[Unprotected Intellectual Property] 9 out of 10 Patent Infringement Victims Are 'SMEs'

Increase in Intellectual Property Infringement Damages Directly Affecting Corporate Survival
6 out of 10 SMEs... Expanding to Venture and Small Tech Companies Reaches 89.1%

At the 'Korea Intellectual Property Exhibition' held last year, a citizen is exploring tourist attractions using drone VR.

[Asia Economy Reporters Sunmi Park and Bokyung Kim] Startup ‘Ignis’ launched a meal replacement product called ‘Lapnosh’ in September 2016. It comes in a transparent container with various flavored powders that are mixed with water for consumption. During the first year after its launch, about one million bottles were sold, generating sales revenue of approximately 2.6 billion KRW, gaining significant popularity. Subsequently, ‘Eommasarang,’ a company with over 20 years of experience manufacturing and selling traditional grain-based health foods, copied the container, design, and contents exactly and released a product named ‘Falling in Love with Meals’ to the market. This product was even purchased and sold by the large supermarket chain Homeplus. Ignis, which could not register a patent due to lack of information, suffered a direct hit to its sales. A company representative stated, “Design patents must be registered within six months of launch, but we were not aware of this beforehand,” adding, “There is a need for government-led education on intellectual property (IP) protection and strategies targeted at small and medium enterprises (SMEs) and startups.”

It has been revealed that 9 out of 10 SMEs, including venture and small technology companies, have recently experienced intellectual property disputes. As IP has emerged as a core asset directly linked to corporate survival, small and venture companies are suffering serious damage such as sales losses while struggling with various disputes in challenging environments.

On the 4th, the Korea Intellectual Property Research Institute conducted a comprehensive survey of 794 companies that had experience with industrial property-related lawsuits over the past five years (2016?2020). Among the 101 respondents, 59.4% were SMEs, representing the largest share.

Including venture and small technology companies (29.7%), the total reached 89.1%. This is a 4.9 percentage point increase from 84.2% two years ago, indicating that the main parties involved in disputes are expanding to include small and venture companies.

By company type, 60% of ventures and small technology companies had experienced infringement. This was followed by SMEs (53.3%) and mid-sized companies (10%). Most infringement disputes were in the patent field, accounting for 48.6%, the highest proportion. Trademark rights (27%), design rights (19.6%), and utility models (4.7%) followed.

For mid-sized companies, trademark infringement was predominant. The institute analyzed that this is mainly because the damage caused by counterfeit product distribution is more severe (business contraction and withdrawal) compared to other disputes.

Hyun Kwak, Senior Research Fellow at the Korea Intellectual Property Research Institute, said, “Companies suffer damages such as decreased sales, increased costs related to disputes, and deterioration of corporate image in infringement disputes,” adding, “Education and consulting on sending warning letters, administrative measures, and litigation methods are necessary for these companies.”

Meanwhile, this survey was conducted by extracting 1,200 plaintiff and defendant companies from a total of 1,652 domestic dispute case precedents by the Intellectual Property Research Institute, and after excluding duplicate companies, a final total of 794 companies were surveyed comprehensively.