Few signs of Korea’s mega-conglomerates making big patent sales; but they may be just round the corner

Over the past few weeks, the IAM Market blog has published a few sneak peaks from its brand new overview of the Asia-Pacific patent transactions marketplace. So far, we’ve analysed the sales, purchase and licensing opportunities in China and Japan; in our final excerpt, we take a look at the landscape in Korea.

Organisation for Economic Cooperation and Development (OECD) research from 2015 indicates that South Korea has doubled its R&D spend as a share of gross domestic product (GDP) over the past 20 years, to reach one of the highest levels in the world at 4.15% of GDP in 2013, compared to an OECD average of 2.4%. Further, Korea owns one of the world’s largest national patent portfolios in relation to the size of its population and its GDP. Korean entities were granted 116,744 US patents between 2001 and 2014, putting them in third place behind only Japan and Germany in terms of foreign-owned US-issued patents. It is worth pointing out, however, that the vast majority of these are owned by just a few large companies (eg, Samsung Electronics and LG Electronics).

However, while Korean companies and research institutions have been among the world’s biggest and most consistent spenders on R&D in recent years and continue to file for patents in huge volumes, the country as a whole still spends significantly more on importing intellectual property than it makes from exporting its own.

Preliminary calculations released by the Bank of Korea earlier this year suggest that the country’s companies paid out $3.63 billion more for using foreign IP rights than they made from licensing or selling their own last year. Korea’s largest company, Samsung Electronics, is thought to have paid as much as $1 billion in patent royalties to Microsoft in 2013 alone, as well as further rumoured billions to the likes of Qualcomm.

In other words, for the few companies at the top of Korea’s corporate food chain, obtaining massive numbers of patents – through both filings and acquisitions from the market – has largely been about defence, securing operational freedom and cross-licensing. This is obviously a difficult practice to maintain over the long term, and we have already seen the likes of LG Electronics and KT selling patents.

Prospective buyers

  • Large corporates may be looking to buy patents if they believe they could prove problematic in the future and want to remove them from the marketplace. They may also be interested in buying portfolios that give them added leverage in licensing negotiations, or that give them freedom to operate in areas where they have thin coverage.
  • Non-practising entities have been barely visible in Korea, but SPFs ID, IP Cube and KDB Infra IP Capital have been active in buying assets from domestic and foreign sources.

Prospective sellers

  • Korean SMEs may be looking for buyers for their patents, while ID and IP Cube have both been known to sell
assets to both local and foreign companies.
  • There have apparently been a few sales made by large corporates, but details regarding these generally remain under wraps.

You can download IAM Market’s full report on the Asia-Pacific transactions marketplace here.

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