Innovative IP Securitization: STIP 'IP Exchange' Opens New Markets in IP Finance

Source: IPR Daily

Author：LEE SUNG-YONG

In today's landscape, companies, especially startups, venture companies, and small to medium enterprises (SMEs) with innovative patent technologies, face significant challenges in securing commercialization funds and monetizing their patents. To address these issues, the STIP IP Exchange is set to launch in August. This platform enables the tokenization of patent technology value, allowing it to be traded similarly to stocks, providing patent holders with opportunities for both monetization and commercialization.

Why is Patent Monetization Necessary?

South Korea ranks as the fourth largest IP powerhouse globally, yet without proper utilization, patents become nothing more than a piece of paper. In fact, the domestic patent utilization rate is below 4%, meaning that 96 out of every 100 patents are underutilized. Due to the recent economic downturn, many patents have been abandoned because companies could not afford to maintain them.

Countless SMEs and individual inventors possess a wealth of intellectual property (IP) such as patents, utility models, trademarks, and designs, yet investment in these assets remains limited. This, in turn, diminishes the practical use of these technologies and weakens corporate competitiveness.

Late last year, the South Korean government cut R&D budgets, leading to widespread concern among research institutions, organizations, and companies. There has been criticism that R&D efforts primarily geared towards securing government grants rather than practical commercialization are not effective. What is needed is R&D that leads to the commercialization of technology, not just research for the sake of research.

Patent Securitization Opens New Possibilities for SMEs and R&D Outcomes

Amidst this backdrop, IP Media Group, led by CEO Seong-yong Lee, is pioneering a new market in IP finance with the world’s first IP exchange, the STIP IP Exchange. This platform enables the commercialization and securitization of patent technologies purely based on the value of patents, opening a new chapter in IP finance on a global scale.

IP Media Group has developed an IP exchange that allows the trading of patent technology value similar to stocks, coupled with media integration (e.g., Bloomberg), to achieve the utilization and commercialization of underutilized patents. The platform aims to generate new business entities, create jobs, and allow SMEs, venture companies, individual inventors, and research institutions to secure R&D and operational funds solely through their patents. This will activate dormant patent technologies, facilitate technology commercialization, enhance the utility of foreign patents, and provide capital-raising opportunities.

Through the STIP IP Exchange, the company aims to enhance national competitiveness by revitalizing the economy based on patented technologies, creating jobs through the establishment of new corporations, and ensuring a steady tax revenue stream. This will create a virtuous cycle of capital from research and development to the practical application of patented technologies.

Seong-yong Lee, CEO of IP Media Group, emphasized the importance of IP in the South Korean economy, stating, “Even during the global economic paralysis caused by COVID-19, patent filings continued to grow. The STIP IP Exchange offers hope for patent holders struggling to commercialize their technologies due to a lack of funding.”

The Innovative Features and Benefits of the STIP IP Exchange

The STIP IP Exchange offers numerous benefits to both patent holders and investors. Firstly, it integrates with the Korean Intellectual Property Office's (KIPO) patent information search system (KIPRIS) to verify patent ownership, enhancing the reliability of transactions.

Secondly, it provides a blockchain-based tracking feature that allows users to see who holds the tokens representing the patent technology's value, ensuring transparency and boosting confidence in the system.

Thirdly, the platform offers business plans that outline how the patented technology addresses specific problems, market conditions, and potential revenue models, helping investors understand the value of the technology and make informed decisions.

Fourthly, the platform provides interview videos where patent holders present their technologies, explaining the innovation and future potential to investors, thus increasing understanding and trust.

Fifthly, the platform grants investors who hold a certain number of tokens non-exclusive licensing rights to the patented technology, offering additional incentives to attract investment.

By utilizing a centralized blockchain trading platform, the STIP IP Exchange leads the way in patent technology securitization through fractional trading of patent value. Just like traditional trading of assets, the STIP IP Exchange allows for the trading of fractional patent value, helping to secure the necessary business funds for the commercialization of excellent patent technologies.

The STIP IP Exchange plans to start trading in August with a focus on South Korean patents (and some Chinese patents), eventually expanding to trade the value of patent technologies worldwide.

How Does the Trading of Patent Technology Tokens Work?

When patent technology value is tokenized, patent holders (both companies and individuals) can issue tokens representing the value of their patents and trade them. Unlike traditional patent sales, this method allows patent holders to maintain full ownership while still securing liquidity by having the market evaluate and trade their patent's value.

The STIP IP Exchange, which facilitates trading of patent technology value in the form of stock-like tokens, enables patent holders to manage their intangible assets more efficiently. By having the market evaluate the value of their patents, patent holders can gain insights into the true value of their assets and trade them transparently and securely through STIP.

Jeong Hyun-do, COO and co-founder of STIP, highlighted the significance of this new financial product, comparing it to the evolution of financial markets, from the New York Stock Exchange in 1817, the Chicago Mercantile Exchange in 1848, to the first cryptocurrency exchange in 2010. He noted that the advent of blockchain technology has reshaped investor perceptions, and the introduction of the STIP IP Exchange marks a revolutionary development in transforming intangible assets into tangible ones, possibly being the last great financial innovation for humanity.

Through the STIP IP Exchange, investors will have the opportunity to invest directly in innovative patent technologies, potentially yielding high returns while supporting technological advancements. Moreover, transactions via the STIP IP Exchange are transparent and secure due to blockchain technology, ensuring investor confidence. The platform also provides additional benefits, such as non-exclusive licensing rights, for investors who hold a certain number of tokens.

Seong-yong Lee, CEO of IP Media Group, has been publishing the nation’s only patent-focused newspaper, "Patent News," for the past 19 years, both online and offline. Lee stated that the STIP IP Exchange was established to revitalize dormant patents and promote the commercialization of patented technologies, as these efforts are vital for boosting national competitiveness.

Lee further explained that the STIP platform allows patent holders to raise funds for commercialization through fractional patent value trading, offering a financial innovation based on blockchain technology.

Why STIP Is Poised to Lead the New Direction in IP Finance

The STIP IP Exchange is set to provide new opportunities for many patent companies. By tokenizing and trading the value of patent technology through the IP Exchange, patent holders can secure funds and maximize the value of their patents. This initiative will also help startups, venture companies, and SMEs commercialize their innovative technologies more easily.

The introduction of the IP Exchange is expected to accelerate technological development by promoting the monetization of patent technologies. By allowing these technologies to be valued and traded in the market, the exchange is anticipated to have a positive impact on both technological advancement and the broader economy.

Jeong Hyun-do, a finance expert and co-founder of STIP, emphasized that the STIP IP Exchange has broken the limitations of traditional fractional investments, such as those in copyrights or real estate. He highlighted that unlike traditional assets, patents represent the only intangible asset that can be transformed into a tangible product, with potentially exponential value growth.

The STIP IP Exchange is also expected to play a key role in funding not only initial startups but also small-scale innovative ventures, thereby fueling the creation of a new IP trading ecosystem.

Resolve another R&D cost with only 'patent', the fruit of R&D heldHelping economic security by creating jobs and securing tax revenuesSynergy effect with IP exchange + media

The platform enforces a policy requiring individual patent holders who raise funds through the STIP IP Exchange to establish a corporate entity. This policy aims to contribute to economic revitalization by creating jobs and ensuring tax revenue while introducing a new paradigm for patent technology utilization.

STIP is preparing to integrate an IP media broadcasting network (similar to Bloomberg) with the IP Exchange, where IP experts will analyze patent technology trends, market potential, and future forecasts while providing real-time interviews with patent office heads from various countries.

Scheduled to open in August this year, STIP will initially offer services in six languages, including Korean, English, Chinese, and Japanese, with plans for further upgrades. The platform’s global reach and unique model are expected to attract a large user base, becoming a new model for IP trading. Moreover, because the fractional trading of patent technology value does not change the ownership of the patent itself, global patent holders are expected to participate actively.

Notably, STIP plans to use the Korean CBDC as the main currency for the IP Exchange once it is issued, further boosting foreign currency inflows.

In conclusion, the launch of the STIP IP Exchange is expected to accelerate patent technology monetization, providing new opportunities for patent companies and contributing to technological advancement and economic growth. By tokenizing and trading patent technology value through the IP Exchange, patent holders can secure funds and maximize the value of their patents, delivering a message of hope to many patent companies and positively impacting technological development and economic growth.

IP Media Group has received the Commissioner of the Korean Intellectual Property Office’s Award in 2021 for Innovation in Creativity and the Chairman of the National Intellectual Property Committee’s Award in 2023 for Blockchain Platform Innovation. The group has also filed two domestic patents related to blockchain-based crowdfunding and IP trading platforms, with additional applications pending in the U.S., China, and other countries.

Despite various technological approaches and efforts, the monetization of patent technology has faced numerous obstacles. Many companies struggle to secure the funds needed to commercialize their patents, hindering technological development. The STIP IP Exchange offers an innovative solution to this problem by allowing patent holders to tokenize the value of their patents and trade them like stocks, paving the way for new opportunities in patent monetization.

The STIP IP Exchange, which offers patent holders the opportunity to commercialize their technologies, could revolutionize South Korea's startup ecosystem and transform the venture fund market with its new financial product. The launch of the STIP IP Exchange could mark a significant event in positioning South Korea as a global leader in the intellectual property market.

Source: IPR Daily

Author: LEE SUNG-YONG