Read the article and answer the question. The URL is the article: http://www.nyt
ID: 2461387 • Letter: R
Question
Read the article and answer the question.
The URL is the article:
http://www.nytimes.com/2016/03/22/technology/supreme-court-to-hear-samsung-appeal-on-apple-patent-award.html?_r=0
Question:
1. Briefly trace the corporate history of Samsung. What were some of the major products, both industrial and consumer that spurred the company’s growth?
2. What is a patent? How is a patent obtained?
3. How is a patent recorded and amortized on a company’s financial statements? If a company (the plaintiff) sues another for patent infringement and wins its case, how are the unreimbursed litigation costs of the plaintiff treated in its financial statements?
4. What is the major issue involved in this conflict between Apple and Samsung and what is your opinion about the merits of Samsung’s claim.
Explanation / Answer
1. Briefly trace the corporate history of Samsung. What were some of the major products, both industrial and consumer that spurred the company’s growth?
1938-1969 Samsung's Beginnings
On March 1, 1938, founding chairman Byung-Chull Lee started a business in Taegu, Korea, with 30,000 won.
At the start, his business focused primarily on trade export, selling dried Korean fish, vegetables, and fruit to Manchuria and Beijing. In little more than a decade, Samsung-which means "three stars" in Korean-would have its own flour mills and confectionery machines, its own manufacturing and sales operations, and ultimately evolve to become the modern global corporation that still bears the same name today.
BUSINESS AREA MAJOR PRODUCTS
Digital media business CTVs, monitors, DVDs, VCRs, camcorders, printers, PCs, etc.
digital appliance business Refrigerators, air conditioners, microwave ovens, washing machines, vacuum cleaners, etc.
Semiconductor business DDR SDRAM, SDRAM, flash memory, display driver IC, etc.
Telecommunications network business Cellular phones, mobile communications network systems, optical cables, etc.
LCD business TFT LCD, OLED, etc.
* Outside these 5 businesses, the Company produces Mechatronics products, etc.
2. What is a patent? How is a patent obtained?
A patent is a right granted to the owner of an invention that prevents others from making, using, importing or selling the invention without his permission.
A patentable invention can be a product or a process that gives a new technical solution to a problem. It can also be a new method of doing things, the composition of a new product, or a technical improvement on how certain objects work.
Once it is granted, its term of a patent is 20 years from the Date of Filing, subject to the payment of annual renewal fees.
When you file with the USPTO, you can either file a full-blown regular patent application (RPA) or a provisional patent application (PPA).
3. How is a patent recorded and amortized on a company’s financial statements? If a company (the plaintiff) sues another for patent infringement and wins its case, how are the unreimbursed litigation costs of the plaintiff treated in its financial statements?
Initial recordation: Record the cost to acquire the patent as the initial asset cost. If a company files for a patent application, this cost will include the registration, documentation, and other legal fees associated with the application. If the company instead bought a patent from another party, the purchase price is the initial asset cost.
Amortization:. The owner of the patent gradually charges the cost of the patent to expense over the useful life of the patent, usually using the straight-line amortization method.
Impairment:. If a patent no longer provides value, or a reduced level of value, recognize an impairment to reduce or eliminate the carrying amount of the asset.
Derecognition:. Once the company is no longer making use of the patented idea, the asset can be derecognized by crediting the balance in the patent asset account and debiting the balance in the accumulated amortization account. If the asset has not been fully amortized at the time of derecognition, then any remaining unamortized balance must be recorded as a loss.
4. What is the major issue involved in this conflict between Apple and Samsung and what is your opinion about the merits of Samsung’s claim.
The three design elements at issue in the case, Samsung Electronics Co. v. Apple Inc., No. 15-777, are, in Samsung’s description, “a particular black rectangular round-cornered front face”; “a substantially similar rectangular round-cornered front face plus the surrounding rim”; and “a particular colorful grid of sixteen icons.”
“The key question is whether damages relating to a design patent should be apportioned in relation to the value added by the patented design or can cover the infringer’s entire profit on the infringing product,”
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