Special Lecture for KIPA

Role and Implication of IP in the Economic Development in Korea

Wednesday, June 9, 2010 Yonsei Univ. Chaho JUNG Prof., School of Law SungKyunKwan University

Introduction
The fields where it seems that Korea can NOT even be close to the U.S.A. within coming 50 years
Music & Movie Hollywood v. Chungmuro Pharmacy Pfizer v. Dong-A Airplane Boeing v. Korea Aerospace Indus. Education Harvard v. Seoul Natl Univ. Legal Infrastructure Westlaw v. Law&B American football No Korean professional team

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History of Patent Law

the very first written patent law in Italy in 1474
Success of industry based, at least in part, on the patent system

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History of Patent Law

Statute of Monopolies in England in 1623
Driving force for the Industry Revolution

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History of Patent Law

Italy England U.S.A.
There are no undisputable evidence which shows that the patent system was a direct cause of economic development somebody: There is a direct correlation between innovation, IP protection & economic performance Three above countries operated strong patent systems and eventually achieved unprecedented economic developments Three above countries were all advanced countries The patent system is effective only in advanced countries?

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Experiences of Korea
In 1970s in Korea, no copyright to foreign authors, esp. musicians to protect local music industry
Results?

In 1970s in Korea, a quota system to protect local movie industry under which a movie maker could import 1 foreign movie after making 5 local movies
Results?

In 1980s in Korea, a quota system to protect local electronic industry, one of which was SAMSUNG, under which substantially limited amount of importations of Japanese products, many of which were SONY products
Results?

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Experiences of Korea
Section 1 of the Korea Patent Act
To promote the (countrys) industry So proper patent system shall be designed considering current local industry

History of the Korean Patent Act

History of stronger patent rights which are somewhat ahead of the economic situations Singed the Korea-US FTA Singed the Korea-EU FTA Planning the Korea-China FTA

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Experiences of Korea
To stay or to proceed?

Genuine Item with Intellectual Property, such as Technology, Trademark and Design $2,000

Counterfeiting Item without IP $20

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Experiences of Korea
Increasing Value of Knowledge
Value of Knowledge Gold/g = U$17 Anti-cancer Interferon/g = U$5,000 EPO/g = U$670,000
Erythropoietin (EPO): A hormone produced by the kidney that promotes the formation of red blood cells in the bone marrow.

Portion of Intangible Property in a Companys Whole Market Value 38%(82) 68%(92) 85%(98) Brookings Institute (S&P 500 Companies) 66% to 75% 3 Corporate Accountability 144-48 Produced Value Per Worker, Per Year in the USA from 2000 to 2004 $181,000 in IP-intensive companies $106,000 in non-IP intensive companies
Robert Shapiro & Nam Pham, Economic Effects of Intellectual PropertyIntensive Manufacturing
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Experiences of Korea
To stay or to proceed?

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Experiences of Korea
Active patent filings

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Experiences of Korea
Active patent filings

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IP Activities of Korean SMEs

IP management is more important to SMEs than to big companies
Korean SMEs have been more active in IP activities, such as R&D expenditures, patent filings 50% more patent filings per the same revenue

Government assistance for Korean SMEs

Free Patent Management Services for Small and Medium-Sized Enterprises Small and Medium-Sized Enterprises' IPR Acquisition Campaign Fee Reductions for Small and Medium-sized Enterprises Free Education on Patent Information Systems to Patent Applicants Ongoing Programs of Assistance for Facilitating Technology Transfer

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Future of Korea
Strong belief for a stronger patent system
Strong patent system is essential for economic development Special situation between two giant countries The IP Basic Act in 2010

A long way to go
Bank of Korea 2000 2001 2002 2003 2004 2005 2006

Unit: million US$ Growth Rate 00 to 06

2012?

Royalty Income Royalty Expenditu re

688

924

835

1311

1861

1908

2011

292%

5872

3221

3053

3002

3570

4446

4561

4487

139%

6237

Deficit

2533

2129

2167

2259

2585

2653

2476

98%

365

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Future of Korea
Future of Korea depends on how much IP will be created in Korea
Inventions are created by inventors Incentive to inventors is essential for the patent system Employee invention shall be compensated by the Invention Promotion Act How much compensations?
A meal or a drink? A makeup or a golf club? A car or an apartment? Bigger compensation, stronger incentive

A graduate who majored a science or technology must be treated in accordance with his/her achievement Many smart students going to medical schools, law schools, etc. Smart students must research and create valuable inventions, for which attorneys are being hired

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Future of Korea
Some 25 years ago, it was understood that Korea can NOT even be close to the U.S.A. in coming 50 years in the following fields:
Semiconductor Automobile Nuclear Power Plant Baseball

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Future of Korea
After 25 to 50 years, what may happen?
Music & Movie: Hollywood v. Chungmuro Pharmacy: Pfizer v. Dong-A Airplane: Boeing v. Korea Aerospace Indus. Education: Harvard v. Seoul Natl Univ. Legal Infrastructure: Westlaw v. Law&B American football

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Thank you for your attention!

Chaho JUNG Prof., School of Law SungKyunKwan University

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