Korea
Recent developments in IP issues
Jay (Young-June) Yang, Peter K Paik and Sang-Young Lee
Kim & Chang
Korea has adopted various IP initiatives in order to meet the growing needs of fast-advancing technologies. The changes also allow Korea to harmonise its legislation with international agreements such as the Patent Law Treaty and the Substantive Patent Law Treaty. This chapter discusses the background, significance and main features of such developments, including amendments to IP laws that are of interest to foreign companies doing business in Korea.
Patent/utility model
Patent Act
The draft bill amending the Patent Act was submitted to the National Assembly in October 2005. At the time of writing the revised act is expected to come into force on January 1 2005, provided the legislative review is completed as scheduled.
Protection of sexually reproductive plants: The current act does not give patent protection to sexually reproductive plants. Under the new act a sexually reproductive, genetically altered plant is patentable subject matter, regardless of its reproduction method, provided protection does not conflict with the public interest. On the other hand, plant seeds are protected under a separate piece of legislation – the Seed Industry Act.
Expanded novelty standard: A broader novelty standard is also included in the draft bill. Under the new act an invention cannot be patented if it has been publicly known or used in Korea or in a foreign country. Under the previous act an invention does not lose novelty unless it is publicly known or used in Korea. This extension of the novelty bar reflects the provisions of the Substantive Patent Law Treaty.
Expanded grounds for grant of compulsory licence: Separate from the current Patent Act revisions, a legislative bill significantly amending compulsory patent licensing laws in Korea was passed by the Korean National Assembly on May 3 2005. This bill is unusual in that it was proposed by members of Congress, rather than by an administrative or legislative agency.
When certain situations set out in the Patent Act arise the Korean government may expropriate patents, use patented inventions and/or require a third party to use patented inventions. Under the previous Patent Act a compulsory licence could be granted in limited situations such as war or national emergency; otherwise, the patented invention had to be in the public interest and necessary for non-commercial use. However, the 2005 amendments expanded the circumstances under which compulsory licences may be granted. Most significantly, compulsory licences may now be granted for public interest reasons even if the patented invention is used for commercial purposes. In addition, compulsory licences may still be granted for the export of medicines under the World Trade Organisation Doha Declaration. Thus, domestic pharmaceutical companies can manufacture pharmaceutical products for export purposes.
Thus far, compulsory licences have rarely been granted. While the practical impact of the 2005 amendments is yet to be observed, the changes clearly represent an attempt to remain competitive in today’s changing economy.
Free trade agreement
On August 4 2005 Korea officially signed a free trade agreement (FTA) with Singapore, South Korea’s largest trading partner among the Southeast Asian countries.
This is South Korea’s second FTA following the agreement signed with Chile in 2004. The Korea-Singapore FTA is a more comprehensive deal than the Korea-Chile FTA, including agreements on financial services, electronic trade and intellectual property.
Regarding IP protection under the FTA, obtaining a patent in Korea will give the same rights in Singapore without examination. This is the second time that Korean patent holders have been granted patent rights in a foreign country without examination – Malaysia was the first country to allow this. Such expedited acquisition of Singaporean patents is likely to encourage Korean investments in Singapore.
The FTA will also allow Korea to perform international searches and preliminary examinations on international patent applications filed by Singapore through the Patent Cooperation Treaty. The Korea-Singapore FTA will take effect as early as 2005 – at the time of writing the FTA was awaiting approval by the National Assembly.
Expedition of patent examination
The Korean Intellectual Property Office (KIPO) announced its plan to reduce the examination period for patent applications from an average of two years to 10 months by the end of 2005. Implementation of this change is currently underway. To achieve this objective, KIPO plans to increase its outsourcing, hire new examiners and promote new organisations for the examination of new and fusion technologies. In addition, KIPO plans to reduce the trial period from the current 14 months to six months by 2005.
The driving force behind the proposed plan is clear. If new inventions or technologies are examined faster by KIPO, they can be applied and utilised in their respective industries faster, thereby contributing to the development of Korean industry. Unless technologies applying for patents are effectively examined, they may become obsolete when newer and more advanced technologies appear. Similarly, other countries are also actively trying to reduce their respective patent examination periods.
Compensation for work-for-hire inventions
In December 2004 the Seoul High Court rendered a decision in favour of a plaintiff (a former employee of the defendant), ordering the defendant to pay about W176 million (US$171,000) to compensate for the plaintiff’s work-for-hire inventions. The compensation ordered by the court is the largest amount ever awarded in a work-for-hire invention case in Korea, although few such cases have taken place. However, in light of this decision the following can be said regarding work-for-hire cases:
• an employer’s obligation to remunerate an employee occurs at the time of the employer’s acquisition of the right to obtain a patent or title to a patent; and
• the compensation rate to inventors is between five and 10 per cent.
Designs
As of July 1 2005 the Design Act was amended to protect typefaces and to raise the required creativity level.
Protection of typeface
Since the development of a new typeface requires a significant investment of creative effort and resources (while imitation involves no such expenditure), many countries protect typefaces through the design and copyright laws. As the former Design Act required a protectable design to be combined or displayed on a product or article, a typeface has not previously been protectable as a design. To address this problem the act was amended in order to protect typefaces as products in themselves. As such, the new definition provided in the amended act treats typeface designs like any other designs, thereby entitling them to the same protection under the Design Act.
Expanded creativity standard
The standard for determining the creativity required for design protection has been expanded. Under the creativity requirement of the former Design Act, a design was protected unless an objecting party could prove that the design was already widely known in Korea or could have been easily created from a widely known design. Under the amendment, a new creativity requirement is imposed, which states that a design is not protected if it is already publicly known (but not necessarily well known) in Korea or any foreign country, or if it could have been easily created from publicly known designs.
Trademarks
Protection of geographical indications
The Trademark Act was amended on July 1 2005 to protect geographical indications, which have not been protected previously in Korea.
In the event that a corporation, composed only of a producer, manufacturer or processor of goods which is entitled to use a geographical mark, applies for a trademark registration, the mark can be registered for protection. A mark identical or similar to an established geographical mark, which has already been registered or includes an unregistered but well-known geographic indication, cannot be registered for identical goods carrying the mark. The right of a geographical indication extends to identical goods only. The amended Trademark Act provides that if the protection for a geographical indication is subsequently suspended in the country of origin, then the registered collective mark may be invalidated in Korea. This amendment reflects the provisions of the World Trade Organisation Agreement on Trade-Related Aspects of Intellectual Property Rights.
Strengthened protection of trademarks with foreign language alphabets
Under the revised Trademark Examination Guidelines and Directives (effective as of January 1 2005), the pronunciation and meaning of a mark in the relevant foreign language must be considered when examining the distinctiveness or similarity with established marks or trademarks composed wholly or partially of the English alphabet, Chinese characters or Japanese (Hiragana and Katakana) characters. However, other foreign languages will be treated as a sign or device for trademark examination purposes.
Unfair competition prevention and trade secrets protection
The amended Unfair Competition Prevention and Trade Secrets Protection Act, which took effect on July 21 2004, includes new remedies against cybersquatting and a new cause of action against ‘dead copy’ product design infringement. The act also broadens the definition of ‘trade secret’ and introduces an aggravated monetary system.
Cybersquatting prohibition
The current act now contains a specific provision that prohibits cybersquatting of a third party’s famous mark in Korea. Under the amendment an act of registering, holding, transferring or using a domain name incorporating an element that is identical or confusingly similar to a third party’s famous trademark or trade name in Korea without legitimate purpose constitutes unfair competition. The significance of this provision is that, previously, a plaintiff would need to seek deregistration under the Uniform Domain Name Dispute Resolution Policy or an equivalent administrative procedure. Now, however, a remedy is available under the act in addition to the existing remedies of injunctive relief and damages. However, criminal liability would not be imposed.
In addition, the recently enacted Internet Address Resource Act provides an additional legal basis for preventing cybersquatting involving ‘.kr’ (Korea country-code top-level) domain names. The act expressly prohibits unlawful registration of a domain name incorporating a third party’s trademark or trade name. It further enables the rightful holder to seek cancellation of the registration of the offensive domain name in court. The act became effective on July 30 2004.
‘Dead copy’ prohibition
The second revision is parallel to what is known in other countries as a ‘dead copy’ prohibition, which prohibits the act of transferring, lending, displaying, importing or exporting products that imitate the product shape manufactured by others. This includes a form, shape, colour or gloss, or combinations thereof, and the shape of a sample prototype or a product brochure. However, this provision shall not be applicable when the imitation product is made more than three years after the original product was made, or if the product shape is a commonly used form for such goods.
This development is a significant step forward for plaintiffs seeking to pursue imitation products because, unlike other Unfair Competition Prevention and Trade Secrets Protection Act or trademark causes of action, there is no requirement that the original product design be famous, or for the product design to be a source identifier. Instead, the statute imposes a time restriction of three years from the date of the original product’s release. All civil remedies generally available under the act, including injunctive relief and damages, are available for this new claim. However, criminal liability will not be imposed.
Broadened definition of ‘trade secret’
In order to reinforce trade secret protection in Korea the amended act broadens the definition of ‘trade secret’ by changing it from “a company’s technological trade” to “a company’s trade secret”. This new change even allows a company to safeguard its management know-how.
Introduction of aggravated monetary penalty system
The amended act also introduces an aggravated monetary penalty system based on unfair profits with respect to the flow of trade secrets in and out of Korea in order to strengthen and toughen the punishment for trade secret misappropriation. Fines now range from twice to 10 times the amount of the profits. In the past the fine was relatively small in comparison with the profits typically obtained from misappropriating trade secrets – for example, for trade secrets misappropriated abroad the fine would be only about US$100,000.
Copyright
Online transmission right to performers and sound recording producers
Following an amendment in 2000, which provided copyright holders with separate rights for online transmission, a recent amendment to the Copyright Act on January 16 2005 extends this right to performers and record producers. In 2000 the Copyright Act was largely revised to respond to the need for greater efficiency in the use and protection of copyrighted works in today’s rapidly developing technological environments. After the revision, there were disagreements in the music industry as to whether performers and record producers should have the same online transmission right. The recent amendment was an attempt to reconcile such disagreements. Furthermore, the provision of such right to performers and record producers is required by the World Intellectual Property Organisation Performance and Phonograms Treaty, which Korea is hoping to sign up to in the near future.
Protection of necktie designs as works of applied art
In July 2004 the Korean Supreme Court reversed and remanded a lower court decision that necktie designs could not be protected under the Copyright Act, thereby denying the plaintiff’s claim of copyright infringement. However, the Supreme Court reversed the decision and stated that if a design is independent and distinct from the actual necktie, then such design could be entitled to protection under the Copyright Act. As to the copyrightability of works of applied art that were created for use in mass production or to implement practical functions, the Taihan Textile decision (1996) is considered to be the benchmark decision. In that case the Supreme Court denied the copyrightability of a textile design based on the reasoning that “applied artistic works are sufficiently protected under the Design Act and copyright protection should be provided to works of applied art only in exceptional circumstances (eg, where the applied artistic work possesses an independent artistic feature or value)”. Therefore, if the Supreme Court’s 2004 decision becomes final, it will broaden the protective scope of applied artistic works and have a major impact upon the Korean design industry.
Conclusion
Korea is gearing up to usher in an advanced global economy by responding to the changing IP environment regionally and globally. The developments in the IP system discussed here are expected to help prepare Korea to remain competitive in today’s global economy.
