Samsung, LG, Hyundai Motor and POSCO are giant corporations which have helped Korea Inc. stand out on the global industrial map. These world-class enterprises have one more thing in common: all are engaged in patent disputes of one sort or another with foreign competitors.
They are hardly the only ones, either. According to data released by the Korean Intellectual Property Office, the number of patent litigations between Korean and foreign companies totaled 278 last year, a hefty rise of 81 percent from 154 in 2009. Out of the total 1,080 patent suits filed between 2007 and May this year, local firms were accused parties in 821 cases, more than three times the number of legal disputes in which they were plaintiffs.
To some extent, this seems inevitable for this relative latecomer to industrialization, which also relies heavily on exports, especially those of high-tech industries more recently, for economic growth.
But the surge in intellectual property conflicts also indicates the rapid growth of some Korean companies, inviting checks from their overseas rivals. Otherwise, it is hard to know why these suits, and other forms of checks, such as governmental probes into alleged price fixing, occurred mainly when the Korean firms’ market share began to rise noticeably.
Nothing shows this better than the patent battles between Samsung and Apple, which have been waged in about 40 regional markets in nine countries, amid keen attention of the industry and global media. At stake behind the suits and countersuits between the two IT titans are not just corporate revenues or images but their future fates as dominators of the global markets. And the prolonged, often nasty fight also reveals some ugly aspects of the ``patent industry.”
As most people know, patents are for encouraging innovation, which ultimately benefits consumers.
Yet recent developments in patent administration and litigation are not helping but hindering innovation by precluding competition in good faith from latecomers, thus damaging consumer interests. The London-based Economist magazine succinctly pointed out this, saying, ``If Apple has had to resort to the courts to stifle competition and limit consumer choice, then it is a sad day for American innovation.”
A more glaring product of corporate greed to keep vested rights is the appearance of a new industry infested by the non-practicing entities (NPEs), or the so-called patent trolls, which produce nothing but buy patents from inventors to bully others, mainly cash- and manpower-short small businesses, into expensive settlements. Regrettably but predictably, Korea’s smaller firms have long been the easy targets of these industrial parasites.
Like it nor not, what the Korean government and businesses should do to cope with the latest international trend is clear: streamlining domestic laws and institutions as well as cultivate expert manpower that can better handle patent disputes. Not only will the patent brawls expand to even the agricultural and financial sectors, but also foreign firms have already begun to use patents as a new source of revenue.
The era of the patent war has dawned, but Korean players, governmental and corporate, are sleeping.