Proposal for the Policy on the Intellectual Property Framework Act

As part of the national survival strategy, I would like to make the following policy proposals regarding operating the Intellectual Property Framework Act (IPFA) I led and enacted more than 20 years ago. 

I respectfully request that the Chief Secretary to the President review my proposals regarding intellectual property policies for the future of our country.

1. The Importance of Intellectual Property Policy

(1) Industrial Property including patents, industrial designs, trademarks, trade names, domain names, semiconductor chip designs, trade secrets, technical know-how, fonts, new plant varieties, microorganism utilization technology, franchising, e-commerce methods, blockchain technology, publicity rights, and Copyrights including computer programs, characters, music, plays, broadcasting, literary works, artworks, graphic works, architecture, photographs, movies, dramas, databases, contents, artificial intelligence, and trade dresses, etc., are increasingly crucial in the name of the Intellectual Property Rights for all human spiritual creations

(2) In the era of the 4th industrial revolution, as analog technology and digital technology converge, products and contents that combine science, technology, culture, and art are flooding, and COVID-19 vaccine technology, technological hegemony, and strategic assets are secured, artificial intelligence, big data, metaverse, virtual currency, driverless cars, drones, ChatGPT, and robots have already penetrated deeply into our lives.

(3) In 1987, Korean semiconductor companies paid a whopping $190 million in damages for patent infringement of the U.S. Texas Instruments.

The U.S.-based Qualcomm company, which has more than 1,700 patents in Korea for mobile phones, received about 5 trillion won in royalties from Korean mobile phone companies over the past decade, and the Walt Disney Company earned $18.7 billion worldwide in 1996 alone as Mickey Mouse.

(4) Saehan Information System in Korea developed the MP3 player first around the world in 1997 and acquired a Korean patent in 2001. However, the patent was transferred to IRIVER in the United States in 2004 due to poor management. 

Meanwhile, Apple released the MP3 player IPOD in 2001, competing with IRIVER's products in the global market. 

Looking back, if a big Korean company had bought Saehan Information System's MP3 player patent and worked hard in sales during this period, it would have dominated the global music market.

(5) It is easy to see how important intellectual property is if you look at the mobile phone patent infringement lawsuits in which Samsung and Apple have put their luck on the line and spent a lot of litigation costs around the world.

(6)  According to statistics on the assets of 500 companies listed on the New York Stock Exchange, the average share of intangible assets, including intellectual property, was around 10% in the 1970s. However, the average share of intangible assets reached more than 90% in 2022. 

According to the World Intellectual Property Organization (WIPO), a UN-affiliated organization, the value of intellectual property has increased tenfold over the past 25 years.

(7) Intellectual property is a considerable part of the contents of the Korea-U.S. Free Trade Agreement signed in January 2007 and the Korea-EU Free Trade Agreement signed in October 2010.

(8) Former Prime Minister Nak-Yeon Lee, former Prime Minister Sye-Kyun Chung, former Chairman Jong-Yong Yoon, and Professor Sang-Jo Jeong, who served as the Co-Chairs of the National Intellectual Property Commission (NIPC) have all suggested that the government must integrate the patent and trademark business of the Korean Intellectual Property Office and the copyright business of the Ministry of Culture, Sports and Tourism to a new the Intellectual Property Office to create a policy synergy effect, through the revision of the Government Organization Act.

(9) All industrial property and copyright organizations gathered in October 2020 and organized the Federation of Intellectual Property Societies (FIPS), like the Korean Federation of Science and Technology Societies and the Korean Federation of Arts and Culture Organizations. The establishment of the FIPS was born out of a practical need to set up intellectual property policies synthetically.

2. International Environment on Intellectual Property Policy

(1) The U.N. established the World Intellectual Property Organization (WIPO) in 1970, which handles industrial property rights and copyrights together. As of 2023, 193 countries were members of the WIPO, and Korea joined in 1979.

(2) In 2020, the International Management and Development Institute in Swiss reported the assessment of intellectual property policy enforcement in 63 countries worldwide. Korea ranked second in R&D investment to gross domestic product and fourth in patent applications, but the government's policy enforcement efficiency was 34th.

(3) In 2008, the United States enforced the Prioritizing Resources and Organization for Intellectual Property Act of 2008, establishing an Intellectual Property Enforcement Coordinator system under the President. The minister-level Intellectual Property Enforcement Coordinator reports directly to the President on all intellectual property policies.

(4) When Japan enforced the Intellectual Property Framework Act in 2002, the Prime Minister managed as the head of the Intellectual Property Strategy Headquarters and directly controlled the intellectual property policies of all administrative Ministries. As a result of their efforts, Japan runs the Intellectual Property High Court in Tokyo.

(5) The European Union has operated the European Patent Office since 1977, and the 27 member countries have mainly run the Unified Patent Court since June 2023.

(6) The Intellectual Property Office operates in the U.K., Switzerland, Belgium, Canada, Luxembourg, Thailand, and Russia. It handles industrial property, including patents, trademarks, and copyrights. France stipulates industrial property rights and copyrights in a single Act.

(7) China established the National Intellectual Property Strategy Committee (NIPSC) in 2008, and 23 Ministries of the NIPSC under the State Council are establishing national intellectual property strategies.

3. History for Enacting the Intellectual Property Framework Act

(1) I have worked as a patent attorney since 1972. I have dreamed that Korea, which has a large population in a small country without natural resources, will become a powerhouse in intellectual property by establishing a survival strategy with brain assets.

(2) In 2005, I formed an organization called the Intellectual Property Forum (IPF), which led the campaign to enact the Intellectual Property Framework Act (IPFA) with the approval of a juristic entity by the National Assembly Secretariat in 2006. 

(3) In November 2009, 102 lawmakers of the National Assembly submitted the bill ( proposed by Rep. Jong-Hyuk Lee )for the IPFA to the National Assembly.

(4) In August 2010, 13 government Ministries jointly worked to enact a bill for the IPFA and submitted a bill to the National Assembly. 

(5) Eventually, the Political Affairs Committee of the National Assembly created an independent bill for the IPFA by adding the congressional bill to the government bill, which passed on April 20, 2011. The National Assembly's plenary session passed this bill on April 29, 2011, and it took effect on July 20, 2011.

(6) Under this Act, the National Intellectual Property Commission (NIPC) was established, and this Commission has two Co-chairs, the Prime Minister and a civilian, and the members of the NIPC were comprised of civilian experts in this field no more than 40 members, including Ministers and Commissioners from 24 central administrative organizations, including the Ministry of Planning and Finance, the Ministry of Education, the Ministry of Science, Technology, Information and Communication (MSTIC), the Ministry of Unification, the Ministry of Justice, the Ministry of Interior and Safety, the Ministry of Culture, Sports and Tourism, the Ministry of Agriculture, Food and Rural Affairs, the Ministry of Industry, Trade and Energy, the Ministry of Health and Welfare, the Ministry of Environment, the Ministry of Land, Infrastructure and Transport, the Ministry of Maritime Affairs and Fisheries, the Ministry of Small and Medium Venture Enterprises, the National Intellegence Service, the Office for Government Policy Coordination, the Korea Communications Commission, the Fair Trade Commission, the Financial Services Commission, the Korea Customs Service, the Cultural Heritage Administration, the Korean Intellectual Property Office, and the Korea Meteorological Administration.

4. Result of Enforcement of the Intellectual Property Framework Act

(1) The IPFA states that the NIPC shall be established under the President and that the Intellectual Property Strategy Planning Office (IPSPO) should support its business.

(2) So far, the government has established three five-year master plans for intellectual property policies and reports the results to the National Assembly every year.

(3) The judiciary concentrated the first trial of the patent infringement lawsuit from each district court across the country to six district courts in which the high courts are located, and the appeal suits were made to the Patent Court, drastically shortening the litigation period.

(4) Lawmakers of the ruling and opposition parties in the National Assembly formed the World Patent Hub National Promotion Committee. They carried out many legislative activities, and the IPFA designated September 4 as Intellectual Property Day every year.

(5) To attract international patent litigation cases to Korea, the judiciary amended the Court Organization Act to allow arguments in English if the parties to the patent infringement litigation case agree.

(6) In 2023, for the first time, the number of collateral loans, investments, and guarantees for intellectual property reached 9.61 trillion won. The financial institutions established Intellectual Property Evaluation and Management Centers to evaluate intellectual property's value and revitalize intellectual property finance.

(7) Korea ranks fourth in the world in the number of domestic and international patent applications and third in the number of standard technologies recognized by the world's top five international organizations for standardization.

(8) In 2023, Korea's intellectual property trade balance saw, for the first time, a surplus of $180 million because it was still in the red in the industrial property field, including patent rights and trademark rights. However, the copyright sector saw a surplus of $2.21 billion due to the influence of the Korean Culture Wave.

(9) The government decided to increase the number of high schools adopting intellectual property subjects from 2025 to 193 and will activate invention education.

(10) In the event of technology leakage, the trade secret owners have used the original proof system of trade secrets to protect trade secrets actively. Considering the increase in criminal punishment for infringement of trade secrets and the difficulty in securing evidence in the event of an intentional breach of intellectual property rights, the judiciary adopted a system to compensate up to five times the amount of damage. It increased the overseas leakage of state-designated high-tech companies to 18 years in prison. The government enacted the Defense Industry Technology Protection Act, and the Korean Intellectual Property Office greatly expanded this particular judicial police organization.

(11) To promote mutual R&D, the government established a national cooperative network between industries, universities, research institutes, and intellectual property centers in 27 regions across the country to strengthen the creation and utilization of intellectual property by local SMEs and small business owners.

(12) Analyzing patent big data in various government and private sector fields helped analyze industrial trends, discover promising technology areas, improve R&D efficiency, and establish corporate strategies. 

In particular, the government implemented intellectual property-based R&D projects by reflecting them in relevant laws. Hence, conducting research and analysis of patents is mandatory when carrying out government R&D projects in fields such as national strategic technology and advanced technology.

(13) The patent invalidation rate has significantly decreased, and the patent examination and trial period have been drastically shortened. In particular, the examination period has been much shortened by employing many examiners in the semiconductor, secondary battery, and artificial intelligence fields.

(14) The government prepared a guideline considering unfair technological infringement in subcontracting transactions and the unfair exercise of intellectual property rights under the Monopoly Regulation and Fair Trade Act.

(15) To actively protect Korean companies' intellectual property rights overseas, the government established ten overseas intellectual property protection centers in 8 countries, including the United States, China, Japan, and Germany, and due to customs clearance reservation and return system on the counterfeits by the Customs Office and the spread of a culture of respecting intellectual property rights, fake products declined sharply.

(16) To ensure that researchers receive fair compensation, the government improved the foundation for revitalizing duty invention by operating a certification system for excellent companies for duty invention compensation.

5. Policy Proposal

(1) Act for Rearrangement of Government Committees

    (A). When the IPFA came into force on July 20, 2011, the NIPC was under the President. However, on September 30, 2022, the government submitted the Amending Bill for the Act for Rearrangement of the Government Committees, which changed the status of the NIPC from the President to the Prime Minister and to the National Assembly.

    (B). Of course, there were 19 Committees under the President. So, it was necessary to reorganize them. However, just as the President held the Export Promotion Expansion Meeting in the early 1960s and contributed significantly to export promotion at that time, the NIPC, Co-hosted by the Prime Minister and a civilian, must be retained under the President and (If possible) presided over by the President to dramatically boost intellectual property-based industries such as semiconductors, defense industries, mobile phones, cars, and ships.

    (C). If the NIPC changes its status from the President to the Prime Minister, it will give the impression that it has virtually abandoned setting up a national strategy to survive the fierce international intellectual property war by enhancing national competitiveness at home and abroad.

     (D). The downgrade of the NIPC to one of the current 80 Committees under the Prime Minister is a result of overlooking intellectual property policy as not very important nationally, even though intellectual property policies are established nationwide, to the extent that 24 Ministers and heads of central administration organizations attend the NIPC, according to the IPFA.

    (E). Under the Presidential Office, the National Construction Policy Committee, the National Library Committee, the Asian Culture-Centered Urban Coordination Committee, the National Bioethics Review Committee, the Material Parts and Equipment Industry Committee, the Competitiveness Enhancement Committee, and the National Water Management Committee are dealing with all big national tasks. However, many Ministries need not implement or jointly formulate these policies. Therefore, the change from the President to the Prime Minister or related Ministry will not have a significant impact.

     (F). As an example of artificial intelligence, considering that 11 Ministries are submitting bills for legislation and amendment to the National Assembly without coordinating their opinions, intellectual property policies require a high degree of choice and concentration. Thus, each Ministry's conflict of interest can be efficiently adjusted only when the NIPC remains under the President.

Since the government submitted a bill to change the status of the NIPC from the President to the Prime Minister, the morale of the policy-makers of each Ministry related to intellectual property has declined, and it looks like an official announcement that the intellectual property policy is no longer an essential task in Korea.  

     (G). New intellectual property policy tasks such as virtual currency, climate convention, carbon border taxes, geographical indications on the country of origin, genetic resources, traditional knowledge, new plant varieties, publicity rights, etc., cannot be established simply by a single Ministry's review. These policies, although the Prime Minister presides over the meeting as a Co-Chairman, make it difficult for the Prime Minister to directly mediate conflicts of interest among Ministries and eliminate the need to report them to the President unless they belong to the President, making it clear that the status of the NIPC is weakened. Therefore, preserving the NIPC under the President aligns with the purpose of the Intellectual Property Framework Act and international trends.

    (H). Since the NIPC is an organization belonging to the President, I understood that the Co-Chair of the NIPC has reported all resolutions made by the NIPC directly to the President.

However, the Co-Chair of the NIPC did not report to the President because the IPFA has no clear Article on this subject. Since this part needs more legislation, I suggest introducing a new Article to ensure that the Co-Chair shall report all resolutions made by the NIPC to the President.

     (I). Korea's survival strategy depends on trade and is based on intellectual property policies scattered across Ministries. As long as the NIPC is given the function and role of coordinating and unifying it, it must remain under the President so that the NIPC can serve as a control tower for intellectual property in name and reality.

(2) Amendment of the Enforcement Decree for the IPFA

     (A). When the IPFA was first implemented, the State Affairs Coordination Office under the Prime Minister was responsible for the NIPC's business. However, the MSTIC is now in charge of the NIPC's business by Article 9, Para.1 of the Enforcement Decree for the IPFA.

I am very sorry that it operates utterly differently from my intention to enact this Act.

     (B). It is true that many of the nationwide intellectual property policies attended by Ministers and Commissioners of 24 central government organizations include matters related to science, technology, and R&D.

However, it is shortsighted that the MSTIC leads all intellectual property policies in the country. Since the MSTIC became the managing Ministry, the driving force for overseas technology leakage has deteriorated. 

It is also true that the attendance of relevant Ministers has hardly been seen, and cooperation with other relevant Ministries has been challenging. 

Significant tasks such as trademarks, designs, trade secrets, new plant varieties, trade dresses, music, movies, art, architecture, photography, and other copyrights have yet to be related to science and technology issues.

     (C). Accordingly, I propose that the managing Ministry in charge of the NIPC's business be returned from the MSTIC to the Office for Government Policy Coordination under the Prime Minister. This change is possible only by revising the Enforcement Decree for the IPFA without amendment to the Act.

(3) Operation of the Intellectual Property Strategy Planning Office

Unlike advanced countries, the status of the Intellectual Property Strategic Planning Office (IPSPO), a supporting organ for the NIPC, has been downgraded since the managing office of the NIPC was changed from the State Affairs Coordination Office under the Prime Minister to the Ministry of STIC. Frequent personnel shifts and gaps in critical positions of the IPSPO have greatly hindered the establishment of systematic and continuous policies.

Please consider the importance of the IPSPO and the plan to strengthen the organization.

(4) Intellectual Property Policy Officer in the Presidential Office

If the NIPC's role and function are a nationwide task, the resolution is also important nationally. So, I cordially propose that a Secretary in charge of intellectual property policy be placed in the Presidential Office, even if there is no ministerial intellectual property execution coordinator like in the United States so that the Co-Chair of the NIPC shall report all NIPC resolutions to the President.

6. Closing Remark

It is said that a high-flying bird looks far away. The source of the power of the United States, which is positioned as a global powerhouse, is based on intellectual property policy. China, which is now challenging it, is also focusing all of the government's efforts on securing intellectual property rights. For Korea, which has come a long way to become an advanced country with K-culture, including the establishment of the National Aeronautics and Space Administration, to maintain its position today firmly, it is a time when the government must look far ahead, as well as the issues seen in front of it. I sincerely hope that the IPFA, enacted after much effort, will operate well and allow the Republic of Korea to take another leap forward.

                                       May 7, 2024

                                         Patent Attorney, Myung-Shin Kim