[Viewpoint] Protecting intellectual properties

In the recently aired SBS television series “Fashion King,” protagonist Kang Yeong-geol produces a dress based on a design by Jeong Jae-hyeok, a director at a major fashion company, and sells it at the Dongdaemun Market. Kang goes on to register the design first, turning Jeong Jae-hyeok’s design a “knockoff” and incurring a loss of over 5 billion won.

This is not just possible in the television drama. In fact, a company developed a two-wheeled “S-Board” and had nearly 10 billion won in revenue until a Chinese knockoff model was introduced to the market at a far cheaper price. The company’s revenue plummeted to 100,000 million won, and most of the employees lost their jobs.

The damage of the fake product is not limited to the company alone. Last year, the knockoff goods cracked downed last year totaled 1.198 trillion won, and the actual loss is likely to be bigger. It is only natural that the spread of the cheap imitations lead to loss of jobs.

According to the “Intellectual Property and the U.S. Economy,” a report published by the U.S. Department of Commerce in March, the intellectual property-driven industries created 40 million jobs, or 27.7 percent of the total employment of the United States, in 2010. It is expected that Washington will aggressively promote policies to protect its intellectual properties to boost job creation.

Korea’s patent applications are fourth largest in the world, and international patent applications are fifth largest in the world. Also, Korea had registered 1 million patents in 62 years, in the shortest time in the world. Moreover, the Korean Intellectual Property Office is a member of the IP5, an international group of five biggest patent offices of the United States, Japan, the European Union, China and Korea, leading the trend of the global intellectual property right.

Despite the international prestige, Korea’s intellectual property protection level was ranked 31st place among 59 countries according to a survey by the Institute for Management and Development. Hong Kong and Taiwan are ranked among the top 20 countries.

In order to enhance the protection of intellectual property right, the government has been cracking down fake goods and working to promote awareness. Korea is the only country in the world to give investigative police authority to the Intellectual Property Office to crackdown knockoff goods. However, the counterfeit goods market is not shirking despite the efforts.

According to Havocscope.com, a website specializing in black market, the counterfeit market is growing 20 to 30 percent every year, and the global market size is 663.5 billion dollars. The Korean counterfeit market is considered 10th largest in the world, at about 14.2 billion dollars.

The market is constantly growing regardless of the government’s crackdown efforts because the consumers are buying the products, fully knowing that they are knockoffs. A research agency revealed that 84.5 percent of the consumers were aware that the goods were not authentic. Evidently, there is not a consumer culture and awareness to only buy original and legal goods.

When consumers purchase counterfeit goods, companies are discouraged to invest on or develop trademarks and original products. Consequently, the sales would suffer. As a result, companies cannot create new jobs, and job-seekers are deprived of employment opportunities.

Counterfeit goods may seem to provide cheap products for the consumers and add jobs to underground manufacturers. But they, in fact, expand the black market and undermine sustainable economic growth. China, which has been branded the “global factory of counterfeit,” has strengthened control on counterfeit goods since 2008.

Moreover, the oversupply of counterfeit goods hurts the national brand and negatively affects foreign investment on the country. The counterfeit market is a serious obstacle for Korea’s advancement to a developed country. According to the Patent Office of Italy, counterfeit goods result in an economic damage of 5.3 billion euros every year and remove 130,000 jobs. You may think carrying a fake handbag won’t hurt the economy, but the consequent damage is far serious than you think.

Driving out counterfeit goods is not a challenge for involved companies alone. As Korea pursues to become an intellectual knowledge power, it is desperately need for the consumers to change the mindset and proactively protect intellectual properties in order to save our own jobs.

Translation by the Korea JoongAng Daily staff.

*The author is the commissioner of the Korean Intellectual Property Office (KIPO).
By Kim Ho-won