U.S.-Korea Free Trade Agreement: Potential Economy-wide ... - USITC

intellectual property rights under these contracts, 93 confidentiality of technical knowledge
and other matters, 94 and problems regarding IT security products. 95
FTA Chapter 18—Intellectual Property Rights
Assessment
Full and effective enforcement of the intellectual property rights (IPR) provisions of the
U.S.-Korea FTA would likely benefit U.S. industries that rely on copyrights, patents,
trademarks, and other intellectual property by reducing their losses from infringement and
increasing export and foreign sales opportunities for their products. U.S. copyright industries
report substantial losses in Korea as a result of hard goods and online infringement of
software, music, motion pictures, and books. U.S. pharmaceutical industries report problems
with the grant of marketing approvals to generic products in violation of patent and data
protections (see box 6.2 for a summary of the current IPR environment in Korea). To the
extent it successfully addresses these and other IPR issues, the U.S.-Korea FTA should
improve the business environment in Korea for U.S. industries that rely on intellectual
property protections.
The IPR chapter of the FTA would reiterate certain existing protections and establish
enhanced standards of protection and enforcement. The enhanced standards are generally
consistent with the negotiating objectives that Congress set for FTAs in the Trade Promotion
Act of 2002. These objectives include providing strong protection for emerging
technologies; ensuring that IPR provisions reflect standards similar to those found in U.S.
law; and ensuring strong civil, administrative, and criminal IPR enforcement. 96 The IPR
provisions of the U.S.- Korea FTA are more rigorous than those included in U.S. FTAs with
some developing countries and would address many issues identified as problematic in the
annual intellectual property reviews of Korea conducted under the Special 301 provisions
of the Trade Act of 1974. 97
93 The ITI cites Korean procurement contracts that clearly state that “all rights including the ownership
rights for the materials submitted to the Ordering Party shall be vested to the Ordering Party.”
94 The ITI stated that a standard government procurement contract has several clauses under the “Use of
Technical Knowledge and Confidentiality,” one allowing the contractee to disclose essentially any
information, and another prohibiting the contractor from disclosing any information or confidential matters,
both clauses the ITI considers far too broad and restrictive.
95 The ITI stated that since 1999, the Korean government has required vendors of certain IT security
products to any government agency to submit the security device source code to Korea’s National
Intelligence Service as part of the supplier certification process, whether the contract is related or not to
national security end users. ITI further states that the requirement to submit security-device source code has
also affected security markets outside of government, such as sales to the financial services, education, and
health-care industries.
96 Trade Promotion Act of 2002, 19 U.S.C. Sec. 3802(b)(4)(A).
97 U.S. Government official, telephone interview by Commission staff, June 11, 2007.
6-23