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S. Korea to expand IP financial investment market to W1.3tr by 2024

KIPO Commissioner Park Won-joo attends a IP-related forum held in central Seoul in July 2019. (Yonhap)
KIPO Commissioner Park Won-joo attends a IP-related forum held in central Seoul in July 2019. (Yonhap)

South Korea aims to foster its intellectual property financial investment market to 1.3 trillion won ($1.08 billion) by 2024 to help firms deal with liquidity issues triggered by the coronavirus pandemic, the nation’s IP office said Thursday.

The Korean Intellectual Property Office announced 14 specific tasks under four pillars that would establish platforms for individuals and firms to directly invest in IP and profit from royalties, sales and even lawsuits. This is expected to boost the size of the IP financial investment market, which stood at 34.3 billion won as of 2019, to more than 1 trillion won in five years, according to KIPO.

Funneling quality IP rights to the market, producing an array of investment items that could cater to different investors, bringing capital inflow to the investment products and establishing market-friendly platforms were listed as the four pillars.

To pump quality IP rights into the market, KIPO said it would be crucial to provide data and information on investment-worthy patents, recommended by patent examiners or tied to state-run projects. Support for designing patents would be provided for universities and laboratories to encourage profit-centered management of patent projects.

Laws and systems related to patent monetization will be improved to allow funds, not only corporations, to directly own patents. Support for funds that would apply for overseas patents would be expanded to help secure overseas rights.

State funding would be used to launch a special fund only for intellectual property investment to create various options for investors. Creation of low-risk funds that profit from patent royalties and high-risk types based on potential technology transfers and lawsuits would receive support as well.

Investments that utilize crowdfunding to help individuals with direct IP investments and test runs of converting IP into securities would be pursued.

To encourage capital flow into the products and the market, the government plans to adopt several financial benefits for the investors.

The same tax benefit for venture investments would be applied to IP investments, while annual patent registration fees would be lowered for those owned by individuals or trust companies.

KIPO said it would launch a centralized call center to help individuals receive proper consulting on IP investment to create a market- and investor-friendly environment. Rules tied to patent lawsuits will also be revised to protect patent holders and the dispute settlement system’s effectiveness will be bolstered to help small and medium-sized enterprises negotiate licensing and profit from patents without heavy financial risks.

State-run financial institutions would add IP courses to their patent attorney programs to foster experts and professionals in the subject. To establish a global network, the government plans to lure global patent brokerages and investment firms to the domestic market.

According to KIPO, it plans to create 20,000 new jobs through its goals of expanding the IP financial investment market.

Due to the latest pandemic, local firms have faced increased liquidity risks and concerns of technology outflow, the patent office noted. It would be important to provide financial support to tech firms with lack of solid collateral, it added.

Korea’s IP trade balance has remained in the red for some time, with the situation calling for an overhaul. The nation’s IP trade deficit came to $800 million last year compared to around $1.7 billion in 2017, data provided by KIPO showed.

The current Moon Jae-in administration has been actively pursuing policies related to IP financing and the local IP market has been seeing fast growth in recent years.

Asia’s fourth-largest economy holds a favorable environment for IP investment due to around an average of 220,000 patent filings that it receives annually, active investment in research and development and steady expansion of the IP-related finance market, according to KIPO.

“IP is the new type of asset in the 21st century which allows anyone with a new idea to acquire it,” KIPO Vice Commissioner Cheon Se-chang said.

“KIPO will provide full support for individuals and firms that own IPs to achieve success through smoother financing,” he added.

By Jung Min-kyung and Lee Kwon-hyung (mkjung@heraldcorp.com) (kwonhl@heraldcorp.com)
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