[Patent Talk] LG Electronics' Exit from the Mobile Phone Business and the Meaning of Keeping Patents In-House

This column by patent attorney Taeyoung Lee of our firm was published in Etoday on April 13, 2021. It discusses LG Electronics' decision to exit the mobile phone business.

[Patent Talk] LG Electronics' Exit from the Mobile Phone Business and the Meaning of Keeping Patents In-House

LG Electronics announced that its board of directors decided on the 5th to close its mobile phone business as of July 31. LG Electronics was once a leading mobile phone maker with the "Chocolate Phone" and the "Prada Phone," but it failed to respond quickly to the market shift to smartphones, lost market share, and finally decided to exit the business after 23 consecutive quarters of operating losses.

LG Electronics did not decide to exit from the outset. It initially considered selling its MC (Mobile Communications) division, but the sale reportedly fell through because potential buyers wanted to acquire the entire division including its patents, while LG Electronics wanted to sell everything except the patents. This is understandable: LG Electronics reportedly holds about 24,000 telecommunications-related standard essential patents, and it would have been difficult to give them up as it pursues future businesses such as AI, robotics and automotive components.

As this shows, intangible assets such as patents account for an ever-growing share of corporate value. One could almost coin a new proverb: "A tiger leaves its skin when it dies; a company leaves its patents when it fails."

In fact, the Nokia sale had already shown the importance of intellectual property. Nokia, which held about 40% of the global mobile phone market in 2008, declined sharply after failing to transition to smartphones and sold its mobile phone business to Microsoft in 2013. What matters is that Nokia sold everything except its patents. With the proceeds, Nokia...

(Please click the link below to read the full column.)

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