Brain Drain
Korea's trade deficit in intellectual property rights towards the U.S., including patent licensing fees, amounted to 2.86 trillion won (US$2.42 billion) in the first quarter of this year, which is a new record. The highest deficit is attributable to the fact that Samsung Electronics and LG Electronics paid Qualcomm for a large amount of smartphone patent royalties during the period.
The amount of money paid by local companies to overseas companies that hold intellectual property like patents, design rights, and trademark rights was US$4.97 billion, according to statistics on the nation's intellectual property trade deficit during Q1 2015 published by the Bank of Korea (BOK) on Aug. 26. In contrast, exports of patents and software copyrights were only US$2.66 billion, half the amount of imports. As a result, the nation reported US$2.31 billion of trade deficits in the intellectual property area in Q1.
The manufacturing sector posted US$2.14 billion of losses in the field, led by the electrical and electronics industry. The U.S. topped the list of the nation's trade deficits in the intellectual property area, since local companies paid US$2.66 billion to U.S. firms for the use of intellectual property, seven times as much as exports of intellectual property to the U.S, which were US$410 million. Due to the trade imbalance, the country recorded US$2.42 billion of losses in intellectual property rights during its trade with the U.S.
The number is the highest-ever since 2010, when the BOK started to compile related statistics. It is due to the fact that local smartphone makers' payments of patent royalties to Qualcomm were concentrated during the period. Industry analysts estimate the amount of royalties paid by local IT companies to the world's largest mobile chipset maker to be 2 trillion won (US$1.7 billion) per year. Currently, the Korea Fair Trade Commission is examining whether or not Qualcomm is abusing its patent rights.