World's 4th Largest 'Patent Powerhouse'... IP Trade Balance Perpetually in Deficit [Tech War, Birth of Advanced Nations]

③The Light and Shadow of Intellectual Property Rights
International Patent Applications Surpass 20,000
Following China, the US, and Japan as Patent Powerhouses
Industrial Property Rights Deficit of 2.8 Trillion Won
Copycat Problems... Need for Patent Infringement Response
Must Establish IP Monetization Strategies

In Antoine de Saint-Exup?ry's novel The Little Prince, there is a phrase that says, "What is essential is invisible to the eye." This can also be applied to the global economic and industrial paradigm. Countries around the world are waging wars armed with invisible technological capabilities. They are competitively increasing investments in intangible assets such as research and development (R&D) and software to drive corporate growth. As the economy shifts toward an intangible asset-centered model for innovation, the importance of intellectual property (IP) is also growing. Min Kyung-hwa, Executive Director at LG Chem, who has experienced several electric vehicle battery patent disputes, emphasized, "Technology and legal rights are separate," and added, "To secure technology as a right, patents must be actively filed from the early stages of development." Since competition is based on invisible value, technology must be protected through IP and utilized as a strategic management tool.

◆A Patent Powerhouse, but IP Trade Balance is in Deficit= South Korea is undeniably a 'patent powerhouse.' Last year, Korea filed over 20,000 international patent applications (PCT) through the World Intellectual Property Organization (WIPO), ranking fourth globally after China, the United States, and Japan. The PCT system allows a single application to have the effect of filing patents in multiple designated countries.

Despite these statistics, Korea's IP trade balance continues to run a deficit. According to the Bank of Korea, the country's IP trade deficit was $30 million (approximately 38 billion KRW) last year. Although this is a significant reduction compared to deficits of $530 million (660 billion KRW) in 2019 and $2.02 billion (2.5 trillion KRW) in 2020, Korea remains in a perennial deficit. The situation is even more severe when looking specifically at industrial property rights, which are directly linked to corporate management. Industrial property rights include patents and utility models, design rights, trademarks, and franchise rights, and last year recorded a deficit of $2.21 billion (2.8 trillion KRW).

The IP deficit is mostly attributed to the manufacturing processes of electrical and electronic products. Jung Yeon-woo, Director of the Industrial Property Policy Bureau at the Korean Intellectual Property Office, explained, "Technology royalties paid to global standard-essential patent leaders such as Qualcomm, Nokia, and Ericsson account for one-third of the total." These companies hold many fundamental technologies related to mobile phones, so the more domestic conglomerates manufacture and sell IT devices like smartphones, the more royalties they must pay to foreign companies. Director Jung added, "Considering Korea's national R&D investment is at the scale of 100 trillion KRW, the IP trade balance is expected to turn positive in four to five years."

◆IP, an Essential Element in Global Industrial Competition= To respond to recent protectionism and the reorganization of global supply chains, active acquisition of IP is essential. In fact, the proportion of export companies experiencing IP disputes increased about tenfold from 1.7% during 2010?2014 to 17.3% during 2014?2018 (Korea Intellectual Property Research Institute). Many small and medium-sized enterprises that barely succeeded in technology development have had their businesses collapse due to prior existing technologies or have withdrawn from overseas markets under patent offensives by foreign companies. Startups are struggling with a flood of copycats as soon as they list products on domestic and international e-commerce platforms like Amazon and Coupang.

Baek Dong-seok, Vice President of Intellectual Discovery (ID), said, "Korea is a country that lives by technology, but its strategies for responding to patent infringement lawsuits are severely lacking," and stressed, "A national IP strategy must be established." Intellectual Discovery is Korea's first intellectual property specialized company, jointly funded and established by the government and private sector in 2010. It purchases invention patents from domestic companies and universities to counter overseas 'patent giants' and conducts IP monetization businesses. The company has been involved in litigation with a major U.S. mobile carrier that cited KAIST Professor Cho Dong-ho's Wi-Fi calling patent and secured a settlement of 55 billion KRW through negotiation.

He said, "After seeing patent cases like Bulk FinFET and Wi-Fi calling technologies worth hundreds of billions of won, professors and university students have been inquiring a lot about the market value of patents arising from their own R&D processes," adding, "Hearing that there is market response naturally fosters an inventive spirit." Creating a market atmosphere where fair exchange value for IP is recognized and respecting IP are essential for technological advancement.

Executive Director Min said, "Many IPs are still being created, but the economic value exit is blocked," and added, "For Korea's patent value to rise, remedial procedures must be effective." It is important how properly damages can be compensated through court procedures when patent rights are infringed. The introduction of discovery procedures (a pre-trial evidence investigation process implemented in countries like the U.S. and the U.K.) could be one way to improve this.

This content was produced with the assistance of AI translation services.