More companies entangled in global patent rows
By Kim Tae-jong
The number of international patent lawsuits involving Korean firms has increased by over 80 percent in the past two years, according to official figures Monday, emerging as a new threat to their efforts to go global.
According to the Korea Intellectual Property Protection Association (KIPPA), the number of patent rows increased to 278 last year from 154 in 2009.
But KIPPA said the number could be much higher, saying it is just a subtotal and there are more cases that they have not accounted for.
“There have been a growing number of patent lawsuits involving domestic firms in the past three years,” said Choo Hyung-joon, manager of KIPPA. “We believe the number is much higher if cases in Japan and Europe where we couldn’t conduct a full-scale survey, were included.”
Patent lawsuits are increasing as domestic firms depend heavily on exports and global companies take advantage of patent disputes to hinder the advance of Korean businesses in their markets or to earn licensing fees.
There were a total of 1,070 patent lawsuits involving Korean firms between January 2007 and May 2012, and 821 of them were filed against local firms.
A growing number of Korean companies are becoming the target of “patent trolls.”
A patent troll, or non-practicing entity (NPE), refers to a company which does not manufacture or use the patented invention but seeks to enforce its right through the negotiation of licenses and litigation to earn licensing fees.
“It’s hard to estimate the portion of patent lawsuits by NPEs, but we believe that about half of all the patent legal disputes against domestic firms are now instigated by them,” Choo said.
NPEs mostly target domestic semiconductor and information technology firms as they have posted large profits while still vulnerable to growing threats from patent rows, he added.
Hynix Semiconductor, which was acquired by SK Group and renamed SK hynix, has been engaged in a patent lawsuit against U.S.-based technology licensing company Rambus for almost 12 years.
“Basically, it’s not just a problem for one or two domestic firms,” an official from a local information technology firm said, who declined to be identified. “We have been strengthening our system to protect the company from attacks by patent trolls and tried to come up with defense strategies, depending on each patent lawsuit.”
According to the Korean Intellectual Property Office (KIPO), other industries such as those with technology essential to produce light emitting diodes (LED), hybrid cars, steel and textiles have been engaged in more and more patent lawsuits.
Although big firms can afford to run multiple cases at the same time, small businesses here are not rich enough to protect themselves from NPEs or other rival companies in the same field.
Experts say that each patent lawsuit costs the plaintiff and defendant billions of won to reach a settlement, which can lead small firms to go bankrupt or lose their competitiveness.
In this regard, they demand the government come up with systematic protection programs for domestic companies, especially small ones, and also suggested the industry be better prepared for patent wars.
“The increasing patent disputes are not just a temporary phenomenon. They will continue at least for the next 10 to 20 years, and basically, it’s a war of patents,” said Jeon Jong-hak, vice chairman of the Korea Patent Attorneys Association. “To properly cope with it, what’s needed is not just temporary protective measures but to help the local industry become warriors to win the battle.”
He suggested the industry should change its structure, now vulnerable to patent disputes, so that they can aggressively use patent rights to advance into other markets