Shrimp Among Whales? Trump’s Patent Fee Hike Threatens Samsung and LG [Prime Intellectual Property]

Trump Administration Reviews Patent System Reform Plan
Samsung Registers Most Patents in the U.S. for Three Consecutive Years
Concerns Over Damage to Korean Companies Amid U.S.-China Trade Negotiations

There are concerns that if the Trump administration's plan to increase patent fees in the United States becomes a reality, major South Korean conglomerates such as Samsung Electronics and LG Electronics could be hit hard. Samsung Electronics has been the company with the most patent applications in the United States over the past three years, and LG Electronics has also maintained a spot in the top 10 for several years.

The Trump administration is reviewing a patent system reform plan that would impose fees equivalent to 1-5% of a patent's value. The intention is to raise several billion dollars in additional revenue each year to address the national fiscal deficit. Some view this as a strategy for the United States to gain an advantage in future trade negotiations with China. However, there are concerns that, much like the saying "when whales fight, the shrimp's back is broken," South Korean companies could suffer significant damage as a result.

According to IFI CLAIMS Patent Services, a U.S. patent analysis firm, Samsung Electronics registered 6,248 patents in the United States in 2022, 6,165 in 2023, and 6,377 last year, ranking first for three consecutive years. The company with the second most patent registrations last year was TSMC from Taiwan, followed by Qualcomm, Apple, Huawei, LG Electronics, and Samsung Display. Many foreign companies appeared at the top of the patent registration rankings. In fact, more than half (56%) of the patents registered in the United States last year were owned by foreign companies. By country, Japan accounted for 43,364 patents, China 28,258, South Korea 24,115, and Germany 14,044.

The United States Patent and Trademark Office (USPTO) released a report earlier this year based on information about inventors’ citizenship listed on U.S. patents from 2000 to 2012. During this period, there were about 138,000 immigrant inventors, accounting for 17% of the total. The proportion of patents that included at least one immigrant inventor increased significantly from 24.5% in 2000 to 40% in 2012. The top three countries of origin for immigrant inventors were India (20%), China (15%), and Canada (10%), with the largest number working in the field of electrical engineering.

The U.S. Federal Reserve Board stated in its "Assessment of China's Innovation Capabilities" report on the 5th that China's patent share in IP5 countries is rapidly increasing, and in 2020, it nearly caught up with the United States, which ranks first in the world. In particular, China is evaluated as becoming a hub of invention in the field of artificial intelligence (AI). Screenshot from the U.S. Federal Reserve website.

As the share of foreign companies and immigrants in the U.S. patent market continues to rise, the Trump administration is seeking to use the fact that foreign companies are protecting their technology through the U.S. patent system as grounds for increasing patent fees. In addition, on the 5th, the U.S. Federal Reserve Board released a report titled "Assessment of China's Innovation Capabilities," comparing the number of patents in South Korea, the United States, and China. The report stated, "China's share in the IP5 (United States, China, Japan, Europe, South Korea) patent market is rapidly increasing," and "in 2020, it nearly caught up with the United States, which ranks first in the world." The report also noted, "It is clear that China is becoming a major hub of invention in cutting-edge technologies such as artificial intelligence (AI)." By highlighting the trend of increasing patent registrations, the report expressed a sense of caution about the rapid growth of China's advanced technology sector.

However, it remains uncertain whether Trump's patent fee reform plan will actually be implemented. This is because it could place a burden on companies and have the unintended effect of reducing the number of patent applications. There is also considerable room for debate, as new standards would need to be created to evaluate patent value in order to set appropriate fees. Furthermore, under U.S. patent law, the authority to set patent fees lies with Congress, not the administration, making it unlikely that the administration could make such a decision unilaterally.