'IP Filings': The Key to Boosting Small Business Survival Rates [Why & Next]

Small Business Owners Who File for Patents or Trademarks Have Higher Survival Rates Than Those Who Do Not
IP Filings Serve as Tools for Competitiveness and Survival Strategies for Small Business Owners
Recent Trends Show a Decline in Patent Filings but an Increase in Trademark Filings Among Small Business Owners
Policy Support Needed to Raise Awareness and Encourage IP Filings

There is an analysis that filing for intellectual property rights (IP rights) has a positive impact on the survival rate of small business owners. The fact that the survival rate of small business owners who filed for patents or trademarks before or after starting their business is relatively higher than that of those who did not file serves as evidence of this. However, as the trend of IP filings among small business owners has been declining recently, there are growing calls for raising awareness of the effects of IP filings and for establishing policies to support such activities.

The survival rate of small business owners who have filed intellectual property rights such as patents and trademarks was found to be higher than that of those who have not filed. This is interpreted as a positive signal that intellectual property filings have a beneficial impact on the survival rate of small business owners.

According to the Korean Intellectual Property Office (KIPO) and the Korea Institute of Intellectual Property (KIIP) as of November 7, 2025, the annual survival rates for all 903,316 small business establishments in 2022 were 69.8% in the third year and 58.5% in the fifth year. The survival rate was calculated by considering all businesses except those that officially reported closure as surviving businesses.

When the survival rate of small business owners who filed for patents or trademarks before or after starting their business was separately calculated, the third-year survival rate was 84.4% and the fifth-year survival rate was 77.8%, surpassing the overall survival rates for all small business owners.

Looking at survival rates by type of IP right (over five years), the survival rate of small business owners who filed for patents was 22.9 percentage points higher than the overall small business survival rate, and for those who filed for trademarks, it was 21.4 percentage points higher.

Particularly, compared to the survival rate of small business owners who did not file for any IP rights at all (third-year: 69.3%, fifth-year: 58.0%), those who filed for patents had a survival rate 15.1 percentage points higher, and those who filed for trademarks had a survival rate 19.8 percentage points higher. This demonstrates that filing for IP rights such as patents and trademarks plays a positive role in increasing the survival rate of small business owners.

There is also a noticeable difference in survival rates depending on the timing of IP filings. The survival rate for small business owners who filed for IP rights after starting their business was 86.4% in the third year and 80.0% in the fifth year, which exceeded the survival rates of those who filed before starting their business (third-year: 79.3%, fifth-year: 71.0%).

The effect of IP filings on the survival of small business owners by industry sector was most pronounced in manufacturing. When analyzing the impact of patent filings on small business survival, the five-year survival rate for small business owners in manufacturing who filed for patents after starting their business (as of 2022) was 87.4%, which is 6.5 percentage points higher than the 80.9% for non-manufacturing. In terms of trademark filings, the survival rate gap between manufacturing (82.9%) and non-manufacturing (74.8%) was 8.1 percentage points.

For small business owners, filing for IP rights becomes a means of maintaining competitiveness or a survival strategy. The so-called "Deopjuk Incident" is a representative example. The Deopjuk Incident refers to a series of events in which a restaurant in Pohang, which gained recognition after being featured on "Baek Jongwon's Alley Restaurant," faced controversy when franchise companies and others filed for similar trademarks first, sparking disputes.

If the restaurant had registered the relevant trademark before the Deopjuk Incident occurred, it could have avoided unnecessary disputes or controversies and would not have faced threats to its survival. In other words, securing IP rights such as patents and trademarks serves as a shield for small business owners to protect their unique competitiveness (recipes, business names, etc.) from infringement by others. This further supports the analysis that patent or trademark filings have a positive impact on the survival rate of small business owners.

While intellectual property rights applications play a positive role in increasing the survival rate of small business owners, the number of small business owners applying for intellectual property rights has generally been declining recently. There are calls for policy support to encourage the intellectual property rights application activities of small business owners.

However, recently, the number of patent filings by small business owners has actually been on the decline. In 2023, the total number of patent filings by small business owners was 36,697, a 12.8% decrease from 42,106 in 2020 (the highest since 2018). The average annual decrease rate is 4.5%. The proportion of patents filed by small business owners among all patents filed domestically also fell from 18.6% in 2018 to 15.1% in 2023.

Trademark filings have fared better than patent filings. As of 2023, the cumulative number of trademark filings by small business owners was 117,023, with an average annual growth rate of 1.1% from 2020 to 2023. The proportion of trademarks filed by small business owners among all trademarks filed domestically increased from 41.5% in 2018 to 45.9% in 2023, showing a different trend from patents.

It is also noteworthy that the proportion of trademark filings, which had been concentrated in the Seoul metropolitan area, is now spreading to non-metropolitan regions. According to KIPO, as of 2023, the metropolitan area still accounted for a high 68.1% of regional trademark filings, but since 2019 (70.9%), the proportion in non-metropolitan areas has been gradually increasing.

Im Sojin, Research Fellow at the Patent Statistics Center of KIIP (Ph.D. in Economics), stated, "The difference in survival rates between small business owners who filed for patents or trademarks before or after starting their business and those who did not is evident in the data. In particular, the survival rate gap between those who filed for IP rights and those who did not is more pronounced over five years than over three years, indicating that IP filing activities have a greater impact on the long-term survival rate of small business owners."

She added, "Innovation activities by small business owners through IP filings are a continuous source of innovative entities and economic vitality. From this perspective, it is necessary to establish effective policies to increase the recently declining IP filing activities of small business owners."

Jung Jaehwan, Director General of the Intellectual Property Information Bureau at KIPO, said, "IP rights such as patents and trademarks not only increase the survival rate of small business owners but also serve as a shield to protect their unique competitiveness from others. KIPO will continue to support small business owners in securing IP rights and strive to ensure that IP rights lead to long-term effects that small business owners can experience in the field."