15 Apr
2016

Validity challenges high on the agenda as Samsung and LG talk strategy at IPBC Korea

IAM has just wrapped up its first ever IPBC event in Seoul. Amid discussions of an improving enforcement environment at home, big changes in the United States, and the government's efforts to boost small companies, we got an inside look at the IP strategies of some of Korea's major patent players. 

Korean Intellectual Property Office (KIPO) deputy commissioner Young Dae Lee kicked off the day by touting the government’s efforts to boost more creative means of utilising IP assets by domestic companies. Lee particularly emphasised the securitisation of patents, saying that the government was working with commercial banks on IP valuation initiatives aimed at encouraging investment and loans based on patent collateral. Another key administration policy – the establishment of Creative Economy Innovation Centres around the country – has given Korean SMEs and start-ups access to over 100,000 patents and connected them with IP experts, venture capitalists and brokers, he added.

There is also clearly a recognition that creating and maintaining a strong enforcement environment will go a long way toward encouraging more monetisation and other forms of IP value creation. The country is moving toward more focused jurisdictions for patent cases and more specialisation of courts, Lee said. Kyung-Hwa Min, vice president and head of the IP centre at LG Chem and a former judge, drew particular attention to Korea’s system for post-grant validity reviews, which are carried out by the Intellectual Property Trial and Appeal Board (IPTAB). Statistics show the number of inter partes patent reviews filed at the IPTAB have taken off in recent years in one specific category – Korean challenges to patents owned by foreign companies. Back in 2010 there were 79, but that number had tripled to 270 by 2014. Min explained the strategic value of IPTAB validity reviews: generally they are expedited trials presided over by qualified, patent-savvy judges, and they are cost-effective. They are well-referenced in other regional IP jurisdictions, meaning they could be used as a test bed for global IP disputes, or even, Min said, as a form of mediation. What he didn’t touch on was whether IPTAB trials are as petitioner-friendly as PTAB reviews in the United States.

The day’s sessions also shed light on patent strategy in Korea’s largest corporates. In a very rare public speaking engagement for a senior Samsung Electronics IP manager, Tae H Kim, vice president of IP licensing at the company, said its strategy could be summed up as managing risk and controlling costs in a way that allows the business units to flourish. “If you can show a reduction in royalty payments”, Kim noted, "that’s a concrete indicator of IP value”. Kim also gave some insights into Samsung’s deal-making habits. The company, which this week we reported owns by far the largest portfolio of active US patents, tends not to sell patents. “That’s not a result of policy or concerns about reputation”, Kim noted, but rather a reflection of the fact that it doesn’t see the value out there in the sales market. Typically the patents that could generate a significant return through sale are also those which Samsung thinks could prove useful defensively, Kim said: “We want to hold on to our best tools”. Instead, the company focuses on forming strategic cross-licences. Those arrangements tend to be strictly IP-based, despite a regional trend toward broader collaborations including technology transfers and knowhow elements." Kim also noted that hs company is experiencing less attention from NPEs than has bene the case in the past.

Samsung Electronics and fellow industry giant LG Electronics are both among the top five inter partes review petitioners in the United States. Discussion of PTAB proceedings, which TSMC’s Michael Shen called a “gamechanger”, dominated the discussion titled “Survival of the fittest”, a sign of how central the reviews have become to the strategies of tech titans in this region. But if IPR petitions can sometimes seem like an easy out, Joo Sup Kim, vice-president of licensing at LG Electronics, reminded delegates that they require plenty of homework. Kim recounted facing a patent assertion from an NPE that had recently gone through a five year litigation with one of LG’s competitors over the same patent. During that drawn-out fight, the competitor had not been able to find applicable prior art. Kim’s team, though, did its own search and found the prior art necessary to have the asserted patent invalidated.

We saw plenty of evidence today that Korea’s top tech players have well-developed IP strategies. But as in large organisations anywhere, keeping IP at the top of the agenda can be a struggle. Taeksung Kim, who recently stepped down as vice president, intellectual property at Samsung Electronics, said one of the biggest hurdles was the tendency of some businesspeople to view IP as an overcomplicated matter that may hold up their activity in creating future business and technology plans. “You have to persuade them that if they don’t collaborate with the IP function, we’re going to step on a booby trap,” he said, adding that patent landscapes and other analytical tools were good ways to demonstrate the IP team’s value in planning future technology development.

Jacob Schindler

Author | Asia-Pacific editor

[email protected]

Jacob Schindler