Asian companies lead the way in royalty-free patent licence strategies 31 Mar 15
Seoul-based Daewoo Shipbuilding & Marine Engineering (DSME) has signed a memorandum of understanding with the government of the Korean port city of Changwon that will see it share its patents and knowhow relating to liquefied natural gas (LNG) engine technology with local businesses.
DSME – one of the world’s largest shipbuilding concerns, with its main shipyard in Korea located in Okpo, just a few miles from Changwon – will issue licences and hold information exchanges with the aim of helping parts suppliers and manufacturers in the area ride out a “global slump in the industry”. The additional benefit, of course, is that DSME can exert added influence over its supply chain and encourage the adoption of its own LNG engine technology, which is typically both cheaper and cleaner than oil-fuelled engine technology.
As part of its ‘creative economy’ initiative, the Park Geun-hye administration has encouraged chaebol (major conglomerates) to use their considerable IP assets to boost the country’s SME ecosystem. IAM previously reported on LG’s decision to open up over 29,000 of its patents to foster collaboration and coincide with the inauguration of its Chungbuk Creative Economy Innovation Center in Cheongju; other chaebol that have launched, or are planning to launch, similar incubators and open innovation hubs include SK, KT, Samsung, Hyundai Motor and Lotte.
It is not just Korean companies that are part of this quiet revolution in corporate IP strategy. The first and most high-profile of the current spate of portfolio ‘openings’ came from Tesla Motors, which pledged not to sue businesses which practise on its patents. Toyota soon followed, offering thousands of its patents royalty-free in the hope that the automotive industry could speed-up the introduction of fuel cell vehicles. Just last week, Panasonic announced that it would open up its source code, technology and patents relevant to device-to-cloud software in order to expedite R&D in the ‘Internet of Things’ field.
What’s noteworthy is that, Tesla aside, it is Asian companies that are leading the way in developing strategies centred around opening up their proprietary technologies in order to kickstart future markets. And with this latest deal involving DSME, we also see that this is not just à la mode in high tech industries where there is some aspect of wireless telecommunications at play. DSME’s LNG engine technology is firmly rooted in mechanical engineering and heavy industry. It is easy to overlook the importance of IP assets in such fields where there is usually less opportunity for monetisation. This is because high barriers to entry mean that there is probably a much smaller number of potential licensees; and end products typically incorporate a handful of patented component parts compared to devices like smartphones or personal computers, which are more likely than not to read on thousands of patents.
Unlike Panasonic, Toyota, Samsung and LG, DSME is not among the entities that own the world’s largest patent portfolios. It came joint last out of the 112 Korean companies that submitted worldwide applications under the Patent Cooperation Treaty in 2013, with 10 filings (compared to top-placed Samsung Electronics’ 1,198 and number two LG Electronics’ 1,178). This suggests that it is not just companies owning massive portfolios – much of which remain unused either in commercial applications or revenue-focused licensing – that are ‘opening’ their patents. A business like DSME – that probably has much less of a chance to monetise its relatively few rights than a Samsung or a Panasonic – can still generate a lot of strategic value from owning IP assets.
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