Monday, 7 March 2011

South Korea's Deficit in Patent Royalty Payments

The Korean firm of C&S Patent has just sent around its regular newsletter which included a reference to a report by The Bank of Korea in which , the amount of royalties that S. Korean companies paid as fees to "access intellectual property rights" (presumably as royalties) in 2010 was a total of 5.8 billion dollars. This was apparently an increase of approximately 2 billion dollars as compared to the figure of 3.9 billion dollars paid out in 2009 and compares to 2.6 billion dollars paid as royalties in 2006.

C&S Patent report this in the context of a licensing payment of 550 million dollars from  Samsung Electronics to Kodak and 400 million dollars from LG Electronics for the use of a patent relating to mobile phone imaging technologies (reported here). This patent has now been held by the US International Trade Commission as being invalid (although Kodak announced that they are appealing the case).

Whatever the merits of the Kodak patent, the case shows the effect that royalty payments can have on the balance of payments of a country. It's no wonder that many national governments in Asia are encouraging their domestic companies to become more active in formulating standards and also to patent aspects of those standards.

1 comment:

  1. Korea generates substantial contributions to its balance of trade by exporting. These IP rights help make its products competitive and exportable. The royalties paid by the likes of Samsung and LG are small in comparison to the export figures and trade surpluses these companies generate. When Korean companies, for example, export to the US, royalty payments to US IP owners represent a relatively small offset in the international trade accounts against US import trade deficits. Korean companies and Korean trade figures do very well overall from this arrangement.