InterviewPatent monetization offers Korean firms easy revenue amid economic uncertainty: Global legal finance experts

Executives of Burford Capital host a reception at a hotel in Seoul, May 13. They are, from left, Quentin Pak, director of Burford's Singapore office, Christopher Freeman and Eric Carlson, managing directors of Burford's patent group. Courtesy of Burford Capital

In times of economic uncertainty, companies may hesitate to invest heavily in new products or untapped markets. But what if there's a revenue source that's been largely overlooked — one that's already sitting on the balance sheet?

That’s where patent monetization comes in, extracting value from a corporation's intellectual property (IP).

This takes several forms. Firms can pursue direct enforcement through litigation to seek damages or negotiate settlements for unauthorized use. Or more commonly, they opt for divestiture, including sale or spin-off of patent assets, to streamline their portfolios and gain liquidity.

"People are looking for new, creative ways to generate revenue. And this is an easy fix, because it's sitting right there," said Eric Carlson, Burford Capital's managing director. "You put a lot of hard work and money into developing IP, and it's literally sitting on the shelf in many instances. That's a whole new revenue stream that can be unlocked."

The Korea Times conducted an exclusive interview with the Burford Capital team during their visit to Korea on May 13, when they held a series of meetings with their business partners. It marks the third time the London-based legal finance firm has hosted a client reception in Seoul, more than in any other location in Asia.

While the U.S. and Europe have traditionally led the field, patent monetization is gaining momentum in Asia as well, according to Burford Capital.

"The financial market in Korea is sophisticated, and legal professionals are more knowledgeable. Crucially, its legal system allows litigation lawyers to take on risk by tying their fees to the outcome of a case. That makes the education process smoother and adoption faster," said Quentin Pak, the firm’s director who leads its Singapore office.

"Asia is still in the early stages overall, but Korea is catching up quickly," Pak added.

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A growing number of Korean conglomerates have already conducted noteworthy transactions involving the monetization of their IPs, according to the Burford Quarterly, published in September 2024.

In 2024, SK hynix, the semiconductor giant, sold over 1,500 patents to an affiliate of Korean patent aggregator Ideahub.

In 2023, LG Electronics sold 48 patents to Chinese smartphone maker Oppo, as the patents were no longer needed after the company exited the smartphone market. LG is known to have an extensive IP portfolio of around 2,400 patents, particularly in 4G, 5G, and Wi-Fi technologies.

Samsung is also entering into multiple licensing and sales agreements that generate immediate revenue and establish long-term partnerships with other tech giants.

"The sweet spot in Korea so far has been leading companies in the technology sector. Display screens are one area; semiconductors are another," said Christopher Freeman, Burford Capital’s managing director.

"A lot of that (technology) has recently come under price-cutting competition from Chinese competitors. Even though you are not a dominant player in that market, you may still own the patents that cover a lot of important technologies," Freeman added.

What motivates companies to explore this untapped area? First, owning IP can be expensive, as it requires significant legal expenses to obtain and maintain patent assets. Companies can also benefit by recovering value from their legal assets, especially to supplement declining sales or shrinking profit margins.

Meanwhile, legal finance firms like Burford Capital step in by assessing the strength of the case and the potential damages, then investing in some or all of the legal costs, taking a portion of the recovery if the case succeeds.

Burford Capital said it hopes to raise awareness among Korean companies about this emerging opportunity and encourages them to act.

"All other top companies in Korea are already doing it. So even though you're not already thinking about this, it's a revenue stream you should be thinking about unlocking," Freeman said. "We hope to help you navigate those waters."