When patents become assets: a fund manager looks at patents

Hello. I am Byung-Geun Choi, CEO of RenaAi. I have spent the past ten-plus years working with assets. I managed global funds at Samsung Asset Management, and through roles in credit rating and at an unlisted-securities exchange I kept asking, in numbers, "what has value?" Stocks, bonds, real estate: I have priced almost everything.

These days there is one asset I find most interesting. Patents.

Many people think of a patent as a "technical document" or a "registration certificate." Through a fund manager's eyes, though, a patent is clearly a financial asset, and one with quite distinctive properties. Today I will explain, through five faces, what changes when you look at a patent as an "asset."

1The five faces of a patent, mapped to familiar financial assets

This one table holds the whole story. Let me unpack it row by row.

2Store of value: a patent is an "intangible vault"

Why are gold and real estate assets? Because they hold value over time. Patents are the same. The innovation an engineer builds overnight is, on its own, just an idea that can scatter. The moment it is locked into a right called a patent, it becomes a "store of value" that does not disappear over time. You cannot see it, but it is like a gold bar in the company vault.

3Value over time: a patent is a "bond with a maturity"

Bonds have a maturity. So do patents. The law sets a term of 20 years from the filing date (Article 88 of the Korean Patent Act).

So a patent's value moves over time. Early on, when commercialization is uncertain, its value is low. Once products sell in the market and licenses attach, its value rises. Just as a bond's price moves with interest rates and remaining maturity, a patent's value is set by "remaining term × cash flow generated."

4Licensing = dividends: a patent is a "cash-generating asset"

This is where it gets most attractive for investors.

Own a stock and you get dividends. Own a bond and you get interest. Own a patent and you get licensing royalties. Instead of selling the patent, you "lend" it out and receive cash every year. In other words, a patent is not an asset you sell once for a gain. It keeps producing income while you hold it, exactly like a dividend stock.

5Worth zero after 20 years: a patent is "melting ice"

But patents have one decisive feature that bonds do not. At maturity you do not get your principal back. The value converges to zero.

When the 20-year term ends, the patented technology passes into the public domain, free for anyone to use. At that moment its value as an exclusive right disappears. It is a depreciating asset, ice that melts with time.

6Bought and sold like stocks: a patent is a "securitizable asset"

Finally, patents have started to be split up and traded like equity.

Patent rights can be transferred, co-owned and pledged as collateral for loans (IP-backed finance). Beyond that, people are experimenting with bundling patents into IP funds, securitizing them into fractions sold to investors, and real-world asset tokenization (RWA).

Of course, they do not yet trade as freely as stocks. There are legal constraints too: disposing of a share in a jointly owned patent requires the consent of the other co-owners (Article 99 of the Korean Patent Act). But the direction is clear. Patents are becoming more and more of a "tradable asset."

7So how should patents be managed?

If so, patents should be managed and invested like any other asset.

• Valuation: do not leave them buried at cost on the balance sheet. Estimate their cash-flow value with royalty-based methods (relief-from-royalty) and DCF.
• Portfolio strategy: decide which patents to hold, license or sell the way you would design an asset allocation.
• Timing: keep an eye on the 20-year clock and plan monetization before the value melts.

Closing: one who values, one who protects

One caveat. All of this "asset" talk stands only on the backbone of the "right." However good a patent is, if its scope is weak or it collapses in a dispute, the asset turns into scrap paper overnight.

"Patents are now assets. And assets return value only to those who truly understand them."