the center.
The greater focus on lobbying by technology companies reflects the growing importance of U.S. laws and regulations to the industry as Congress considers issues from patents to Internet privacy to copyright infringement, said Mark Lemley, who teaches patent law at Stanford Law School in California.
“It’s just an increasingly important part of their business,” Lemley said. “What happens in Washington can significantly affect the lives of technology companies, and they can’t ignore it.”
The bulk of Samsung’s U.S. lobbying money last year, $760,000, went to the law firm Akin Gump Strauss Hauer & Feld, according to the filings. The firm also lobbied on behalf of AT&T Inc. and Lenovo Group Ltd., filings show. Akin Gump declined to comment.
Samsung is involved in dozens of legal disputes with Apple worldwide as the two biggest smartphone makers seek to use patents to curb each other’s growth or force changes in the other’s products. Apple sold 27.4 million iPhone 5s in the quarter ended Dec. 31, and Samsung sold 15.4 million Galaxy 3S models, according to researcher Strategy Analytics.
“Apple is spending a lot of time, money and resources on lobbying, so Samsung is doing the same,” said Mark C. Newman, a senior analyst at Sanford C. Bernstein in Hong Kong.
In August, Apple won the verdict against Samsung from a federal court in San Jose, California. Apple also sought to ban sales of infringing Samsung devices, a request that the judge rejected. Samsung has denied copying Apple devices, and both companies have filed appeals.
Samsung and Ericsson AB (ERICB) also have lodged patent- infringement complaints against each other, and the Korean company is challenging U.S. anti-dumping duties imposed on its washing machines after a complaint by Whirlpool Corp. (WHR)
The company’s increased attention to U.S. policy parallels the growth of its business there. Though Samsung doesn’t break out revenues by country, regional data show the Americas to be its largest market, generating 29 percent of its sales in 2011, the latest year available, up from 25 percent in 2009.
Samsung’s U.S. handset revenue increased to $18.5 billion in 2012 from $8.9 billion in 2008, according to data compiled by Bloomberg Industries.
Samsung says it will spend $4 billion to expand its chip factory in Austin, Texas, bringing total investment in the facility to $15 billion. The company is also planning a 1.1 million-square-foot sales and research-and-development headquarters for its semiconductor business near San Jose.
Samsung has registered more U.S. patents annually than any other company except International Business Machines Corp. since 2006, data from the U.S. Patent Office show. The Korean company won 5,081 patents last year, versus 6,478 for IBM, according to research firm IFI Claims Patent Services.
Samsung, based in Suwon, South Korea, isn’t the first Asian manufacturer to get more involved in U.S. politics as it expands in the world’s largest economy. Responding to U.S. import barriers and threats of increased tariffs in the 1980s and 1990s, Toyota Motor Corp. (7203) and Honda Motor Co. increased their U.S. lobbying as they built factories in North America to make vehicles for the local market, said Bill Visnic, a senior editor at Edmunds.com, an automotive research website.
Last year, Toyota spent about $3.4 million on lobbying, according to the Center for Responsive Politics. The world’s largest carmaker pursued issues including energy, trade agreements, taxes and safety, regulatory filings show.
Last year’s court ruling in San Jose may prove to have the same effect on Samsung as tariff threats did for Toyota, according to Amir Anvarzadeh, a manager for Asia equity sales at BGC Partners Inc. (BGCP) in Singapore.
Samsung was “very close to being banned,” Anvarzadeh said. “That was a wake-up call that, ‘Hey, we need to expand our presence, particularly in Washington, and get some lobbying power.’”
To contact the reporter on this story: Terje Langeland in Tokyo at email@example.com
To contact the editor responsible for this story: Michael Tighe at firstname.lastname@example.org