The Importance of Patents in Faculty-Led Startups in Korea

Recently, as more cases emerge where advanced university technologies are directly commercialized in the market, "faculty-led startups"—where professors and researchers venture into entrepreneurship—are becoming increasingly active. These startups hold significant potential as they can leverage university research resources to develop innovative products or services. However, to reliably commercialize excellent technology, securing patent rights is an indispensable step. This column examines the importance of patents in faculty-led startups and the strategy of securing rights through joint applications filed by the startup company and the university's Industry-Academic Cooperation Foundation (hereinafter referred to as "IACF"), based on service inventions created by faculty members.

Faculty-Led Startups: Why Are Patents Crucial?

1. Technology Protection and Competitive AdvantageThe primary reason for securing patents in faculty-led startups is to protect core technology and establish a differentiated competitive edge. Innovative technologies born in university labs often possess a high degree of originality compared to similar technologies. Failure to protect these with patents allows competitors to easily imitate them and quickly enter the market. Therefore, securing patent rights is essential to prevent technology leakage and loss of competitiveness.
2. Attracting Investment and Enhancing Corporate ValueInvestors evaluate patent rights as a company's 'Intellectual Property (IP) assets' and decide on investments based on potential future market profits and exclusive status. A robust, protected patent portfolio signals technological prowess and business capability, making it easier to attract investment and increasing the company's valuation.
3. Business Expansion and Licensing OpportunitiesSecured patents can open doors to collaboration opportunities, such as licensing agreements with various companies and joint R&D projects. This helps faculty-led startups move beyond merely selling products or services, enabling them to establish additional revenue streams through their intellectual property.

Service Inventions and the Need for Joint Applications

Technology invented by faculty members during their employment through research and development activities generally qualifies as a 'service invention.' A service invention is an invention made within the scope of employment duties, and the rights, in principle, belong to the university. Consequently, for a faculty-led startup to utilize such an invention for commercialization, collaboration and rights allocation with the university (including its IACF) are essential.

From the faculty founder's perspective, systematic negotiation with the university regarding rights is necessary to ensure the research outcomes can actually be used by the startup company they lead or are involved in as an executive. One of the most effective methods is for the startup company and the IACF to secure patent rights through a joint application.

Joint Application Strategy

1. Rights Attribution and Share NegotiationThe most critical aspect of a joint application is determining the ownership and allocation of shares in the patent right. Shares should be allocated comprehensively, considering the university's contribution to R&D, additional developments or investments made by the founder, etc. A clear share structure is vital to prevent disputes during subsequent processes like technology transfer, licensing agreements, or investment attraction.
2. Consideration of University Regulations and Internal ReviewsMost universities have internal regulations concerning faculty-led startups, service inventions, and joint applications. The IACF typically reviews documentation, conducts technology assessments, and performs research ethics reviews before acknowledging the rights to the invention, after which the university and the startup can jointly file for the patent. Sufficient prior consultation is crucial during this process to avoid unnecessary delays.
3. Utilization of R&D FundingVarious R&D funds are provided by the government, local authorities, and IACFs to encourage faculty-led startups. Considering costs for patent application and technology assessment alongside these funds can help the startup reduce its financial burden and pursue patent acquisition more stably.
4. Expert Advice and ManagementIssues related to patents for faculty-led startups tend to be more complex than those for general corporate patent applications. This is because faculty-led startups involve intertwining factors like university internal regulations, collaboration with the IACF, and R&D contract conditions. Therefore, close cooperation with a specialist patent attorney is necessary.

Advice from Pine IP Firm

We at Pine IP Firm possess extensive experience and know-how regarding service inventions and patent applications arising during the faculty-led startup process. Faculty founders must navigate university internal regulations and IACF procedures, while meticulous strategy development is essential for securing the startup company's rights and achieving commercialization. Our firm provides the following services:

• Invention Analysis and Patent Strategy Development: We provide thorough support from the initial stages, including technology analysis, prior art searches, and defining the scope of the application.
• Joint Application and Rights Allocation Negotiation: We assist in negotiating rights allocation between the IACF and the startup, draft patent application documents, and handle the entire filing process.
• Linking R&D Projects with Patent Applications: We advise on efficiently linking government-supported R&D projects with patent applications to minimize the financial burden on the startup.
• Building an Enhanced Patent Portfolio: We help build a strong portfolio by bundling multiple patents over the long term, providing an advantage in attracting investment and market entry.

Concluding Remarks

Faculty-led startups offer an attractive opportunity to bring outstanding research achievements directly to the market. However, a robust patent strategy is essential to reliably protect the innovative technology born in the lab and guide it towards successful commercialization. In particular, joint applications by the startup and the IACF based on faculty inventions recognized as service inventions represent a key strategy for securing rights definitively and preventing disputes.

Leveraging our expertise and experience in the field of faculty-led startups, Pine IP Firm is dedicated to meticulously supporting you through the entire process, ensuring your valuable technology and ideas translate into successful businesses. Please do not hesitate to contact us anytime if you have questions or require consultation regarding patents for faculty-led startups.