What is the difference between patents and know-how, and what are the pros and cons of each?

Patents protect both private and public interests by granting exclusive rights to inventions, but there are patent monsters out there who abuse them. Know-how can be protected without disclosure, but it’s harder to get legal protection in case of infringement. There are advantages and disadvantages to both patents and know-how, so it’s up to the inventor to choose.

 

As technology advances, the value of intellectual property rights has increased day by day, and patents have the power to make the difference between life and death for companies. According to Article 1 of the Patent Act, the purpose of patent law is to “promote the progress of technology by protecting and encouraging inventions and promoting their utilization, thereby contributing to the development of industry. A closer look at this article reveals that the purpose of patent law is divided into the private purpose of protecting inventions and the public purpose of promoting technological progress and industrial development by promoting the utilization of inventions. At first glance, it may seem that patents have only a private purpose, as registration grants an exclusive right to prevent others from using the inventor’s invention. However, as the law states, patents are actually very much in the public interest. Consider the conditions for receiving a patent.
When an inventor creates a technology, there are two ways to protect it. One is to register it as a patent, and the other is to protect it as know-how. Know-how is the use of technology as a secret recipe without disclosing it to others, the most common example being the recipe for Coca-Cola. The main difference between patents and know-how is whether it is disclosed or protected as a right. Know-how has the advantage of being able to use technology without disclosing it, but the disadvantage is that it is not protected as a right in case of infringement. The question then becomes whether it is better to protect the technology with a patent or know-how, and there is no definitive answer to this question, and it is a matter of choice for the inventor. However, from a public interest perspective, the answer is patents. Based on the previous discussion, we can say that the public interest aspect of patents comes from the difference with know-how: disclosure. Even if a new technology is invented, if it is not disclosed, others will not be able to use it, and the creation of more advanced technologies will be less likely than if the technology is disclosed, so the public interest of patents comes from the disclosure of the technology. In other words, a patent can be seen as a right granted in exchange for disclosing a technology.
So, what kind of inventions can be patented? According to Article 2(1) of the Patent Act, “an invention is a technical idea that utilizes the laws of nature to create something new. In simple terms, this means that advanced technologies that follow the laws of nature can be patented. Here, we need to focus on the word “sophisticated” as it applies to general technology. If you look up ‘sophisticated’ in the dictionary, it means a very high level or degree, so it can be inferred that the technology must be advanced or developed. Article 29(2) of the Patent Act clarifies this by stating, “If an invention can be easily invented by a person having ordinary knowledge in the field of technology to which the invention belongs before filing a patent application, the invention cannot be registered.” Therefore, an invention that does not advance from an existing invention cannot be registered. Considering that patent rights are granted as a reward for disclosure and that the purpose of patents is to promote technological progress and contribute to industrial development, it is a natural fact that only inventions that are inventive can be the subject of patents, as it is difficult to expect any technological progress or industrial development from the disclosure of inventions that do not advance from existing inventions.
As such, a patent can be said to be a right obtained in exchange for the disclosure of an inventive invention, but there is a prerequisite to consider before judging inventiveness. The prerequisite is that the invention is new and does not exist before. Even if the technology to be patented is advanced compared to other technologies, it is self-evident that the patent right cannot be obtained in exchange for disclosure if it is only an existing technology that has already been disclosed. The Patent Act clarifies this in Article 29(1), which states that technology that is publicly available cannot be registered as a patent. To summarize, only new and advanced inventions can be registered as patents in exchange for disclosure, and patents can promote technological progress and industrial development because inventors can protect their inventions with patents while others can use the disclosed inventions.
Patents have been fulfilling their functions as industries have developed, enabling the systematic development of technology. However, just as there are loopholes in any law or system, there are groups that have begun to exploit patent loopholes to maximize their profits. Patent rights can be held even if the inventor does not directly practice the invention. A patent troll is a negative term for a company that takes advantage of this and buys patent rights from rights holders and collects royalties without practicing the patented invention. They seek out companies that implement their patented technology and demand high royalties through negotiations or lawsuits for patent infringement. Patent trolls are difficult to prosecute legally because they are exercising their rights as patent holders, but they are contrary to the purpose of the patent system in that they hinder the use of patented inventions and increase barriers to entry into technology.
As such, patent monsters have a negative aspect that hinders industrial development, but they cannot be condemned. Recently, NPEs (Non-Practicing Entities) have emerged as a term to describe patent monsters, which emphasizes the purely functional aspect of patent monsters as patent management companies that not only facilitate access to patents for small and medium-sized enterprises that previously had difficulty accessing patents, but also play a role in facilitating patent transactions by helping inventors receive fair compensation through patent purchases. As such, patent monsters or NPEs can be seen as both benign and dysfunctional. Therefore, it is important to establish a system or policy that emphasizes their positive aspects, and there are attempts to establish a patent fund at the public-private level to seek appropriate compensation and protection for technology.
The public interest aspects of patents have been examined, and it is clear that patents are not just a system for protecting the rights of individual inventors. It is a system that promotes technological advancement and contributes to industrial development by inducing the disclosure of advanced technologies by protecting the rights of individual inventors and rewarding them fairly. Although there are patent monsters that use patents as a weapon to attack companies or prevent the use of technology, which can be seen as contrary to the purpose of the patent system, it can be seen as a transitional aspect in the process of developing patents as a type of intellectual property right that is subject to trade as a definite right, such as tangible property rights. Therefore, it is desirable for the patent system to develop in a way that appropriately balances the private interest of protecting the rights of inventors with the public interest of technological advancement and industrial development in the overall framework of the purpose of the patent system, and to solve problems that arise in the interim. This process will require not only gradual improvement of laws and systems, but also a shift in people’s perception that intangible assets such as patents should be protected as legitimate rights. This is because the patent system can only be properly established in a society and culture where patents are rightfully recognized as a right.