[News Terms] Frequent Patent Lawsuits, 'NPE' Targeting Samsung and Hyundai Motor

A Non-Practicing Entity (NPE) is a company that does not directly manufacture or sell products but generates revenue by purchasing patents from other companies and engaging in patent litigation or licensing agreements. The main targets for patent acquisition are patents from IT, semiconductor, bio, and automotive companies, where technological development is active. In particular, NPEs focus on acquiring patents that have a broad scope of application in technology fields with intense competition among multiple businesses. Patents from major Korean conglomerates such as Samsung Electronics, LG Electronics, and Hyundai Motor Company are also of significant interest to NPEs.

Recently, global manufacturing companies have also transformed into NPEs to exercise monopoly power over the patents they hold. Qualcomm, which monopolizes about 25,000 standard essential patents (SEPs) essential for mobile phone production, is a representative example. Last year, Qualcomm earned $7 billion (approximately 9.32 trillion KRW), accounting for 54.3% of its net profit, from intellectual property (IP) revenue. IBM and Nokia are also recognized as companies with high patent income.

The problem is that as NPEs increasingly demand excessive costs during patent litigation or royalty negotiations with companies, the technology and management strategies of those companies are being threatened. This is why NPEs are often referred to as ‘patent trolls.’

Korean companies are also suffering from lawsuits filed by NPEs. According to the ‘2022 Intellectual Property (IP) Trend Annual Report’ released by the Korean Intellectual Property Office in July last year, out of a total of 208 patent disputes involving Korean companies in the United States in 2022, 149 cases involved Korean companies being sued. In other words, 7 out of 10 patent disputes occurring in the U.S. were cases where Korean companies were targeted.

In particular, among the patent lawsuits against Korean companies, the proportion filed by NPEs was 84.6% (126 out of 149 cases), indicating that NPEs are leading patent attacks against Korean companies. Furthermore, most patent disputes were concentrated in the electrical, electronic, and information communication fields such as semiconductors and computers.

Recently, it was revealed through a prosecution investigation that a former executive who served as Samsung Electronics’ patent defense commander filed a patent infringement lawsuit in the U.S. based on confidential documents illegally obtained from an employee responsible for Samsung Electronics’ IP-related work.

Of course, not all NPEs can be labeled as ‘patent trolls.’ Unlike patent trolls who seek compensation, settlements, and royalties through excessive patent litigation, there are also ‘defensive NPEs’ established to support industry liquidity and protect domestic companies in global patent lawsuits.

This content was produced with the assistance of AI translation services.