Unfair Patent Penalties
Korean companies are paying foreign tech firms hundreds of billions of won in penalties a year due to unfair patent license agreements. Experts point out that the awareness of patent licensing should be raised by means of immediate support.
“Patent right owners are entitled to audit accounts of the firms in license contracts and to demand various types of penalties through auditing,” said a patent attorney, adding, “Korean enterprises are currently paying excessive royalties due to unfair license contracts.”
This is because small firms, which lack bargaining power and experience, tend to pay insufficient heed during the signing of such agreements. In contrast, foreign entities in possession of essential patents and original technologies abuse their dominant position more often than not. The examples include the conclusion of a license contract including overseas patents by a company not engaged in overseas business and failure to note the retroactive implementation of a license contract, both of which lead to exorbitant royalties.
When such a license contract is concluded, regular auditing is conducted to impose royalties. Payment of excessive royalties and disclosure of business information are forced during the course as the case may be. In extreme cases, the contract is signed without any knowledge as to which patents are to be included in the licensing object.