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Governments start buying global patents

Wednesday, March 20 11:56:21

Patent competition in the United States is usually a fierce arena for private companies, but now the South Korean and French governments are suiting up.

Both countries have launched patent-acquisition companies, with the goal of helping domestic technology firms and possibly making some money in the process. China and Japan are making moves into the business too.

The Korean and French firms, dubbed Intellectual Discovery and France Brevets, are similar to the handful of private patent-acquisition firms in the U.S. derisively called "patent trolls."

U.S. patent aggregators such as closely-held Intellectual Ventures - which don't produce products - are often accused of unfairly targeting companies that actually build things by threatening to sue unless they are paid royalties.

The aggregators say they create a more-liquid market for valuable intellectual property, and help assure that legitimate inventors - especially those who don't work for big corporations - get paid for their breakthroughs. The French and Korean firms haven't yet filed any U.S. lawsuits.

The advent of state-sponsored intellectual property dealers adds a fresh geopolitical element to the debate about patent trolls and how to protect legitimate inventions without stifling innovation. It could also complicate efforts to improve global cooperation on trade-related matters such as online piracy and computer security.

Congressman Peter DeFazio, a Democrat from Oregon and co-sponsor of a bill designed to limit patent litigation, called the new government-backed patent entities a form of "protectionism" that nobody had anticipated.

"This is a whole new level of jeopardy," said DeFazio, who had not been previously aware of them.

Government-sponsored aggregators are still comparatively minor players in the patent deals market, and officials involved with Intellectual Discovery and France Brevets say they have no intention of pursuing aggressive litigation strategies.

Intellectual Discovery presents itself as a defensive alliance: if a South Korean company finds itself targeted in a lawsuit, for instance, it can access the patents being compiled by Intellectual Discovery to hit back.

"It is still in an incubating stage and focusing pretty much on aggregating IP," said Park Jong-Pil, deputy director at South Korea's Ministry of Knowledge Economy, in reference to Intellectual Discovery. "It is not close to a stage of earning big revenues or identifying entities violating our patents or taking legal action."

Intellectual Discovery has bought over 200 U.S. patents, including one for retinal eye scan technology from Singaporean chipmaker Avago Technologies Ltd last July, U.S. government records show. Reuters