Samsung Chief Jailed For 2.5 Years Over Corruption Scandal

Samsung heir Lee Jae-yong arrives at court in Seoul on Janaury 18, 2021. The de facto chief of South Korea’s Samsung business empire was convicted over a huge corruption scandal and jailed for two and a half years, in a ruling that deprives the tech giant of its top decision-maker.

 

The de facto chief of South Korea’s Samsung business empire was convicted Monday over a huge corruption scandal and jailed for two and a half years, in a ruling that deprives the tech giant of its top decision-maker.

Lee Jae-yong, vice-chairman of Samsung Electronics, the world’s biggest smartphone and memory chip maker, was found guilty of bribery and embezzlement in connection with the scandal that brought down president Park Geun-hye.

Lee “actively provided bribes and implicitly asked the president to use her power to help his smooth succession” at the head of the sprawling conglomerate, the Seoul Central District Court said in its verdict.

“It is very unfortunate that Samsung, the country’s top company and proud global innovator, is repeatedly involved in crimes whenever there is a change in political power.”

It jailed him for two and a half years, concluding a retrial that was the latest step in a long-running legal process that has hung over Samsung for years.

The multi-billionaire Lee — who had earlier walked into court grim-faced and wearing a facemask, without responding to reporters’ shouted questions — was immediately taken into custody.

He has effectively been at the head of the entire Samsung group for several years after his father was left bedridden by a heart attack, finally dying in October.

“This is essentially a case where the freedom and property rights of a company were violated by the former president’s abuse of power,” Lee’s lawyer, Lee In-jae, told reporters.

“Given the nature of the matter, I find the court’s ruling regrettable.”

Samsung is by far the biggest of the family-controlled conglomerates, or chaebols, that dominate business in the world’s 12th-largest economy.

Its overall turnover is equivalent to a fifth of the national gross domestic product and it is crucial to South Korea’s economic health.

Its rise has been driven by a willingness to invest billions in strategic bets on key technologies.

But experts say the sentence will create a leadership vacuum that could hamper its decision-making on future large-scale investments.

“It’s really a huge blow and a big crisis for Samsung,” said Kim Dae-jong, a business professor at Sejong University.

Samsung Electronics, the group’s flagship subsidiary, declined to comment on Monday’s ruling.

Like many tech firms, its shares have risen significantly during the coronavirus pandemic, more than doubling from their lows in March, but closed down 3.4 percent on Monday.

– Public apology –

The case centres on millions of dollars the Samsung group paid Park’s secret confidante Choi Soon-sil, allegedly for government favours including ensuring a smooth transition for Lee to succeed his then-ailing father.

The scandal highlighted shady connections between big business and politics in South Korea, with the ousted president and her friend accused of taking bribes from corporate bigwigs in exchange for preferential treatment.

Lee was first jailed for five years in 2017, after Park’s ouster.

He walked free the following year when an appeals court dismissed most of his bribery convictions and gave him a suspended sentence, but the Supreme Court later ordered the 52-year-old to face a retrial.

In May, Lee made a rare public apology, bowing before flashing cameras for company misconduct including the firm’s controversial plan for him to ascend to the leadership.

His own children, he promised, would not succeed him in top management roles at the company.

Both Lee’s father Lee Kun-hee and grandfather — Samsung founder Lee Byung-chull — had brushes with the law themselves but never served time behind bars.

In the past, leaders of South Korean conglomerates convicted of crimes such as tax evasion or bribery have been given presidential pardons in recognition of their economic role.

The Federation of Korean Industries said in a statement: “Considering Samsung’s share of the Korean economy and its status as a global company, the ruling is feared to have a negative impact on the overall Korean economy.”

Lee, it added, “has been helping to sustain the Korean economy by spearheading bold investment and job creation amid the economic crisis over the coronavirus”.

Earlier this month, Samsung Electronics flagged a jump of more than 25 percent in fourth quarter operating profits, citing benefits from pandemic-induced working from home that boosted demand for devices powered by its chips.

Analysts forecast a stable outlook for the company in 2021, driven by continued demand for memory chips.

-AFP

Samsung Electronics Chairman Lee Kun-Hee Is Dead

In this file photo taken on July 11, 2008 (FILES) Lee Kun-Hee (C), former Samsung Group chairman, leaves after his trial as reporters ask him questions at a Seoul court. Lee died on October 25 at the age of 78, the company said. JEON HYEONG-JIN / AFP FILES / AFP

 

Samsung Electronics chairman Lee Kun-hee, who transformed the South Korean firm into a global tech titan, died at the age of 78 on Sunday, the company said.

Under Lee’s leadership, Samsung rose to become the world’s largest producer of smartphones and memory chips, and the firm’s overall turnover today is equivalent to a fifth of South Korea’s GDP.

Samsung’s meteoric rise helped make Lee South Korea’s richest and most powerful industrialist.

“It is with great sadness that we announce the passing of Kun-hee Lee, Chairman of Samsung Electronics,” the company said in a statement.

“Chairman Lee passed away on October 25 with his family, including Vice Chairman Jay Y. Lee, by his side.

“Chairman Lee was a true visionary who transformed Samsung into the world-leading innovator and industrial powerhouse from a local business,” the firm said, adding: “His legacy will be everlasting.”

Samsung is by far the biggest of the family-controlled conglomerates, or chaebols, that dominate business in South Korea.

They drove the nation’s transformation from a war-ravaged ruin to the world’s 12th-largest economy, but nowadays are accused of murky political ties and stifling competition — with Lee himself twice convicted of criminal offences, in one case bribing a president.

– Global power –

When Lee inherited the chairmanship of the Samsung group in 1987 — founded by his father as a fish and fruit exporter — it was already the country’s largest conglomerate, with operations ranging from consumer electronics to construction.

But it was seen as a shoddy producer of cheap, low-quality products.

“Let’s change everything except our wives and kids,” Lee said in 1993.

The company gathered up and burnt all 150,000 mobile phones it had in stock, paving the way for the rebirth of the highly successful “Anycall” handset.

With Lee at the helm, Samsung became a global behemoth: by the time he suffered a heart attack in 2014, it was the world’s biggest maker of smartphones and memory chips, and a major player in semiconductors and LCDs.

Lee rarely spoke to the media, but was closely watched whenever he broke his long silences, often with doom-laden New Year corporate addresses.

His son, Samsung Electronics vice chairman Lee Jae-yong, has been at the helm of the company since the 2014 heart attack.

– ‘Hermit king’ –

Despite his immense wealth and power, Lee seldom ventured out from the high walls of his private compound in central Seoul to visit the company headquarters, earning him the nickname “hermit king”.

Lee, the third son of Samsung group founder Lee Byung-chull, had a soft spot for dogs — developed as a child in Japan where he went to school from age 11. He was also known for his love of movies, horseriding and exotic supercars.

He studied at Japan’s prestigious Waseda University and earned an MBA at George Washington University in the United States.

He became vice chairman of the group’s construction and trading arm at the age of 36, and became group chairman nine years later, shortly after his father’s death.

Lee married Hong Ra-hee — whose father was a justice minister — with whom he had a son and three daughters.

– Bribes, embezzlement, tax evasion –

The worlds of politics and business have been intertwined in South Korea, and the connection was reflected in Lee’s career.

In 1996, he was convicted of bribing former president Roh Tae-woo to get favours for Samsung in business policy decisions.

Lee was also found guilty of embezzlement and tax evasion in a slush fund scandal in 2008, which saw him briefly step down from the company leadership.

But suspended sentences meant he never served time in jail and he received two presidential pardons, going on to spearhead his country’s successful efforts to secure the 2018 Winter Olympics.

A few years later, he fought off a lawsuit from his older brother and sister claiming they were entitled to Samsung shares worth billions of dollars.

He had been in medical care after his heart attack, but few details were ever revealed about his condition, leaving him shrouded in mystery even in his final days.

AFP

Huawei Overtakes Samsung As Top Smartphone Seller

A man wearing a face mask uses his mobile phone as he walks past a Huawei store in Beijing on May 16, 2020. WANG Zhao / AFP
A man wearing a face mask uses his mobile phone as he walks past a Huawei store in Beijing on May 16, 2020.
WANG Zhao / AFP

 

 

 

China’s Huawei has overtaken Samsung to become the number-one smartphone seller worldwide in the second quarter on the back of strong domestic demand, industry tracker Canalys said Thursday.

Canalys said the embattled firm, which is facing US sanctions and falling overseas sales, shipped 55.8 million devices — overtaking Samsung for the first time, which shifted 53.7 million units.

The findings marked the first quarter in nine years that a company other than Samsung or Apple has led the market, Canalys said.

US sanctions had “stifled” Huawei’s business outside mainland China, the research group added, but it had grown to dominate its substantial home market.

More than 70 percent of Huawei smartphones are now sold in the country, Canalys said, where Samsung has a very small share of the market.

Huawei said in a statement it was a sign of “exceptional resilience”.

Overseas shipments, however, fell nearly a third in the second quarter and Canalys analyst Mo Jia warned that strength in China alone “will not be enough to sustain Huawei at the top once the global economy starts to recover”.

“Its major channel partners in key regions, such as Europe, are increasingly wary of ranging Huawei devices, taking on fewer models, and bringing in new brands to reduce risk,” Mo said.

Huawei — the world’s top producer of telecoms networking equipment — has become a pivotal issue in the geopolitical standoff between Beijing and Washington, which claims the firm poses a significant cybersecurity threat.

Global tensions

Washington has essentially barred Huawei from the US market and waged a global campaign to isolate the company.

The British government bowed to growing US pressure and pledged earlier this month to remove Huawei from its 5G network by 2027, despite warnings of retaliation from Beijing.

The politically-fraught change requires companies to stop buying new 5G equipment from Huawei starting next year and strip out existing gear by the end of 2027.

On Wednesday the US ambassador in Brasilia warned of “consequences” if Brazil chooses Huawei for the project to develop the next generation of telecommunications technology in Latin America’s most populous country.

Australia and Japan have taken steps to block or restrict the Chinese company’s participation in their 5G rollouts, and European telecoms operators including Norway’s Telenor and Sweden’s Telia have passed over Huawei as a supplier.

The US has also requested the extradition of Huawei executive Meng Wanzhou on fraud charges, further damaging relations between China and Canada, where she is under house arrest.

Meng, the Chinese telecom giant’s chief financial officer, was arrested on a US warrant in December 2018 during a stopover in Vancouver and has been fighting extradition ever since.

 

 

-AFP

Samsung Electronics Defies Pandemic With Profit Rise

This file photo taken on October 11, 2016 shows the Samsung store in Paris. Samsung Electronics France was charged in April 2019 with “deceptive marketing practices”.
BERTRAND GUAY / AFP

 

 

 

South Korean tech giant Samsung Electronics defied the coronavirus to report higher net profits in the second quarter Thursday, with strong demand for memory chips overcoming the pandemic’s impact on smartphone sales.

Long known as the world’s biggest smartphone and memory chip maker, it said net profits rose 7.3 percent to 5.56 trillion won ($4.66 billion) in the April-to-June period.

The firm is the flagship subsidiary of the giant Samsung Group, by far the biggest of the family-controlled conglomerates that dominate business in the world’s 12th largest economy, and it is crucial to the South’s economic health.

The figures — which beat expectations according to Bloomberg News — come as the coronavirus pandemic wreaks havoc across the world economy, and with the trade-dependent South having entered a recession for the first time in 17 years due to plunging exports.

But lockdowns imposed around the world — especially in Europe and the US — have boosted Samsung Electronics’ chip business with data centres moving to stockpile DRAM chips to meet surging demand for online activities.

“Even as the spread of COVID-19 caused closures and slowdowns at stores and production sites around the world, the company responded to challenges through its extensive global supply chain,” the firm said in a statement.

It also minimised the impact of the pandemic by “strengthening online sales channels and optimising costs,” it added.

Operating profit rose 23.48 percent to 8.15 trillion won, it said, even as sales dropped 5.6 percent to 52.97 trillion won.

The overall turnover of the wider Samsung group is equivalent to a fifth of South Korea’s gross domestic product.

Analysts said they expect Samsung Electronics’ memory chips and television businesses to improve.

Diplomatic and military tensions between India and China could also play in Samsung’s favour, analysts said, if Indian consumers choose to shun Chinese brands and opt for Samsung devices instead.

“The growth is likely to drive by memory chips and displays as both of these products are in high demand due to heavy content consumption during the lockdown,” Prachir Singh, a senior analyst at market observer Counterpoint, told AFP.

“India is showing a pent-up demand as the country recovers in the post-lockdown period.

“There is certainly an anti-China sentiment in the minds of Indian consumers. Samsung is surely benefiting from this.”

Huawei overtakes

Samsung has long been considered the world’s biggest smartphone maker, but industry tracker Canalys said Thursday it had been overtaken in the second quarter by Chinese rival Huawei, on the back of strong domestic demand in the world’s second-largest economy.

But as the world economy recovers Huawei could struggle to retain top spot in the face of US sanctions and falling overseas sales, Canalys added.

Samsung Electronics declined to comment on the ranking to AFP.

Global smartphone sales slumped more than 20 percent year-on-year in the first quarter, their worst performance ever, according to market tracker Gartner, as the pandemic hit consumer spending.

And for the second half of the year, the outlook for Samsung’s mobiles is “still quite uncertain because while lockdowns in some countries are easing, there is a resurgence of cases in some places,” said Gloria Tsuen, a senior credit officer at Moody’s Investors Service.

LG Electronics, South Korea’s second largest appliance firm after Samsung, posted a second-quarter net profit slump of 38.1 percent to 65.6 billion won Thursday, saying it had been “affected significantly” by the pandemic.

Adding to Samsung Electronics’ challenges, its vice chairman and de facto leader Lee Jae-yong is currently being retried over a sprawling corruption scandal that could see him return to prison.

He is not being held in custody during the proceedings but a guilty verdict could deprive the firm of its top decision-maker.

Samsung shares closed unchanged in Seoul on Thursday at 59,000 won.

 

 

-AFP

Samsung Joins The Fold With Galaxy Z Flip Smartphone

Rebecca Hirst, head of UK Mobile Product Development, speaks during the Samsung Galaxy Unpacked 2020 event in San Francisco, California on February 11, 2020.  Josh Edelson / AFP

 

Samsung on Tuesday unveiled its second folding smartphone, a “Z Flip” handset with a lofty price tag aimed at “trendsetters.”

The smartphone flips open, like a case, opening into a 6.7-inch screen, and fits in a pocket when folded.

The ultrathin glass used for the screen can be folded and unfolded more than 200,000 times and resists scratches, according to Samsung.

The Galaxy Z Flip will be available beginning Friday at a starting price of $1,380, head of Samsung product marketing in Rebecca Hirst said at a San Francisco unveiling.

“It changes everything — space, size, and the very way we use it,” Hirst said as she held a Z Flip in the palm of a hand.

“The Z Flip is a statement smartphone; it is for trendsetters and trailblazers.”

When closed, the Z Flip displays notifications such as time and phone calls, and can still be used to take photos.

The new device comes amid growing interest in folding handsets, and a similar “flip” Razr device recently introduced by Motorola.

Samsung launched its first foldable handset, the Galaxy Fold, in September after faulty screens forced an embarrassing delay of the release of the $2,000 device.

Folding smartphones have been introduced by Chinese makers Huawei and Royole.

Analyst Patrick Moorhead of Moor Insights & Strategy said Samsung was moving ahead of iPhone maker Apple, which he does not expect to develop foldable screens in a handset for at least three years.

“I think that Apple is a bit risk-averse when it comes to designs these days,” Moorhead said.

 New 5G handset 

Samsung also introduced a new Galaxy S 20 Ultra flagship model for its lineup of smartphones synched to new 5G telecommunication networks.

“5G will completely change how we communicate, how we game, and how we engage with the world around us,” Samsung head of US mobile product management Drew Blackard said during the presentation.

“This is the year of Galaxy 5G, and it begins right here with the Galaxy S 20.”

Unlike rivals, Samsung has introduced a line of three 5G smartphones instead of just one model, aiming to be in the lead in that market, according to analyst Jack Gold of J. Gold Associates.

Galaxy S 20 models boast high definition 8K quality camera capabilities, and the Ultra model zoom magnifies views up to 100 times, according to demonstrations.

Galaxy S 20 5G models have a starting price of $999 and will be released on March 6, according to the South Korean electronics giant, which has been at or near the top of the smartphone market in recent years.

New collaborations 

Samsung also announced new collaborations with streaming television titan Netflix and Xbox video game console maker Microsoft.

“We believe this is a significant partnership that will provide millions of Samsung users around the globe the best entertainment experience,” said Netflix chief marketing officer Jackie Lee-Joe.

“Great stories come from anywhere and should be loved everywhere.”

Netflix will be providing Samsung S 20 phones to creators of some of its original shows to make content for the global streaming platform.

An Xbox car racing game, “Forza Street,” has been tailored for play on S 20 phones, according to Samsung.

“This is just the beginning of or gaming partnership with Xbox,” said head of US mobile channel marketing David Park.

Samsung also touted working closely with Google to integrate the internet giant’s technology into its new smartphones, such as tailoring YouTube content for display on the Z Flip.

“I think the partnership play was very strong today,” said Creative Strategies analyst Carolina Milanesi.

“Having Google here is a big deal. It seems they are getting closer together; there was a time when Samsung wanted to build its own ecosystem.

Barriers put in place by the US government to Google providing its technology to Chinese smartphone maker Huawei might have played into the tighter relationship with Samsung, Milanesi reasoned.

Samsung Admits Galaxy S10 Fingerprint Access Flaw

A billboard advertising the brand-new Samsung Galaxy S10 and S10 Plus smartphones in Hong Kong on April 3, 2019. EyePress News / EyePress

 

Tech giant Samsung Electronics on Friday acknowledged a major flaw with its fingerprint system that allows other people to open its top-end smartphones, advising users to delete all registered prints.

Samsung is the flagship subsidiary of the giant Samsung Group and crucial to South Korea’s economic health. The conglomerate is by far the biggest of the family-controlled empires that dominate business in the world’s 11th-largest economy.

But it has a history of humiliating setbacks with major products, most notably a worldwide recall of its Galaxy Note 7 devices in 2016 over exploding batteries, which hammered its reputation.

Earlier this year it had to delay the launch of its first foldable smartphone, the Galaxy Fold, after pre-release users found faulty screens.

READ ALSO: Lebanon To Tax Calls On Messaging Apps

Samsung’s latest problem emerged after a user in the UK told the Sun newspaper earlier this week her Galaxy S10 smartphone could be unlocked by someone else simply by putting on a screen protector and applying an unregistered fingerprint.

The flaw meant anyone who got hold of her phone could transfer funds using her financial apps, the user told the British paper.

In a statement released Friday, Samsung said the issue involved “fingerprint sensors unlocking devices after recognising three-dimensional patterns appearing on certain silicone screen protecting cases as users’ fingerprints.”

The firm advised users of the Galaxy Note10, 10+ and Galaxy S10, S10+, and S10 5G to “delete all previous fingerprints” and register their data anew.

“Please refrain from applying a silicone screen protecting case to your device until a software update, which is planned to be released beginning next week,” it added.

The statement was released a day after Samsung said it would soon roll out a fix, but did not specify what the problem was.

The world’s biggest smartphone maker has touted the Galaxy S10’s in-display fingerprint sensor as “revolutionary”.

“When you place your thumb on the screen, it sends ultrasonic pulses to detect the 3D ridges and valleys of your unique fingerprint to quickly and accurately recognise you,” the firm has said about the technology involved.

Kakaobank, South Korea’s internet-only bank, has told its customers not to use fingerprints to access its mobile banking services and employ passwords and pattern locks instead until the problem is fixed.

Italy Fines Apple, Samsung For ‘Slowing Phones’

Italy Fines Apple, Samsung For 'Slowing Phones'

 

Italy’s competition authority on Wednesday said it was fining Apple and Samsung 10 and five million euros ($11.5 and $5.7 million) respectively for the so-called “planned obsolescence” of their smartphones.

The ruling is believed to be the first against the manufacturers following accusations worldwide that they encourage operating system updates for older phones which slow them down, thereby encouraging the purchase of new phones.

Two “complex investigations” by the anti-trust authority AGCM revealed that Apple and Samsung implemented unfair commercial practices, a statement said.

“The two companies have induced consumers to install software updates that are not adequately supported by their devices, without adequately informing them, nor providing them with an effective way to recover the full functionality of their devices,” the AGCM said.

Operating system updates “caused serious malfunctions and significantly reduced their performance, in this way speeding up their replacement with more recent products.”

Samsung “insistently suggested” to owners of its 2014 Note 4 phone to install a new version of Google’s Android operating system intended for the more recent Note 7, the ACGM said.

But that was “without informing them of the serious malfunctions that the new firmware could cause due to greater stress of device’s hardware and asking a high repair cost for out-of-warranty repairs connected to such malfunctions”.

Likewise, Apple “insistently suggested” to iPhone 6 owners to install an operating system designed for the iPhone 7, “without warning consumers that its installation could reduce the speed of execution and functionality of devices”.

A Samsung statement said it would appeal the fine because the company “did not issue any software update that reduced the Galaxy Note 4’s performance.

“In contrast, Samsung has always released software updates enabling our customers to have the best experience possible,” it said.

Samsung pledged nonetheless to cooperate with the Italian authorities.

– ‘No support’ –

The ACGM said that Apple “did not offer any specific support measures for iPhones that had experienced such operating problems and were no longer covered by the legal warranty; only in December 2017 Apple provided for the possibility to replace batteries at a discounted price”.

Apple was also found not to have told customers about “essential” characteristics of its phones’ lithium batteries, “such as their average duration and deterioration factors, nor about the correct procedures to maintain, verify and replace batteries in order to preserve full functionality of devices”.

Both companies were fined the maximum possible, Apple paying double Samsung’s five-million-euro fine because of its two contested practices.

The Italian anti-trust authority opened its investigation in January following customer complaints.

The US company was forced to admit last year that it intentionally slowed down older models of its iPhones over time, sparking concerns it was unfairly nudging consumers to upgrade.

At first, Apple had denied it intentionally shortened the life on any of its products. It said it slowed models to extend the performance of the phone — which uses less power when running at slower speeds — and to prevent unexpected shutdowns.

The California-based group also faces a class-action suit in the United States and a slew of lawsuits in Russia.

The companies will be required to publish an “amending declaration” on their Italian websites with a link to the AGCM’s ruling.

There was no immediate reaction to the Italian decision from Apple.

In neighbouring France, a prosecutor opened an investigation into Apple’s practices at the same time as the Italian probe.

In the US meanwhile, the Justice Department and stock exchange watchdog SEC are looking into whether the slowing down of Apple phones infringed stock exchange rules.

AFP

Apple And Samsung Settle Lengthy iPhone Patent Battle

 

Apple and Samsung have ended a years-long patent battle over copied iPhone design with an undisclosed settlement, according to a US court filing Wednesday.

The world’s two biggest smartphone makers reached a truce in their seven-year-old court battle a month after a federal court jury ordered Samsung to pay Apple some $539 million for copying patented iPhone features.

That award was seen as a victory for Apple, which had argued in court that design was essential to the iPhone.

Financial terms of the settlement were not revealed and neither company elaborated on the brief court order which dismissed the litigation dating back to 2011.

“Whereas the court has been advised by the parties that the above-entitled action has been settled, all remaining claims and counterclaims in this case are hereby dismissed with prejudice,” US District Court Judge Lucy Koh wrote.

When contacted by AFP for comment, Apple referred to a statement released last month after the jury announced the damages award.

“This case has always been about more than money,” the statement read.

“It is important that we continue to protect the hard work and innovation of so many people at Apple.

South Korea-based Samsung declined to comment.

Apple’s lawsuit claimed Samsung, now the world’s biggest handset maker, copied the design and other features of the iPhone as the smartphone market was exploding.

The case was keenly watched as a precedent for whether design is so important that it could actually be considered the “article of design” even in a product as complex as a smartphone.

The case had been sent back to the district court following a Supreme Court decision to revisit an earlier $400 million damage award.

The jury had been asked to determine whether design features at issue in the case are worth all profit made from Samsung smartphones that copied them — or whether those features are worth just a fraction because they are components.

The three design patents in the case apply to the shape of the iPhone’s black screen with rounded edges and a bezel, and the rows of colorful icons displayed.

Two utility patents also involved apply to “bounce-back” and “tap-to-zoom” functions.

An original trial finding that Samsung violated Apple patents preceded a lengthy appellate dueling over whether design features such as rounded edges are worth all the money made from a phone.

The retrial regarding damages was one element of a $548 million penalty — knocked down from an original $1 billion jury award — Samsung was ordered to pay for copying iPhone patents.

AFP

Jury Orders Samsung To Pay Apple $533m In iPhone Case

 

A federal court jury on Thursday ordered Samsung to pay Apple $533 million for copying iPhone design features in a patent case dating back seven years.

Jurors tacked on an additional $5 million in damages for a pair of patented functions. The award appeared to be a bit of a victory for Apple, which had argued in court that design was essential to the iPhone.

The case was sent back to the district court following a Supreme Court decision to revisit an earlier $400 million damage award. The jury essentially split the difference between Apple’s request for $1 billion and Samsun’s argument for $28 million.

To arrive at a damages award of more than a half-billion dollars, jurors would likely have needed to buy into Apple’s reasoning that design was so integral to the iPhone that it was essentially the “article of manufacture.”

The lower figure sought by the South Korean consumer electronics titan would have involved treating the design features as components.

The jury had been asked to determine whether design features at issue in the case are worth all profit made from Samsung smartphones that copied them or whether those features are worth just a fraction because they are components.

“Samsung isn’t saying it isn’t required to pay profits,” Samsung attorney John Quinn said during closing arguments on Friday.

“It is just saying it isn’t required to pay profits on the whole phone.”

Apple argued in court that the iPhone was a “bet-the-company” project at Apple and that design is as much the “article of manufacture” as the device itself.

The three design patents in the case apply to the shape of the iPhone’s black screen with rounded edges and a bezel, and the rows of colorful icons displayed.

Samsung no longer sells the smartphone models at issue in the case.

Two utility patents also involved apply to “bounce-back” and “tap-to-zoom” functions.

The case dates back seven years. An original trial finding that Samsung violated Apple patents was followed by lengthy appellate dueling over whether design features such as rounded edges are worth all the money made from a phone.

Technology vs Style

Samsung challenged the legal precedent that requires the forfeiture of all profits from a product even if only a single design patent has been infringed.

The US Supreme Court in 2016 overturned the penalty imposed on the South Korean consumer electronics giant.

Justices ruled that Samsung should not be required to forfeit the entire profits from its smartphones for infringement on design components, sending the case back to a lower court.

The key question of the value of design patents rallied Samsung supporters in the tech sector, and Apple backers in the creative and design communities.

Samsung won the backing of major Silicon Valley and other IT sector giants, including Google, Facebook, Dell and Hewlett-Packard, claiming a strict ruling on design infringement could lead to a surge in litigation.

Apple was supported by big names in fashion and manufacturing. Design professionals, researchers and academics, citing precedents like Coca-Cola’s iconic soda bottle.

The case is one element of a $548 million penalty — knocked down from an original $1 billion jury award — Samsung was ordered to pay for copying iPhone patents.

AFP

Corruption Scandal: South Korea Appeals Court Frees Samsung Heir

South Korea Appeals Court Frees Samsung Heir
Samsung heir Lee Jae-Yong (R) walks out from a court in Seoul on February 5, 2018, after an appellate court handed him a suspended sentence. Dong-A Ilbo / AFP

 

A South Korean appeals court on Monday upheld Samsung heir Lee Jae-Yong’s bribery conviction but cut his prison sentence to a suspended term, ordering his immediate release.

Lee, vice chairman of Samsung Electronics, the world’s biggest smartphone and memory chip maker, was convicted of bribery in connection with the sprawling corruption scandal that brought down former South Korean president Park Geun-Hye.

The 49-year-old was given five years in prison when his original trial concluded in August, making him the first Samsung chief to serve prison time, even though his father was twice convicted of criminal offences and his grandfather was earlier embroiled in scandal.

He had been convicted of a range of offences, including bribery, embezzlement, money laundering and perjury of parliament.

The case centred on payments Samsung made to Park’s secret confidante Choi Soon-Sil, with prosecutors arguing they were intended to secure government favours.

But the appeals court on Monday struck out several of the convictions and reduced the penalty on the remainder to a suspended prison sentence of two and a half years.

“Park Geun-Hye and Choi Soon-Sil should be seen as the main players in this scandal,” said the ruling, read out in court by one of the judges.

Four other Samsung Electronics executives convicted alongside Lee also had their convictions reduced, with the two who had been given prison terms similarly having their sentences suspended.

Since his father was left bedridden by a heart attack in 2014 Lee has been the de facto head of the sprawling Samsung group, by far the biggest of the family-controlled conglomerates known as chaebols that dominate Asia’s fourth-largest economy, with its revenues equivalent to around a fifth of the country’s GDP.

AFP

Jailed Samsung Heir Appeals Against Conviction

Samsung Group heir Lee Jae-yong leaves the Seoul Central District Court following his verdict in Seoul on August 25, 2017./ AFP PHOTO / POOL / Chung Sung-Jun

Lawyers for the jailed heir to the Samsung empire filed an appeal against his conviction on Monday as South Korean media divided on the ruling that put the country’s top business leader behind bars.

Lee Jae-Yong, the de-facto head of Samsung Electronics, was found guilty last week of bribing South Korea’s ousted president Park Geun-Hye and sentenced to five years in prison.

The official website of the Seoul Central District Court showed that Lee’s lawyer Kim Jong-Hoon filed an appeal on Monday but gave no further details.

Prosecutors have also said they will appeal the court ruling –to seek a harsher punishment for Lee.

A Samsung Group spokeswoman declined to comment.

But another Samsung Electronics vice chairman, Kwon Oh-Hyun, called the situation “regrettable” in a statement to employees of the world’s biggest smartphone maker, the Yonhap news agency reported.

“We should all steadily wait until the truth is revealed,” it cited him as saying, urging them to “gather power and wisdom to overcome the unprecedented challenge”.

South Korea’s media have divided over the unprecedented imprisonment of the country’s most powerful tycoon, with some newspapers condemning the ruling and others accusing their rivals of “kneeling” before the rich.

Samsung is by far the biggest of the chaebols, as the family-controlled conglomerates that dominate Asia’s fourth-largest economy are known, with its revenues equivalent to around a fifth of the country’s GDP.

Chaebols were instrumental in South Korea’s economic rise but have long had murky connections with political authorities and are also known to wield considerable influence on the media, potentially courtesy of their giant advertising budgets.

The JoongAng Daily, a company with close family ties to the Samsung Group, said in an editorial that an appeal by Lee would have “a good case”.

The country’s top-selling Chosun Ilbo daily, which is conservative in outlook, added: “The company faced retaliation if it rejected the president’s request and faced punishment for bribery if it gave in.”

Samsung was the first South Korean company emerge as a top global firm and it would be “worrisome” if the verdict proved “a negative turning point” for it, the paper said, unable to make key business decisions for years with its leader in jail.

But liberal papers heralded the ruling and slammed other media outlets for siding with the country’s rich.

The Hankyoreh paper expressed concerns about the “amicable attitude towards Lee and Samsung” from “conservative media and business papers”.

Their argument that evidence was lacking, it said, was “irrational”, adding: “It is hoped they will no longer ask to become the press that kneeled before the chaebol.”

AFP

Samsung Heir Guilty Of Bribery, Sentenced To Five Years Jail

Samsung Group heir Lee Jae-yong leaves the Seoul Central District Court following his verdict in Seoul on August 25, 2017./ AFP PHOTO / POOL / Chung Sung-Jun

The heir to the Samsung empire was convicted of bribery and other offenses on  Friday and jailed for five years in connection with the scandal that brought down South Korean president Park Geun-Hye.

Lee Jae-Yong’s penalty could leave the vast conglomerate, which includes the world’s biggest smartphone maker, rudderless and hampers its ability to make key investment decisions for years.

The vice-chairman of Samsung Electronics, 49, arrived at Seoul Central District Court on a justice ministry bus handcuffed and bound with white rope around his dark jacket.

Lee was found guilty of bribery, perjury and other charges related to payments Samsung made to Park’s secret confidante Choi Soon-Sil.

In total 8.9 billion won ($7.9 million) was paid in bribes in return for favors including government support for Lee’s hereditary succession at the group after his father was left bedridden by a heart attack in 2014, the court found.

Lee had denied the charges, but presiding judge Kim Jin-Dong said: “He offered bribes in response to strong demands by the president.”

Four other top Samsung executives were also convicted, with two jailed for up to four years, and the other pair given suspended terms.

Supporters demonstrating outside the court broke down in tears while Lee’s lawyers said they would appeal “immediately”, with lead attorney Song Wu-Cheol saying he “cannot possibly accept” the court’s “interpretation of law and finding of facts”.

Samsung is by far the biggest of the chaebols, as the family-controlled conglomerates that dominate Asia’s fourth-largest economy are known, with its revenues equivalent to around a fifth of the country’s GDP.

But while the economy is still growing, frustrations have mounted over inequality and the demonstrators who mounted giant candlelit protests against Park last year also targeted Lee and other chaebol chiefs.

The verdict could add impetus to new President Moon Jae-In’s campaign pledges of chaebol reform.

In a rare statement on a court case, the presidential Blue House said: “We hope that the ruling will serve to encourage the cutting of collusive ties between politicians and businesses, which have hampered social progress.”

Chaebols have long had murky connections with political authorities in South Korea, and past trials of their leaders have often ended with light or suspended sentences, with courts citing their contributions to the economy.

Lee’s father Lee Kun-Hee was convicted of tax and other offenses in 2008, receiving a suspended sentence.

But Lee’s sentence is the longest ever handed to a sitting chaebol controller, said Chung Sun-Sup, the head of corporate analysis firm chaebul.com.

“Considering the fact that Lee was found guilty on all the five charges, five years in prison is the minimum sentence the court was able to come up with,” he told AFP.

The court said Park was aware that Lee wanted state approval for a controversial merger of two Samsung units in 2015, seen as a key step to ensuring his accession.

The deal was opposed by shareholders who said it willfully undervalued shares of one of the firms. But it eventually went through after the national pension fund — a major Samsung shareholder — approved it.

‘Ruling family’
Lee has been Samsung’s de facto leader since his father fell ill and the sentence leaves the conglomerate facing an extended vacuum at its highest level, but analysts differ on its impact.

Analyst Chung said major chaebol decisions on large-scale acquisitions or investments “are often endorsed by the patriarch of a ruling family”, and with Lee in prison, the firm “may move more slowly than before”.

But Geoffrey Cain, the author of a forthcoming book on the group, said: “Samsung will not be doomed without Jay Lee. It’s up to the specialists to make their own decisions.”

Credit rating agency Fitch said it did not expect the conviction “to significantly disrupt the day-to-day operations of Samsung Electronics” or “negatively affect” its A+/stable credit profile.

But Fitch warned: “It could increase longer-term business risks by delaying necessary strategic decisions and major investment plans.”

The conglomerate appears to have been unaffected by Lee’s absence so far — he was detained in custody in February — with flagship subsidiary Samsung Electronics making record profits on the back of strong demand for its memory chips and this week it unveiled a new model of its Galaxy Note “phablet”.

“Samsung Electronics has a strong management team currently in place, led by its three co-CEOs,” it said in a statement.

“This team has delivered superior performance and will endeavor to lead our operations without disruptions” from what it called “the ongoing legal process”.

Samsung Electronics shares closed 1.05 percent down on Friday after the verdict.

The convictions suggest that ousted head of state Park, who is in custody and faces 18 counts including coercion, abuse of power and bribery at her trial with Choi, is likely to be found guilty.

Park has denied all wrongdoing and blamed Choi for abusing their friendship.

AFP