[Patent Talk] Patent Acquisition Disclosures and Stock Price Movements

This is a column contributed by our patent attorney Taeyoung Lee to Etoday on July 6, 2021. It discusses patent acquisition disclosures and corporate stock price movements.

[Patent Talk] Patent Acquisition Disclosures and Stock Price Movements

With low interest rates and increased liquidity, the Korean stock market keeps growing. In March last year, the KOSPI plunged to 1439 in the COVID-19 crisis, but it is now on the verge of breaking 3300, and the KOSDAQ has also broken 1000. Particularly notable is that, starting with last year's "Donghak Ants Movement" of retail investors, the share of individual investors has risen sharply and, unlike in the past, there are more savvy retail investors. However, the stock market is inherently volatile, so the share prices of individual companies often surge or plunge in the short term on positive news about the company.

Patent acquisition disclosures are sometimes treated as short-term positive news. However, there are also many cases where the share price falls despite a patent acquisition disclosure, so there appears to be no correlation between such disclosures and share price movements. Investors should therefore be careful, as buying shares in anticipation of a price rise after seeing a patent acquisition disclosure can lead to losses.

A patent acquisition disclosure is a voluntary disclosure, not a mandatory one, so a company can decide on its own whether to disclose a patent it has acquired. In practice, large corporations that acquire hundreds or thousands of patents a year rarely make such disclosures, whereas small and mid-sized companies that acquire a few or a few dozen patents a year often disclose each registration.

In my personal view, except in special cases, patent acquisition disclosures should not be regarded as a factor with a major effect on share prices. The value of a patent is determined by comprehensively considering many factors, such as its scope of rights, whether it is or can be applied to products, the likelihood of invalidation and the size of the market, so it is unreasonable to regard the acquisition of an individual patent itself as a major increase in corporate value.

Nevertheless, a company acquiring patents does mean that its value may rise in the future. Rather than individual patent acquisition disclosures, investors should look at the company's overall patent ....

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LNB IP Law Firm