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IPR Policies and Economic Development:

the Korean Lessons

Keun LEEProfessor of Economics

Seoul National University (kenneth@snu.ac.kr)

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Perspectives on IRPs in Economic Development: Conflicting Goals:1) General: Innovation vs. diffusion

( strong IPR vs. weak IPR )2) Development-specific (early stage):

int’l diffusion vs. local innovation= inducement of foreign tech. Vs. domestic R&D

(strong IPR vs. Weak IPR)Protection of foreign IPR for encouraging inflow

of foreign technology<=>Encouragement of domestic invention made

in imitation and diffusion of foreign technology.

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3) Development-specific (later stage):local innovation vs. local diffusion (strong IPR vs. Weak IPR ?)

maybe other means for diffusion:better national IPR systems

4) Needed: Dynamic Perspectives on IPRs in economic development:

=> Korean experiences.

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Accumulation of Technological capability in Korea

Korean patents in the US-from 7(1982) to 3558 (1999) -rank 5th (1999) in the world (except US):

Japan, Germany, France, Taiwan, & Korea. Korean share of patents in Korea Patents

-from 11.4%(1980) to 62.4% (1999)

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0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

TaiwanshareKorea share

The share by the Koreans in the US patents: rapid catch-up

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Evolution in Patenting Activities in Korea: 4 stagesStage 1) Before the mid 1970s (no foreign IRP in Korea)• Poor technological capability of domestic inventors• Low inflow of foreign technology=>Low interest of foreign

inventors in application of IPR• => dominance by the Korean inventors in IPRStage 2) Mid 1970s-the mid 1980s (foreign dominance)• Accumulation of technological capability through inflow of

foreign technology • High inflow of foreign technology=>High interest of foreign

inventors in application of IPR• => dominance by foreign inventors• Number of individual patents (1984)=1.5 times of the number

of firm patents

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3) Mid 1980s-the mid 1990s (Korean catch-up)• Accumulation of technological capability through

R&D and inflow of foreign technology • Accumulated technological capability=> Share of domestic inventors rose rapidly => Rapid growth in application for IPR by Koreans in

foreign countries, like in the US• Resolving patent conflict became an issue• Protection of IPRs was strengthened from 1987• Firms’ patenting activities are much more active

than those of individuals: firms’ patents 55,294(1995)=>14 times of individual patents

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4) Mid 1990s- to the Present (Korean dominance)• Accumulation of technological capability through R&D,

inflow of foreign technology• Share of domestic inventors rose rapidly

=> 62.4% in (1999) • Active Policy towards encouraging patenting activities

(esp. by the SMEs and individuals)-publicising importance of gaining IPR -infrastructure : i.e. on-line access system-partial funding to application in foreign countries-reduction of charges of application and examinations -help searching process: distribute patent map reports and PIAS

software for patent mapping

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Patenting trends of domestic and foreigners in Korea (granted)

0

10, 000

20, 000

30, 000

40, 000

50, 000

60, 000

70, 000

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

Y

No.

of

Pate

To tal

Korean

Foreigner

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Evolution of the Korean IPR system until 2001

Year(s) IPR-related event

1908 The first national laws on the protection of patent, design and trademark are promulgated

1910 Korea was affiliated to Japan compulsorily

1945 Korea was liberated from Japan, and was governed by the US military administration until 1948

1946 The first modern-type industrial law was promulgated

1961 The first revision on the Patent Law, Utility Model Law, Design Law, Unfair Competition Prevention Law

1963 Revision on the trademark Law

1973 Korea Patent Association (KPA) was established

1979 Korea became a member country of WIPO

1980 Korea became a member of Paris Convention

1984 Korea became a member of Patent Cooperation Treaty (PCT)

1987 Scope of patentable subject matter was enlarged that the invention of pharmaceuticals, method of producing pharmaceuticals, substance, and substance-use, which used to be excluded from the scope, to be included therein

1994 Korea Invention Promotion Association (KIPA) was founded under the provision of the Invention Promotion Act

1995 Korea Industrial Property Rights Information Center was established.

1995 In order to comply with TRIPs regulations by enlarging the scope of patentable subject matter, extending the term of patent to be 20 years, and so on.

1996 Korea Industrial Property Business Arrangement Center was established

1997 Intellectual Property Rights Research Center was established.

1998 Patent Court was opened

1998 Korean Industrial Property Office (KIPO) established an on-line application system, called KIPOnet, through Internet and thus, articles related to on-line application were newly added to the Patent Law.

1998 To encourage the development and prompt IPR acquisition of new technology, the Quick Registration System (QRS) had been introduced for utility models

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Characteristic Features of the Korean IPR System

1. First-to-file Rule: any person desiring to obtain a patent right must file a patent application of a complete invention stating all the required information on the invention.

2. On-line Application: On-line application system through Internet have been operated since 1999

3. Publication of Application: After 18 months being elapsed, all applications are published.

4. Examination: An application is examined by an examiner upon a request for examination by the applicant.

5. Quick Registration System (QRS) for utility models: KIPO adopted the Quick Registration System for utility model, effective as of July 1999, to encourage the development and prompt IPR acquisition of new technology.

6. Term of Industrial Property Rights: Generally, the term of patent right is 20 years from the date of application.

7. Relations with the International Agreements Related to IPR: The provisions of international agreements have the same authority as domestic laws.

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IPR Index in Korea 1961-2000

(Ginarte & Park, 1997, Research Policy

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

61 64 67 70 73 76 79 82 85 88 91 94 97 00

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IPRight Index in Korea 1961~2002 (Ginarte & Park, 1997, Research Policy)

61 71 73 80 81 82 85 86 89 90 93 94 95 00 01 02

1) Coverage

patentability of pharmaceuticals

1 1 1 1 1 1 1 1 1

patentability of chemicals 1 1 1 1 1 1 1 1 1

patentability of food 1 1 1 1 1 1 1

patentability of planet and animal varieties

1 1 1 1 1 1 1 1 1 1 1 1 1 1

patentability of surgical products

1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

patentability of microorganisms

1 1 1 1 1 1 1 1 1 1 1 1

patentability of utility models 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

2) Membership in international treaties

Paris convention and revisions 1 1 1 1 1 1 1 1 1 1 1 1 1

Patent cooperation treaty 1 1 1 1 1 1 1 1 1 1 1

Protection of new varieties 1

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IPRight Index in Korea 1961~2002

61 71 73 80 81 82 85 86 89 90 93 94 95 00 01 02

3) Loss of protection measures against losses

Working requirements 1 1 1 1 1 1 1

Compulsory licensing 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

Revocation of patents 1 1 1 1 1 1 1 1 1

4) Enforcement

Preliminary injunctions 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

Contributory infringement 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

Burden-of-proof reversal 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

5) Duration

Grant-based standard

App-based standard 1 1 1 1

IP Right Index

0.71 0.71 0.71 0.71 0.71 0.71 0.7 1 0.71 0.71 0.88 0.88 0.88

2.32 2.32 2.47 2.80 2.94 3.28 3.28 3.90 3.90 4.55 4.55 4.55 4.67 4.67 4.67 5.00

15YEAR

201020001990198019701960

TPA

120000

100000

80000

60000

40000

20000

0

Trends in Patent applications

16YEAR

201020001990198019701960

RD

200000

175000

150000

125000

100000

75000

50000

25000

0

-25000

Trends in R&D expenditure

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Model A Model B Model C Model D

Intercept 0.024 (0.50)

0.061 (1.00)

-0.190(-1.38)

-0.363 (-1.63)

Change in R&D

0.421 (2.25)**

0.512(2.01)*

0.561 (2.74)***

0.494 (2.01)*

Changein GDP

-0.329(-0.66)

0.513(0.71)

Patent Protection

Index

0.051(1.81)*

0.079 (2.00)*

Adjusted R2 0.171 0.164 0.227 0.221

F-value 8.637 4.626 6.418 4.506

Regressions on: Increase in patent applications:

Impacts of patent right protection

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Model E Model F Model G

Intercept -0.056 (-0.86) -0.271 (-1.37) -0.106 (-1.09)

R&D Change 0.610 (2.64)** 0.494 (1.93)* 0.543 (2.26)**

GDP Change 1.034 (1.13) 0.216 (0.38)

Period 2 -0.054 (-0.54) -0.093 (-0.89)

Period 3 -0.009 (-0.14) 0.076 (0.72)

Period 4 0.128 (2.92)** 0.209 (2.51)**

Period 5 0.065 (1.67) 0.141 (1.78)*

Period 6 0.102 (1.41) 0.241 (1.59)

Post-1986 Period(since 1986)

0.132 (2.22)**

Adjusted R2 0.166 0.184 0.224

F-value 2.230 2.194 4.562

Regressions on: Increase in patent applications:

Period by period

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Korean Lessons : government policies

Lesson 1: Importance of Utility modelsIn stimulating domestic innovation activities : domestic firms, with weak capability, can invent and

protect their invention with utility model system.

With the accumulation of domestic technological capability, patenting activities of firms grow faster than individuals

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• Lesson 2: Dynamic Perspective on IPR Policy:•

Early stage: IPR granted even to minor inventions or adaptations by local residents while there would be less need for domestic recognition of foreign IPRs.

Later stage: with growth of tech. Capa. an increasing need for internat’l technology transfer and the local market for technology also grow. Then, an adequate level of protection of foreign IPRsshould be provided locally.

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Lesson 3: Emphasis on the Expansion of Patentable Subject Matter

- Korea amended IPR system with the emphasis on the scope of the subject matters,

which can act as a accelerator for expanding the spectrum of the technological capability

- Korea has now attained the most developed level in term of scope of the subject matters,

including the newest right like bio-technological Inventions, business method inventions

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Lesson 4: Systemic (NIS) Approach

- Korea has taken “IPR System” as a subsystem of the National Innovation System”

-Korea continuously improved the innovation infrastructure, such as efficiency of the services by government agencies, information sources, and arbitration bodies,

to cope with the changing innovation environments,