Dram Man

Warning! Hand Wringing Ahead!

Expect the Korean government and society to get even more edgy about the licensing deficit in Korea. The article's structure alone (a Yonhap piece) shows exactly how worried the average Korean is about the situation. The article announces that overseas licensing payments are up US$2.5 billion for the first half of the year. Note how they play down that Korean companies actualy collected almost a US$1 billion for licensing their IP in the same period. That all translates into a US$5 billion in payments for the year out, and US$2 billion in payments in.

Why would this make Korea edgy? It is basically the knee-jerk mercantilistic attitude of Korea as a whole. Any loss is bad, not matter how much benefit it delivers. To put things into perspective however Korea imported last year over US$200 billion in goods and services. Meaning the they are focusing on about 2.5 of their overall imports. Finally to show the benefits of this "leak" (something rarely reported/thought of in Korea), Korea last year showed a trade surplus in technology products of US$33 billion.

As a final observation. I made comments about LMNT, the group of former Hynix executives that stole "valuable" intellectual property form their former employer. The press reported that the total value of stolen goods at USD$600 million. Now if you can excuse the rough calculations, go with me on a journey. Hynix's yearly sales are about US$5 billion, or about 2.5% of all goods exported. Carrying that ratio to the IP export market, that means that Hynix received royalty payments of US$50 million (US$1 billion X 2.5%). So again, Hynix expects the world to believe that the value of their IP is US$600 million? More and more I wonder if the executives stole something of actual value.

(Final note on Hynix: According to their books, they made US$600 million in "non-operating revenue", a catch-all that also includes IPR payments. In light of the above calculation is it just me or is this a little fishy?)

posted by Dram Man @ 1:38 PM