LG Electronics to Share IP Profits with Employees
When LG Electronics (066570.KS) decided to end its smartphone business last year it offered to license its mobile patent portfolio to outside customers to generate income as it can no longer gain a competitive advantage from the IP itself. Since 1976 LGE has made 24,677 patent applications in the US alone and has been granted 39,775 patents, with 55.3% of applications and 53.8% of approved patents filed and granted over the last 10 years and on the WIPO (World Intellectual Property Organization) database, LGE shows over 264,769 filings that reference the company name.
While this is a commendable indication as to the company’s R&D efforts, LGE has a reputation for not compensating those employees who were instrumental in creating that IP. That seems to be changing, at least to a degree, as the company is offering compensation to current and former employees for their contribution to license or royalty generating IP for the first time, and indicated that it generated 800b won (~$615m) in profit in the 1st quarter of this year. Compensation ranges from a few million won (1m won = $769 US) to millions of dollars, although the company has not revealed how it arrived at such figures to employees.
While LGE is involved in many IP related lawsuits, particularly with competitors, it is also involved in ~50 lawsuits with employees over compensation for IP development, which seems to lessen the altruistic tone to the LGE offer, but compensation is compensation, and settlements of those suits are the likely goal of the compensation offers, as legal costs and an eventual compensatory payout are the likely result of many of those lawsuits, it is probably a wise decision to make such offers, especially if you don’t have to disclose how the compensation was determined, and will likely avoid new suits going forward under the theory that if they get something now they will be less likely to sue in the future…
While this is a commendable indication as to the company’s R&D efforts, LGE has a reputation for not compensating those employees who were instrumental in creating that IP. That seems to be changing, at least to a degree, as the company is offering compensation to current and former employees for their contribution to license or royalty generating IP for the first time, and indicated that it generated 800b won (~$615m) in profit in the 1st quarter of this year. Compensation ranges from a few million won (1m won = $769 US) to millions of dollars, although the company has not revealed how it arrived at such figures to employees.
While LGE is involved in many IP related lawsuits, particularly with competitors, it is also involved in ~50 lawsuits with employees over compensation for IP development, which seems to lessen the altruistic tone to the LGE offer, but compensation is compensation, and settlements of those suits are the likely goal of the compensation offers, as legal costs and an eventual compensatory payout are the likely result of many of those lawsuits, it is probably a wise decision to make such offers, especially if you don’t have to disclose how the compensation was determined, and will likely avoid new suits going forward under the theory that if they get something now they will be less likely to sue in the future…
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