The Korean government is raising a fund of 100 billion won for investment in intellectual property such as patent rights, trademark rights, and copyrights, in an effort to boost creative economic activities. New preferred surety programs are being put into practice for the intellectual property industry sector as well.
According to the Financial Service Commission’s plan made available on July 30, the fund is going to be created as a part of the Growth Ladder Fund that was raised in May for the support of venture firms and start-ups. One-half of the amount will be invested in invention capital, and the other half in venture capital. The investment will be made either by purchasing intellectual property directly from companies or buying asset-backed securities.
|New Preferred Surety Services||
* Financing of funds for intellectual property acquisition and R&D by the KCGF and the KTFC
|New Technology Evaluation Programs||
* The KCGF and the KTFC adopting guarantee programs for intellectual property evaluations
|Sale Credit Insurance for Guarantee of Royalties||* Insurance for the stability of royalty income|
|Expansion of Securitization||* Aggressive securitization by means of the Intellectual Property Fund|
The preferred surety programs are being launched next month by the Korea Credit Guarantee Fund (KCGF) and the Korea Technology Finance Corporation (KTFC) so that they can stand surety when a company acquires another company’s intellectual property. The guarantee rate will be between 90% and 95%, while the fee will be 0.3% to 0.5% lower than those of ordinary guarantee programs in general.
In the same vein, new preferred surety programs for R&D investment are being set up by the KCGF. Although the KTFC is running such programs now, the KCGF has not handled them. The guarantee rate is expected to be about 90% to 100%. The programs are provided for companies with excellent intellectual property. Up to now, the KTFC has provided surety services for technology-centered companies but given no preference to intellectual property. The fees of the new surety programs are planned to be 0.2% points lower and the guarantee rate is 90% to 95%. The guarantee ceiling has increased from three billion won to five billion won.
The guarantee programs for the evaluation of intellectual property will cover not only patent rights but also intellectual property rights down the road. The fees are cut by 0.3 to 0.5 percentage points while the guarantee rate is increased to 90% or 100%. The fees will be offered by both the KCGF and the KTFC.
At the same time, sale credit insurance for royalties will be introduced. Assuming that a company in possession of patented technology receives patent fees from another company, the former is subject to deteriorated cash flow if the latter goes out of business. However, by subscribing to insurance and paying a 1.7% premium, the former can receive royalty income regardless of whether or not the other company is in business.
The government is going to come up with plans for the securitization of and security loans for intellectual property, too. A transaction information system is scheduled to be established by the Presidential Council on Intellectual Property and the Korea Intellectual Property Office along with databases for intellectual property and technology evaluation. Detailed plans will be announced before the end of October this year.