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

Box 6.2 Recent conditions of IPR protection in Korea
Korea has been on the USTR’s Special 301 Watch List or Priority Watch List for countries with particular IPR concerns
since 1992. In 2005, the USTR lowered Korea from the Priority Watch List to the Watch List based on a finding of
meaningful improvements to the IPR regime. Korea remained on the Watch List in 2006 and 2007. In 2007, the USTR
announced its intent to work closely with Korea to implement the far-reaching IPR commitments it made in the FTA.
The current environment for IPR protection in Korea is described below.
Copyrights
Korea ratified the World Intellectual Property Organization (WIPO) Copyright Treaty in 2004, and committed to accede
to the WIPO Performances and Phonograms Treaty (collectively, the WIPO Internet Treaties) by the date the FTA
enters into force. The WIPO Internet Treaties address the application of IPR in the digital environment. To update its
legal framework, Korea passed a new copyright law in 2006 with implementing decrees to take effect in June 2007.
Further revisions are anticipated to comply with the requirements of the FTA.
The International Intellectual Property Alliance (IIPA) estimates trade losses and levels of copyright infringement in
Korea across five industries: business software, records and music, motion pictures, entertainment software, and
books. These losses are for hard goods only and do not take into account online copyright infringement. IIPA estimates
total trade losses in Korea of $619 million in 2006 down from $660 million in 2005. IIPA reports that the copyright
industries face extraordinary enforcement challenges because of the prevalence of broadband access to the Internet
in Korea. The music and motion picture industries are particularly impacted by unauthorized streaming and
downloading, peer-to-peer (P2P) and “Web-hard” services, closed-file sharing systems in which unauthorized copies
are stored online and access is obtained through passwords and online payments. The unauthorized photocopying
and printing of textbooks, particularly around university campuses, substantially impacts book publishers.
Trademarks
Trademark protection in Korea lasts for 10 years and is renewable every 10 years. Korea has acceded to Trademark
Protocols administered by WIPO, which simplify procedures for registering and maintaining trademarks among
member states. Korea’s Trademark Act has been amended to allow trademark examiners to reject the mark of a
foreign trademark holder that is registered in bad faith. The USTR reports, however, that U.S. companies are
discouraged from pursuing the cancellation of such marks because of complex and lengthy legal procedures. The EU
Chamber of Commerce in Korea reports that nondeterrent monetary penalties and minimal criminal sentences
undermine effective enforcement against counterfeiters.
Patents and Regulated Products
Patents are protected for 20 years from the application filing date. Patent filings by foreign applicants have steadily
increased in Korea over the last 5 years, from 28 percent of all filings in 2002 to 33 percent in 2006. Japan and the
United States were the largest sources of foreign applications in 2006. With respect to pharmaceuticals, U.S.
producers report problems with the unauthorized use of test data submitted in support of marketing approval and with
the grant of marketing approvals to generic producers while patents on original products are still pending.
Sources: USTR, “Final - United States - Korea FTA Texts,” 2007; USTR, “Korea,” 2007 National Trade Estimate
Report on Foreign Trade Barriers, April 2, 2007; IIPA, “South Korea, 2007 Special 301 Report,” 2007; IIPA, “U.S.
Trade Representative ‘Special 301’ Decisions,” 2007; EIU, “Country Commerce: South Korea,” July 2006; Primosch,
testimony before the Trade Policy Staff Committee, Office of the USTR, March 14, 2006; European Union Chamber
of Commerce in Korea, “Trade Issues and Recommendations 2007,” 2007; Korean Intellectual Property Office,
Republic of Korea, “Statistics”; and May, testimony before the USITC, June 20, 2007, 275–77.
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