IP Insight

Learn how to use intellectual property

Recently, influencers have caused negative impact on a daily basis, causing great controversy. Although they are well aware of their significant influence over social media users, they often act irresponsibly and encourage their followers to buy products, calling for extra caution. Still, however, a whole bunch of followers with an unhealthy obsession are drawn towards them.  Maybe, because their great ideas to create dozens of recipes and designs with a single ingredient are so-called technical capabilities.  Therefore, even in times of economic difficulties, the products they introduce sell like crazy.  As such, the entrepreneurs who know how to make money all share the common features of adding variations to an ordinary item.  This rule is what we would like to recommend to corporate representatives. These days, small and medium-sized business entrepreneurs are well aware that the technology they have developed must be registered to obtain an intellectual property right and defend their technology. 

Thus, smart entrepreneurs who know how to leverage this right even launch a sub-menu on the intellectual property right on their company websites to demonstrate that they are packed full of outstanding technologies, displaying documentary evidence obtained from the Korean Intellectual Property Office.  Unless a company has widely appeared in media or implemented various marketing plans, the surest way to promote the outstanding technology of a lesser-known company would be the trademark. 

These days, however, that is hardly enough.  Because there are so many different ways to use intellectual property rights. In fact, the most effective way to use them would be capitalization.  If you have an industrial property right registered under your name, or a patent filed under the name of your child who is registered as a shareholder of your company, that will create a really great opportunity.

The first benefit is that the patent held under the name of an individual can be transferred to the enterprise. With this kind of capitalization, companies with a high debt ratio can improve their financial status by increasing their capital within the company, offering an opportunity to normalize or improve the corporate evaluation.  One leading example that increases corporate liabilities would be provisional payments.  If the amount was small, then it would be promptly handled by increasing the salary or paying a bonus to the CEO, but if the amount has increased to hundreds of millions of won, then the company would have run out of options.  However, if you have the value assessed for an intellectual property held under the name of the CEO or shareholder and sign a transfer agreement with your company for consideration, you can receive royalties in cash, thus covering part of the payments with your company's capital.  This method is particularly revolutionary because the CEO’s income created in this way is classified as part of the other income and 60% of the amount is deemed as a tax-exempt, necessary expense. The company can also write off the payment as the depreciation cost of the intangible assets each year, thus reducing corporate income tax. 

What if the patent is in your child's name? By transferring the patent to a company, you will benefit from the reduced inheritance tax.  Moreover, since this process ultimately leads to fixing up the financial risk of the company, it would be a wise choice to address the overlooked corporate risk in advance as an inheritance may hit people without warning.  Above all, intellectual property is now the treasure of a company that carries greater value than cash. It is no surprise that intellectual property offers the upper hand in bidding, business partnership, and procurement.  The Financial Services Commission has announced a plan to finance with intellectual property as collateral, providing small and medium-sized businesses with the sure way out of financial difficulties.  Since loans secured by movable property is projected to display continuous growth within three years from now, a bright future lies ahead for the patent.  Therefore, we highly recommend that you embrace a full commitment towards obtaining patents.