South Korea posted an intellectual property (IP) trade deficit of US$880 million in the first half of this year, the largest first-half IP trade deficit in four years, whereas the deficit had been US$530 million in the first half of 2018, the Bank of Korea announced on Sept. 20.
Specifically, the deficit amounted to US$1.43 billion in the field of industrial property rights such as patent and utility model rights. “The deficit in this field was a one-off phenomenon, which resulted from the end of patent right disputes between South Korean and foreign companies and the following payment of settlement money made by the former,” the central bank explained.
In the first half this year, South Korean companies imported a number of technology patents from advanced economies with demands for electronics such as smartphones on the rise. South Korea recorded an IP trade deficit of US$2.23 billion with the United States and US$490 million with Japan during the period. On the other hand, it posted IP trade surpluses with China and Vietnam.
When it comes to small and medium-sized enterprises invested by foreigners, the deficit increased to US$1.92 billion after having increased from US$1.5 billion in the first half of 2017 to US$1.71 billion in the first half of 2018. “This was led by payments for cultural and artistic copyrights and software copyrights, which increased along with the numbers of Netflix and YouTube viewers and smartphone applications developed by foreign developers,” the bank continued to say.
The IP trade deficit in the manufacturing sector increased US$90 million from a year ago to US$910 million. The IP trade surplus in the service sector fell from US$310 million to US$70 million during the same period. The decrease in surplus was because of fewer new games.