Intellectual property no-brainer

There can be many interpretations of the meaning of creative and innovative economy. Economic systems and environments that recognize the value of intellectual property and intangible human assets might be the best practical interpretation. But without a legal system upholding the value of intellectual property, the economy can never become creative and grow.

The biggest difference between doing business in Korea and abroad is that innovative companies overseas are much more sensitive and protective of their intellectual property rights than Korean enterprises. They respect others’ intellectual property rights as much as they do their own.

They could not have been born with stricter ethics when it comes to appreciating the mental work and creations of others. They learned to do so because they could face stiff legal penalties if they broke the law. If they did it intentionally, the penalty is more severe.

South Korea’s registered patents totaled 210,000 in 2014, the fourth-highest level in the world. Korea ranks seventh in trademark registration and third in proprietary design. Korea is fifth with 12,386 patents under the international patent system Patent Cooperation Treaty. Korea is among the world’s top five intellectual property powerhouses.

In contrast to its stellar record in creative and inventive achievements, the country does a poor job protecting them. In an intellectual property protection ranking by the World Economic Forum, Korea is 68th out of 144 countries. On the scale of the Switzerland-based International Institute for Management Development, Korea came in 41st out of 60. Korea has been lagging behind in administrative protection of intellectual property despite its economic scale and competitiveness standard.

Disregard for individual or corporate inventions and innovation that hampers growth in technology venture enterprises stems from lenient court decisions on criminal violations and low damage awards. Even when caught using proprietary assets without consent, one can get away with paying a light fine. It is why people do not bother to ask themselves if their actions are tantamount to stealing when they use other people’s proprietary assets. The patent system, therefore, provides little protection.

Of the lawsuits over patent rights filed from 2000-9, more than 50 percent were awarded damages of less than 50 million won ($45,749) in the first trial. Damage coverage for an individual amounts to just 10 percent of what he or she has sought. Even if one wins the lawsuit, the damages received are not enough to cover the losses.

In the case of the United States, the median damages for patent infringement cases were $4.9 million from 2007-12. The median for Korean infringement cases from 2009-13 was 59 million won. Even considering the difference in economic scale, damages for patent infringements are utterly too low.

In the early industrialization period when Korean companies and individuals had to chase the work and business models of advanced countries, lenient criminal rulings and fines might have helped. But if the courts remain backward on intellectual property protection, the Korean habitat cannot continue to produce competitive and innovative new technologies and enterprises. The goal of turning the traditional manufacturing economy into the so-called creative one will remain far-fetched.

Courts must be strict in their rulings on intellectual property litigations . There should be jail terms, fines and damages sufficient enough to lead to a social norm that appreciate and respects creations. At the same time, it would help raise Korea’s credibility as a country that has the will to protect intangible assets.

Translation by the Korea JoongAng Daily staff

JoongAng Ilbo, May 12, Page B8

*The author is chairman of the Korea Venture Business Association and CEO of Solid.

by Chung Joon