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.

Korean Government proposing to spend USD 400 Million on protecting IP

The ever useful Patyellow website reports that the South Korean Presidential Councial on National Competitiveness is proposing to spend USD 400 Million by 2013 to protect the countries national IP base.

Payellow reports that the Council proposes setting up state-run "invention capital" companies to manage the holdings of IP.

Research institutes and universitites will apparently be encouraged to develop IP and set up "technological holding firms".

The Chosun Ibo website has a more expanded report in which it discussed the balance of payments deficit for patent licensing. The mobile phone industry pays around W500 billion in oryalties. The invention capital company will be supported to the tune of up to W500 billion

This commentator finds it fascinating the resources that East Asian countries are putting into developing and protecting their intellectual property. Not only is South Korea proposing to increase the budget massively (up to 3% by 2013), but Taiwan also has similar strategic projects. Contrast this to the USA and Europe where, if anything, intellectual property rights are being attacked. Whilst it is possibly true that there may be historic problems related to an overgenerous grant of patents in the past few years, it does not seem logical to conclude that the system itself is at fault.