Leading Korean information technology (IT) companies are highly vulnerable to patent trolls, also known as "non-practicing entities (NPEs)."
NPEs have been filing a series of lawsuits against Korean IT players after the Samsung Group and the Hyundai Motor Group were attacked by Elliott Management, an activist US hedge fund, in the process of revamping their corporate governance structures.
Analysts advise Korean companies to guard against NPEs as their attacks could undermine corporate management activities and innovation efforts for the Fourth Industrial Revolution.
According to the 2017 Annual IP Trend Report released by the Korea Intellectual Property Protection Agency on May 17, there were 107 cases of disputes between domestic companies and NPEs in the United States last year. The figure accounted for about 60% of all 182 disputes last year. An NPE is a company that files lawsuits based on its patents without engaging in any production facilities.
NPEs filed 920 lawsuits against Korean companies over the past five years from 2013. The 920 lawsuits accounted for 75% of all disputes. NPE lawsuits had steadily dropped to 87 cases in 2016 since peaking at 288 cases, a five year low in 2013 but bounced back to 107 cases last year.
Many of the Korean companies sued by NPEs were those which produced smartphones and semiconductors, cash cow items for Corporate Korea. In particular, they mainly targeted Samsung Electronics but is gradually expanding the scope of their targets to LG Electronics and Nexon.