Samsung Files Complaint
One of the world’s leading smartphone providers has recently petitioned the U.S. International Trade Commission (ITC) to prevent specific types of replacement screens from entering the United States. This move could have far-reaching implications for independent repair enterprises that are dependent upon access to these parts.
On Dec. 28th, a complaint was filed by Samsung to the ITC regarding patents for OLED screens. Over a dozen independent American repair shops were named in this action. Then in late February, Chinese OLED manufacturer, BOE, became involved with its own filing. This case has sparked interest from right-to-repair advocates, and those within the independent repair industry.
Samsung’s lawsuit accused 17 companies of infringing on four patents for active-matrix OLED (AMOLED) displays. The tech giant requested to stop the importation of the patented displays with a general exclusion order, and seeks to have a permanent cease and desist arrangement to be issued against the named business entities. Most of which are small-scale standalone repair and refurbishment operations.
Samsung presented nearly 200 exhibits and evidence backing up its claims that certain products were illicitly sold or imported. Photographs of these items were also included, providing alleged visual proof of infringement on the patents.
Many Companies Were “Unaware” of the Patent
One of the named companies, Injured Gadgets, was served with investigation papers from Samsung, concerning a patent the company had “no idea” they even held. In a conversation with E-Scrap News, CEO Shay Kripalani, states that he was unaware of the patent until he was notified in early January.
Kripalani insisted that a victory for Samsung could have consequences beyond aftermarket repair, extending into the realm of second-hand device sales and industries such as insurance warranty firms.
“The No. 1 part that’s repaired is a screen, so if the cost of the screen goes from $30 … to $300 for an OEM one, you’re killing the secondary market,” he stated.
The involvement of BOE was motivated by its desire to shield corporate investments and business related to AMOLED display panels and because, “many of the respondents are small businesses that may not have the desire or the financial resources to defend the case vigorously.”
Both Samsung and BOE declined to comment at this time.
Original Complaint Specifics
Turning to Section 337 of Tariff Act of 1930, Samsung (referred as SDC) upholds that “unfair methods of competition and unfair acts in the importation of articles into the United States, or in their sale,” are illegal if the tactics utilized to import items into America result in destruction or substantial injury to an industry.
“Despite the patents covering SDC’s AMOLED display products, SDC has become aware that its designs and technologies are being widely copied in aftermarket displays used as replacement displays for mobile devices,” the complaint detailed.
The documents pointed out a breach of Section 337, “through, and in connection with, the unlicensed importation into the United States, sale for importation into the United States, and/or sale within the United States after importation.”
Samsung Electronics has invested heavily in research and development according to the records, with a total amounting in $18.45 billion and $19.58 billion in 2020 and 2021, respectively. Of these figures, approximately $1.13 billion was spent in America in 2020, increasing to roughly $1.24 billion the following year.
BOE Voices Concern
BOE noted that a general exclusion order would have a substantial impact on the industry, even though the complaint did not name BOE or other AMOLED manufacturers as respondents specifically.
According to the motion, the U.S. Customs and Boarder Protection (CBP) may “detain shipments containing Mianyang BOE replacement screens and, if CBP erroneously believes that Mianyang BOE’s products infringe the asserted patents, it may improperly bar Mianyang BOE products from entry.”
“Mianyang BOE has invested significant resources into the design, development and manufacture of its AMOLED screens and it should be afforded the opportunity to protect those investments by participating as a respondent in this case,” the company explained.
Kripalani, CEO of Injured Gadgets, declared that his company had never encountered any problems from a legal standpoint before.
“We always tried to stay very legal and so have most of our competitors, so it was very surprising to hear that they were investigating us,” he said.
The Repair Industry Responds
In reaction to the recent case, independent repair technician and YouTube content creator, Louie Rossmann, expressed his opinions in a video uploaded on Jan 11. According to him, Samsung’s strategy of preventing imports of all aftermarket screens could be related to customs officials’ inability to differentiate between those that break patents, and those that do not.
“To be clear, when we say aftermarket, we’re not talking about somebody pretending that something has a Samsung logo on it or has a Samsung part when it does not,” Rossmann stated. “We are talking about parts that are very clearly branded as refurbished, aftermarket or not original for a mobile device.”
He asserted that an imposed blanket order could prevent the import of reconditioned iPhone screens, many of which have new glass but would retain the original AMOLED. Rossmann warned that such an action, “would result in the independent repair industry being shot dead.”
A Fight Between Tech Giants
Rossmann stated on February 13th that he believed the dispute between Apple and Samsung held much more than a patent complaint. He went on to explain that Apple had recently contracted BOE to make 70% of the screens for its initial order of iPhone 15 displays, while the company had only produced 15% of the screens for the iPhone 12. Therefore leaving BOE in a position where it could potentially replace Samsung as the main supplier for iPhone displays.
For quite some time, BOE focused its efforts on producing screens for well-known international brands, but refrained from those in the United States. Kripalani concluded that should the ITC rule in favor of Samsung, it could “give them a stronghold on service in the United States”.
Rossman identified that the ongoing dispute between Apple and Samsung is more than just a patent battle, but is truly a reflection of “the industry war between China and the U.S.”
Kripalani agreed that the situation appeared as if Samsung was targeting the supply chain and its battle is “between BOE and Samsung, not us, we’re just pawns.”
His attorney told him that the entire process, including the investigation and case, should take somewhere between 16 and 24 months. Thereby requiring all involved parties to keep financing the litigation costs. As per the procedural schedule in place, the completion of all proceedings are hopeful to conclude by July 3rd 2024.
“Legal fees are not cheap,” Kripalani added.
Potential Effects on the Economy and Consumers
Samsung claims that the investigation “does not present a situation in which the Commission, the parties or the public should expend the time or resources to undertake discovery and trial.” In accordance with the regulations of the ITC, external participation and comments on an issue are only allowed in cases where there is considerable public interest.
However, Rossman stipulated that it is vital for citizens to have a voice in this matter, as it has a direct impact on what consumers will pay for repairs, and whether individuals will be able to get devices refurbished at all. “The public should get a say here,” he attested.
The tech giant maintained in its filing that the general exclusion order and cease and desist orders would not have a negative effect on the American economy, consumers in the U.S., or on the production of similar products.
A Strong Opposition
Rossmann had an opposing standpoint, claiming that the prohibition of all screen imports “100% affects the competitive state of the U.S. economy.” He contended that individuals should have the freedom to purchase whichever screen they prefer, regardless of disparities in quality between imported and aftermarket alternatives.
“I don’t think the public interest is that the manufacturer is the only one who can sell a screen,” he feels that this would lead to forced purchases of new devices when screens inevitably break.
Contrary to what was stated by Samsung, Rossman estimates that the proposed corrective steps will influence the introduction of smartphones, tablets and other devices with AMOLED displays. He argued that “we’re talking about shapes of pixels” and “customs won’t be able to tell the difference.”
“Samsung is looking to ban everybody from importing cell phone screens, functionally,” Rossman said. “Everything will be blocked.”
If Samsung’s requests are awarded, it will be “an arrow into the heart of the repair industry” he added.
With fear looming over independent repair centers, only time will determine what regulations may be imposed by Samsung’s case.
