Samsung’s Shady Business Practices Detailed in Vanity Fair Smartphone Wars Piece

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More than 1,000 days of litigation and over a billion dollars spent in court: This is the three-year bill of the patent litigation between the two tech giants, Samsung and Apple. The two have patent infringement cases filed against each other across four continents. One day, Apple’s associate general counsel for intellectual property, Chip Lutton, went to Seoul and put up a Powerpoint slide with the title “Samsung’s Use of Apple Patents in Smartphones” and said: “Galaxy copied the iPhone.” Of course, his visit was initiated by Apple co-founder, then CEO, Steve Jobs.

Since then, we’ve seen two rounds of harsh legal battles in California. The first round resulted in more than a billion dollars awarded in damages for Apple — later eased to slightly over $900 million due to faulty calculations.

More recently, the second round of patent litigation ended, and Apple was awarded $120 million in damages, although it asked for $2 billion. By the way, Apple was found to be infringing Samsung’s patents as well.

But what’s interesting is how Samsung’s business machinery works, and the Vanity Fair piece points to a handful of examples (via Daring Fireball). We picked up only two:

A criminal investigation in Korea ensued, at first focusing on Kim’s [former top legal officer, Kim Yong-chul] allegation that Samsung executives maintained a slush fund to bribe politicians, judges, and prosecutors. In January 2008, government investigators raided the home and office of Lee Kun-hee, the chairman of Samsung, who was subsequently convicted of dodging some $37 million in taxes. He was given a three-year suspended sentence and ordered to pay $89 million in fines. A year and a half later, South Korean president Lee Myung-bak pardoned Lee.

A year later [2012], Korean newspapers reported that the government had fined Samsung for obstructing the investigation at the facility. At the time, a legal team representing Apple was in Seoul to take depositions in the Samsung case, and they read about the standoff. From what they heard, one of the Samsung employees there had even swallowed documents before the investigators were allowed in. That certainly didn’t bode well for Apple’s case; how, the Apple lawyers said half-jokingly among themselves, could they possibly compete in a legal forum with employees who were so loyal to the company that they were willing to eat incriminating evidence?

The whole piece is well worth the time. To read the full Vanity Fair article, click here.

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