IP, not patents

Yi Jung-jae
The author is a columnist at the JoongAng Ilbo.

I met Intellectual Property Office Commissioner Park Won-joo a couple of times, but we were not particularly close. Until he visited me a month ago and made an impassionate speech, I had no special interest in patents, other than common sense understanding. He educated me for nearly two hours. In short, “patents are the keys to the victory in the economic war between Korea and Japan,” and “the secret plan to complete Korea’s autogenous industrial ecosystem.” I was convinced and promised him that I would write a piece on the vision of patent power within a month. After delaying due to laziness and a lack of knowledge, this is my late homework.

First, patents enable true co-existence between large corporations and small businesses. The nature of business is to make money. Partnerships going against this nature will fail. It is not the fault of the companies. The Korean industry’s uneven ecosystem makes small businesses rely on large corporations, and large companies can always abandon small businesses. Patents can change this. Germany’s hidden champions have five times more patents — 31 cases per 1,000 — than large corporations. Patents serve as a shield from rivals and large companies. Hidden champions are strong in the global market, leading 25 percent of Germany’s export. Mutual dependency between large and small businesses are created naturally. This is the case for Japan, which Korea is now fighting.

Second, Korea can become a country that cannot be shaken. Last year, Top Engineering became the leader in LCD glass cutting equipment in the world. Starting with the glass cutting system patent in 2007, the company has 619 patents domestically and internationally. When Japan’s Hitachi, which dominated the global market in 2005, attacked Top Engineering for violating patents, the company defended with its own patents and won every case. It has been relentlessly growing. The company’s 2006 revenue was 41.1 billion won ($34 million), and last year, it grew by 22 times to 917.6 billion won. When more companies become unshakable, the country, also, cannot be shaken.

Third, Korea can become the main player of the fourth industrial revolution. Korea has the fourth most patents in the world, and per-person it is the top. Korea is one of the top five intellectual property leaders in the world with the United States, China, Japan and Europe. When values of patents are acknowledged and protected, Korea can lead the fourth industrial revolution. In the United States, where world-class patent protection system is in place, companies with patents are 35 times more likely to succeed through IPOs or successful sales than companies without patents.

Park said that proper designation is the key, and terms need to be revised. “Aside from Japan, South and North Korea are the only countries using the term ‘patent.’ It should be rephrased as invention rights or innovation rights recognizing the greater concept of intellectual property. Then, social awareness on invention and innovation will change and add value. When we change the word, attitude changes, and then life will change.”

Most of all, properly protecting invention rights is essential. In July, the patent infringement compensation system of paying three times the damage took effect, but it is not enough. There should be compensation for punitive damage that includes not only the damage of the patent holder but also the gains that the company, especially large corporations, enjoyed from stealing the patent. Then, the amount of compensation will be nine times larger on average. Only then, large corporations cannot think that it would be a gain to steal even if they would need to pay back later. The United States, Germany and China adopted such a compensation system.

Korean industry may have lost direction because of fast growth, because we skipped the basics. We may have missed the important task while chasing urgent ones first. That’s why the Korean economy is swayed by Japan. I understood Park’s argument that countries with strong patents have a solid foundation. He could be working so hard for personal success. But no matter what his true intention is, if his passion helps the country, that’s enough. The basics of civil service is working hard for the country. The basics of the media is to publicize and encourage such efforts.

JoongAng Ilbo, Aug. 22, Page 30