The Uncomfortable Truth on Patent Attorney's Net Income

(Electronics Newspaper on July 27, 2023)

                                                                                                                         Myung Shin Kim, Past President

                                                                                                                         The Korean Patent Attorneys Association

A few years ago, the National Tax Service (NTS) announced that patent attorneys had the highest yearly income among professional qualifiers. The net income is the remaining amount after deducting expenditures from the total revenues.

However, the NTS confused total revenues and net incomes by dividing total revenues by the number of Korean Patent Attorneys Association (KPAA) members.

Therefore, let us review the reality as it is now in detail. To investigate the total revenues of professional qualifiers in 2022, I visited the portal site of national tax statistics of the NTS and found the item in the VAT column. So, I learned that the total annual revenues of each qualifier are as follows;

Architects about U.S.$8,722 million ; Lawyers about U.S.$6,297 million ; Tax accountants about U.S.$5,135 million ; Certified public accountants about U.S.$4,342 million ; Patent attorneys about U.S.$933 million ;  Certified public appraisers about U.S.$919 million.

Thus, we can calculate the yearly personal revenues of each professional qualifier by dividing the number of members from the total annual revenues of each.

As such, the personal yearly revenues of architects are about U.S.$655,800 on average by dividing the total annual revenues by the number (13,300) of members as of the year-end of 2022. The personal yearly revenues of lawyers are about US$225,000 on average by dividing the total annual revenues by the number (28,000)of members.

Those of tax accountants, with 15,500 members, are about U.S.$331,000. Those of certified public accountants, with 16,866 members, are about U.S.$257,500. Those of patent attorneys, with 3,531 members (arrived at by taking the total number 4,083, but subtracting those who also qualify as lawyers 522) are about U.S.$264,000. Those of certified public appraisals, with 5,500 members, are about U.S.$167,000.

The COVID-19 pandemic, since 2020, has significantly decreased the economy, trade, sightseeing, and R&D investment business. But fortunately, the filing number of patent applications increased year by year.

Anyway, the order of personal yearly revenues of professional qualifiers is architect, tax accountant, patent attorney, certified public accountant, lawyer, and certified public appraisal.

According to the above statistics, the personal yearly revenues of patent attorneys are higher than certified public accountants and lawyers. However, if the expenditures of patent attorneys are deducted from total revenues, then net incomes will be much lower than certified public accountants and lawyers on average.

Unlike other professional qualifiers, generally, patent attorneys employ other patent attorneys having various technical backgrounds and staff for translations of patent specifications in foreign languages (English, Japanese, Chinese, German, French, etc.), reports in foreign languages, technical drawings, prior technical searches and trademark searches and on-line works because the Korea Intellectual Property Office (KIPO) has adopted paperless administration since 1998.

In addition, the KIPO operating the paperless administration has processed electronically statistics of all cases filed by patent attorneys, and the KIPO has reported these statistics to the NTS. So, the omission of issues or evasion of revenues is fundamentally blocked.

Moreover, most patent attorneys' customers are corporations and tax invoices are issued. In foreign cases, patent attorneys must exchange the money remitted to Korea at domestic banks under the Foreign Exchange Transaction Act. Therefore, the contents of the revenues of patent attorneys are very transparent.

Additionally, the NTS statistics show that patent attorneys must pay more value-added tax (VAT) based on high revenues. However, this needs to be clarified regarding the practice of the current VAT system.

When filing a patent application from a foreign country to Korea or from Korea to a foreign country, the payment of VAT is exempted by the principle of reciprocity under the General Agreement on Tariffs and Trade.

In 2022, the total number of applications filed with the KIPO under patents, utility models, industrial designs, and trademarks was 556,436 cases, whereas that by foreigners was 90,207 cases (about 16%). And patent attorneys have contributed to Korea's foreign currency balance by earning a lot of foreign currency.

The incorrect statistics may be helpful when choosing a marriage partner, as it can be socially boasted that a patent attorney is the highest-income job for prospective grooms and brides. However, inaccurate statistics must be corrected, revealing the uncomfortable truth on the patent attorney's net income.