Pictos Accuses Samsung of Industrial Espionage

BusinessWire: Acting on a complaint filed by Pictos Technologies Inc., The US International Trade Commission has launched a probe into industrial espionage and patent infringement by Samsung relating to digital imaging technology. This investigation by the Commission could result in an embargo of Samsung’s smartphone imports from South Korea and other countries into the US.

“While other major corporations such as Apple, Kyocera, LG, and Nokia have all resolved their disputes with Pictos, Samsung has refused to do so, reaping billions of dollars from its wrongdoing. The Commission must not permit the patents of U.S. Companies and their trade secrets to be wantonly stolen by foreign interests. We urge the Commission to check Samsung’s predatory behavior,” said Vince Capone, General Counsel of Pictos.

BusinessWire: Pictos also files a lawsuit against Samsung on patent infringements. It appears that the previous lawsuits covered here, here, and here were eventually declined "on other grounds," as Pictos says. Few quotes from the new lawsuit filed in Texas Eastern District Court:

"Pictos is an intellectual property company that holds more than 70 patents on core technologies relating to image sensors and other features used in consumer electronic products such as cell phones, digital cameras, tablet computers, and laptops.

This case involves innovative technology developed in the 1980s by Rockwell International while working for the United States Department of Defense on satellite imaging, including important contributions to the CMOS imaging sensors that power all of our mobile phone and laptop cameras today.

In June 2003, ESS Technology, Inc. (“ESS”) acquired Pictos Technologies, Inc., a California company, from Conexant Systems, Rockwell’s successor. This acquisition included Pictos’s digital imaging patent portfolio. At the time, Pictos developed and supplied image processors, CMOS image sensors, camera modules and embedded software throughout the U.S. marketplace. Pictos’s consumer products included one of the world’s smallest VGA color sensors, CMOS imaging sensors and modules, as well as the fastest click-to-click, high performance low power image processors that supported multiple digital output formats.

ESS’s technology caught Samsung’s attention and by March 2005 Samsung had selected ESS’s 1.3 megapixel ES2260M chip for inclusion in its A890 handset, Samsung’s first mobile phone designed for Verizon’s EVDO broadband network. ESS’s engineers spent considerable time directly assisting Samsung’s engineers in the United States and in Korea.

ESS and Samsung signed non-disclosure agreements under which ESS gave Samsung access to ESS’s engineers, laboratories, source code, and expertise. Samsung took advantage of this access. Samsung’s engineers photographed, measured, and analyzed every aspect of ESS’s testing and calibration laboratory in the United States. Samsung then reproduced an exact replica – down to the lines on the floor – of ESS’s

laboratory in Korea. ESS’s laboratory specifications were the result of decades of development, investment, and research, to create the necessary machines, software, and methodologies to test and tune digital imaging components.

Samsung entered into contracts with ESS to purchase ESS’s digital imaging components, such as the cutting edge ES2260M chip, and then used the resulting access to ESS’s technology to copy that technology. Samsung then ceased doing business with Pictos. But Samsung had catapulted itself from a minor player in the CMOS industry to eventually become the second largest CMOS manufacturer in the world.

As is not surprising when a behemoth in the mobile industry steals technology and then stops doing business with a small digital imaging semiconductor company, ESS’s camera business quickly plummeted. By early 2007, ESS was forced to officially close its phone camera operations and instead attempted to salvage what it could by licensing its technology.

In 2008, as a part of the separation of its operating businesses and its licensing businesses, ESS rolled its licensing efforts into Imperium IP Holdings (Cayman), Ltd. (“Imperium”). Through mergers and related agreements ESS assigned all of its patents and trade secrets to Imperium.

As part of its effort to license its technology, Imperium entered into discussions with a patent broker. Allegedly working on behalf of a major player in the industry, the patent broker negotiated with Imperium for the license or purchase of Imperium’s patent portfolio starting in May 2011. In fact, that broker was retained by Samsung. Samsung twice evaluated Imperium’s 70-plus patent portfolio between 2011 and 2014 and said “thanks but no thanks.” Samsung was therefore on notice of its infringement at least as early as its analysis and has continued to infringe since that date.

Despite the foregoing pre-suit negotiations, and notice of its infringement, Samsung refused to settle, continued to infringe, and Imperium was forced to bring suit against Samsung in 2014. In 2016, after significant motions practice and a six-day trial, the jury found that Samsung infringed Imperium’s patents, Imperium IP Holdings (Cayman) Ltd. v. Samsung Electronics Co., et. al., Civil Action No. 4:14-CV-371, Dkt. 253 (E.D. Tex. Feb. 8, 2016) (reversed on other grounds), and, unsurprisingly, the Court found that Samsung had willfully done so, Imperium IP Holdings (Cayman), Ltd. v. Samsung Electronics Co., Ltd., Case No. 4:14-CV-371, 2017 WL 4038883 (E.D. Tex. Sept. 13, 2017) (reversed on other grounds).

Through a merger, Imperium IP Holdings became a Delaware corporation named Pictos Technologies Inc. in late 2019."