Patent monsters, officially known as Non-Practicing Entities (NPEs), are increasingly filing patent infringement lawsuits against Korean companies in the U.S., which is often referred to as a patent holder’s paradise. A recent notable example involves former Samsung Electronics executive Ahn Seung Ho, who founded an NPE and could not win a lawsuit against his former employer in the U.S. for misusing stolen technology.
Even when Korean companies win against these lawsuits, they suffer significant financial damage due to the considerable costs incurred during the lengthy trial process. Voices call for the government to devise countermeasures to prevent Korean companies relying heavily on exports from becoming prey to NPEs. According to the financial industry, on May 30, NPEs profit by acquiring patents and collecting usage fees or initiating lawsuits. They often purchase patents with broad rights at a low price, even if they have little technological value, and then sue related companies aiming for substantial settlement amounts. Recently, more aggressive NPEs that raise funds from litigation investors and distribute the proceeds after filing lawsuits are rising.
The main stage for NPEs is the U.S. Eastern District Court of Texas, known for delivering verdicts favorable to patent infringement claims.
Their primary targets are Korean global corporations and medium-sized businesses that consider the U.S. as their main market. Samsung Electronics, for example, has faced a staggering 195 patent infringement lawsuits in the past five years, receiving a lawsuit approximately every nine days. Out of these, Samsung Electronics won 193 cases. The U.S. Patent Trial and Appeal Board later invalidated the two cases it lost, essentially confirming that Samsung did not infringe on any of the 195 patents.
But even victories come at a cost. The cost of responding to a patent infringement lawsuit in the U.S. can reach between $7 million and $10 million. If the trials continue, the cost can triple or even quadruple. Many companies that struggle to bear these hefty litigation costs and time commitments often settle for lesser amounts.
Companies argue that they are insufficiently equipped to fend off the relentless attacks from NPEs on their own. They call for a government-level response as NPEs repeatedly sue specific companies and increasingly broaden their range of targeted businesses. Although the Korean Intellectual Property Office released measures to strengthen the provision of information on overseas NPE trends since March 2024, strong voices in the field claim these measures lack effectiveness.
An industry official emphasized, “As the burden of settlement payments and litigation costs increase due to NPE attacks, the competitiveness of Korean companies weakens, and there is a massive outflow of national wealth. This is a problem for Korean companies and the national competitiveness, requiring urgent and proactive measures from the government.”
Meanwhile, Ahn, who is facing a reapplication for an arrest warrant on charges of leaking internal Samsung patents (violation of the Unfair Competition Prevention and Trade Secret Protection Act), will undergo a suspect examination before detention (Substantive Review of Arrest Warrants) at the Supreme Court Of Korea.