[Opinion] From Intellectual Property Powerhouse to Intellectual Property Wealthy Nation [Tech War, Birth of Advanced Nations]

Professor Ko Young-hee, Graduate School of Management, Seoul National University of Science and Technology

Korea’s position as one of the world’s top 10 economies and its leap to a global level is a source of great pride. Cultural content is recognized in various fields, major conglomerates such as Samsung and Hyundai Motor Company have established themselves as global brands, and Naver and Kakao are demonstrating rapid global growth across diverse businesses based on platform business models.

At the foundation of this growth lies intellectual property rights. Korea, a global patent powerhouse, ranks 4th worldwide in international patent applications, and its share of global standard-essential patents reached 22.8% in 2021, securing first place. Samsung Electronics alone holds 80,000 patents in the United States, ranking second only to IBM.

However, growth inevitably reaches a phase where its speed slows and maintaining sustainability becomes crucial. The core of sustainability is innovation. Sustaining long-term growth amid relentless competition between countries and companies is only possible by continuously maintaining an edge through innovation. This is evident in how Japanese companies, once competitors of American firms in the 1980s, have failed to maintain their innovative edge.

Recently, Chinese companies have emerged as formidable competitors. Once known as the epitome of copycats, China’s position in intellectual property must now be reassessed. Particularly in the field of artificial intelligence (AI), China achieved an extraordinary quantitative growth with a cumulative 81,236 AI patent applications from 2010 to 2019, ranking first worldwide. Building on this, China is strengthening its intellectual property policies and is now establishing competitive advantages that threaten global companies.

In this context, our companies’ innovation strategies must now shift. The foundation for this can be our accumulated intellectual property. While Korea’s intellectual property rights have maximized quantitative growth, they fall short of expectations in active protection, commercialization, and revenue generation. According to IMD, Korea ranked 36th last year in intellectual property protection, a significant gap compared to the scale of holdings, and recorded a trade deficit of $1.87 billion in intellectual property rights as of 2020, having yet to post a surplus. Although Korea is a strong holder of intellectual property rights, wealth creation based on them falls far short of expectations.

Strengthening Awareness of Intellectual Property Protection

For sustainable growth, innovation must now expand comprehensively beyond large corporations and specific industries. The passion for technological innovation among domestic small and medium-sized enterprises (SMEs) and the new challenges of startup entrepreneurs continue. However, their new ideas and development efforts are hindered by intellectual property theft, leakage, and imitation during collaboration, OEM manufacturing, and distribution processes. Although many systems and policies have been introduced, ultimately, protecting intellectual property requires a change in awareness about how much others’ ideas and know-how are respected as valuable property rights. As we now consider the value recognition of AI-generated creations and inventions, we must reflect on whether Korea’s innovation growth can be sustained if we fail to protect the knowledge and ideas of companies that can bring innovation to numerous industries.

Revenue Generation Based on Intellectual Property

Furthermore, domestic companies need to advance their business sophistication to compete head-on with global corporations. Since the 2000s, most global companies have recorded intangible assets accounting for over 80% of their value, with many exceeding 90%. This means they operate their businesses based on intangible assets, including intellectual property rights. Licensing intellectual property can be a core source of stable revenue and continued innovation.

IBM, founded in 1911 and with a history spanning over 100 years, turned a crisis in the PC industry into an opportunity by actively licensing and trading its patent portfolio, generating $27 billion in revenue from 1996 to recent years. Most global companies actively license patents, copyrights, and trademarks. In contrast, Korean companies’ strategies for trading and utilizing intellectual property rights still lag significantly. This stems from the industrial structure based on manufacturing, where domestic companies have focused on technology development, production, and sales, with low awareness of the transactional value of intangible assets. Korean companies need a strategic shift in perspective, recognizing that inventions are not just R&D but part of the company’s business model, and generating revenue not only from product sales but also from licensing sales.

Market-driven growth is essentially innovation-driven corporate growth, based on the inventions and creativity of Koreans. It is time for Korea, a strong intellectual property nation, to embark on a new journey toward becoming a wealthy intellectual property powerhouse.

Ko Young-hee, Professor at Seoul School of Integrated Sciences and Technologies (Member of the National Intellectual Property Committee)

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