Today, I would like to talk about intellectual property funds. To begin with, what is intellectual property and why is everyone profusely talking about this issue? One of the main reasons behind it is because of the on-going patent war between Apple Inc. and Samsung Electronics. For couple of months, articles regarding the patent war seemed to appear on every page of magazines and newspapers. When we look around, it is very easy to spot people holding phones made by either Apple or Samsung. Apple and Samsung are the two tycoons in mobile industry and they are filing lawsuits against one another regarding patent rights and copyrights. According to the reports, there are about 50 on-going lawsuits around the world claiming tremendous compensations. It is an unfortunate event for both companies. However, thanks to the big scenes caused by these two companies, the value of intellectual property rights came up on surface, attracting closer scrutiny from the market.
Korean companies had to spend about few trillion won to pay for intellectual property rights license up until now. At the same time, companies with brilliant new technology had difficulty in promoting the product because of lack of money. Overall, companies were having hard times regarding intellectual property rights and of course, this struck harder on the small and mid-sized business (SMEs) to remain in the game.
Financial Commission Service recently came up with an alternative called ‘Intellectual Property rights Fund’ in response to such situations. It can best utilize intellectual property rights that companies have and give financial assistance to the SMEs. Simply put, intellectual property rights fund increases in sales for companies with their own patents. In addition, it also financially supports companies that are in need of money to better develop its patents. It is basically helping companies with patent promotion and funding for product advancement. Furthermore, the fund will be operated with ‘Sales & license back’ system. Just like the concept mentioned above, it means to transfer intellectual property rights to the fund and gain financial assistance in return. This way, more people will have better access to the new technologies while companies can enjoy better advertising and promotion effect.
FSC created 100 billion won ($89.3 million) funding program for small and mid-size companies. Banks are also attempting to be deeply engaged with developing financial products that will provide 100 billion won for advancing SMEs technologies Even if small and mid-sized companies do not meet the exact eligibility criteria to receive funding, as long as they demonstrate clear potentials with the IP assets, they will be considered as qualified candidates. The intellectual property fund will play great intermediary role in allowing SMEs to sell their intellectual properties to lenders and receive funding supports in return.
There are many attempts to protect intellectual property rights outside of Korea. For instance, 360IP of United States and Innovation Network Corporation of Japan (INCJ) are institutions that protect intellectual property rights through funding. They began the funding system long before Korea came up with one recently. Experts believe that intellectual property rights fund will also provide shelter for domestic companies from international ‘patent trolls’. Patent troll is a terminology that refers to an organization composed of patent related professionals such as engineers, professors, patent lawyers and so on. They are famous for filing law suits against other companies for patent rights in order to maximize their own profits. They are known to flourish in IT industry since technological development is most active there. Korea has growing IT industry. Not to mention, there had been lack of precautionary measures regarding protecting and valuing Korean intellectual property rights.
Intellectual property rights can be considered as one of the most important investments assets with the establishment of intellectual property rights fund. It has bright prospect in encouraging start-up companies, collecting capital and re-challenging. As a whole, experts view that it will help greatly in forming creative economy.
By Choung Jiae (email@example.com)