South Korean and French governments enter the patent buying game?


There is no question that the landscape has changed for considering the potential value of patents.

And there is no question that business models have shifted—from using patents to support and perpetuate profits made through manufacturing, to using patents to make profits from the manufacturing activities of others.  So-called “patent trolls” make money by collecting patents and asserting them against anyone who unwittingly steps within their boundaries.

And there is no question that governments have long backed domestic enterprises and have supported the development of local industries.  Governments provide billions to subsidize fledgling industries.  Often those funds even come from other governments who seek to aid the economic development of poor nations.

But what about governments using their resources to buy patent portfolios of overseas rights?  Apparently, that is exactly what the South Korean and French governments have quietly begun doing!

Intellectual Discovery in South Korea, and Brevets in France, may be the first government-owned enterprises to get into the lucrative “patent troll” business.  According to Reuters, Intellectual Discovery has already purchased more than 200 U.S. patents; Brevets, so far, own only 4 U.S. patents and 50 total “patent families.”

While controversial, the practice of buying patents—not to manufacture products, but to assert those rights against other companies who do—has proven to be quite a lucrative business model.  Companies such as U.S. based Intellectual Ventures, have shown the model to be very profitable—while creating a massive increase in patent litigation.  The controversy arises when corporations seeking to introduce innovative products in the fast-paced tech industries find themselves on the receiving end of multiple lawsuits from shell companies owning patents.

The question has been: Does it fulfill the true intention of the patent system, which seeks to promote innovation and progress in science and the useful arts, to allow those who never make products to interfere with those who seek to actively bring new products to life?  This question has spurred significant debate—even without governments getting involved.

And now, with the significant financial resources of governments, it is clear that this debate is about to be raised to a whole new level.

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