Jaffe v. Samsung Electronics Co.

Case Updates

The Fourth Circuit affirmed the judgement of the bankruptcy court.

The U.S. Chamber urged the Fourth Circuit to hold that foreign bankruptcy proceedings should not enable unilateral cancellation of cross-licenses. The semiconductor industry has broadly adopted the use of cross-licenses - a practice where firms allow their competitors to use their patents in exchange for the same privilege -as a means to mitigate the industry's extremely high research, development and manufacturing costs.

The Chamber argued in its amicus brief that allowing unilateral cancellation of these licenses has several negative and unreasonable effects on the industry and on U.S. consumers. For example, unilateral cancellation of these patent licenses will force firms to pay twice for the same technology: once to get the cross-license and the again after the firm has incorporated that technology into their product. For firms, this creates the very real possibility that firms will be face royalty demands by their competitors after the competitor’s patents are incorporated into their product - a point at which switching to alternative technology is cost and time prohibitive. For consumers, this will result in higher prices and less innovative products. The Chamber also argued that cross-licenses have created many benefits for the semiconductor industry, U.S. consumers and the U.S. economy and allowing them to be rejected unilaterally would erase the efficiency benefits these cross-licenses provide.