SMEs and Intellectual Property Rights - The Case of South Korea
Short Description
International Survey of Intellectual Property Rights in South Korea...
Description
Aygün Erkaslan
SÉMINAIRE DE SYNTHÈSE
SMES AND INTELLECTUAL PROPERTY: THE CASE OF SOUTH KOREA UNIVERSITY OF NEUCHATEL MASTER OF SCIENCE IN INTERNATIONAL BUSINESS DEVELOPMENT SÉMINAIRE DE SYNTHÈSE AYGÜN ERKASLAN
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Aygün Erkaslan
TABLE OF CONTENTS 1
. INTRODUCTION ................................................................................................................................... 1 1.1 1.2 1.3
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INTRODUCTION .......................................................................................................................................... 2 RESEARCH OBJECTIVE................................................................................................................................... 2 RESEARCH STRUCTURE ................................................................................................................................. 2
. ANALYSIS OF THE NATIONAL CONTEXT FOR IPR ................................................................................... 4 2.1 OVERVIEW OF THE OVERALL OPERATING ENVIRONMENT ..................................................................................... 5 2.1.1 Foreign direct investment in South Korea ......................................................................................... 5 2.1.2 Government Policy and Incentive ...................................................................................................... 6 2.1.3 Market ............................................................................................................................................... 6 2.1.4 Human Resources .............................................................................................................................. 7 2.1.5 Infrastructure .................................................................................................................................... 7 2.2 STATISTICAL OVERVIEW OF INTELLECTUAL PROPERTY .......................................................................................... 8 2.3 SOUTH KOREA'S INTELLECTUAL PROPERTY ‐ FROM THE PAST TO THE PRESENT ....................................................... 10
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. THE MACRO‐ENVIRONMENT .............................................................................................................. 12 3.1 GOVERNMENT ATTITUDE & COMMITMENT ................................................................................................... 13 3.1.1 Government declarations regarding IPR protection and enforcement ........................................... 14 3.1.2 Resources ........................................................................................................................................ 17 3.2 IPR INSTRUMENT STRUCTURE & SCOPE ........................................................................................................ 19 3.2.1 Formal, Legal and Informal options for Intellectual Property protection ........................................ 19 3.2.2 Instruments for the commercialization of IPR ................................................................................. 21 3.2.3 Instruments for the enforcement of IPR .......................................................................................... 24 3.3 SUPPORTING LEGAL AND REGULATORY ENVIRONMENT ..................................................................................... 25 3.3.1 Judiciary independence, transparency and corruption .................................................................... 26 3.3.2 Labour Law ...................................................................................................................................... 27
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. THE MESO‐LEVEL ............................................................................................................................... 28 4.1 SECTOR REVIEW & ANALYSIS ...................................................................................................................... 29 4.2 THE INSTITUTIONAL MAP ............................................................................................................................ 33 Institutions involved in creating policy and instruments .............................................................................. 33 Institutions involved in registration, support and enforcement ................................................................... 33 4.3 DEGREE OF INSTITUTIONAL PROACTIVITY ....................................................................................................... 35 4.3.1 Attitude and commitment to IPR related issues – Active provision of IPR related informant and services 35 4.3.2 Resources ........................................................................................................................................ 36
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. THE MICRO‐LEVEL .............................................................................................................................. 38
5.1 LEVEL OF USE OF IPR PROTECTION INSTRUMENTS ............................................................................................ 39 5.1.1 Level of Transgressions .................................................................................................................... 42 5.2 FROM AWARENESS TO ACTION .................................................................................................................... 46 5.2.1 Awareness of the importance – knowledge of instruments and institutions .................................. 46 5.2.2 Barriers to the adoption of IPR related measures ........................................................................... 46
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. GLOBAL SUMMARY ........................................................................................................................... 48 6.1
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SUMMARY ............................................................................................................................................... 49
. THE SURVEY ...................................................................................................................................... 52 7.1 QUANTITATIVE METHODOLOGY ................................................................................................................... 53 7.1.1 The sample ...................................................................................................................................... 53 7.1.2 Survey Information .......................................................................................................................... 54 7.1.3 Data analysis method ...................................................................................................................... 54 7.2 RESULTS ................................................................................................................................................. 54 7.2.1 Descriptive analysis ......................................................................................................................... 54 7.2.1.1 7.2.1.2 7.2.1.3 7.2.1.4
7.2.2
Motivation to own Intellectual Property Rights ..................................................................................... 55 Reasons not to own Intellectual Property Rights ................................................................................... 56 Informal Protection Methods ................................................................................................................. 57 List of barriers to operate in this country comparing with the problem of IP ........................................ 58
Reliability and Validity Measures .................................................................................................... 59
7.2.2.1 Reliability Measures ............................................................................................................................... 59 7.2.2.2 Validity Measures ................................................................................................................................... 60 7.2.2.2.1 Discriminant validity (intercorrelation of the research constructs) ................................................... 62 7.2.2.2.2 Intercorrelation of the research constructs' analysis ........................................................................ 64 7.2.2.2.3 General Pattern ................................................................................................................................. 65
7.2.3
Correlation between the motivations to own IPR variables and other variables ............................ 66
7.2.3.1 7.2.3.2 7.2.3.3 7.2.3.4 7.2.3.5 7.2.3.6 7.2.3.7
7.2.4
Correlation between the reasons to not own IPR variables and other variables ............................ 70
7.2.4.1 7.2.4.2 7.2.4.3 7.2.4.4 7.2.4.5 7.2.4.6
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To attract financing ................................................................................................................................ 67 To increase bargaining power ................................................................................................................ 67 To have high return on investment ........................................................................................................ 68 To have a stronger market position........................................................................................................ 68 To improve our advertising impact......................................................................................................... 68 To prevent piracy by competitors .......................................................................................................... 68 To block competitors .............................................................................................................................. 69 No need .................................................................................................................................................. 71 Because too bureaucratic ....................................................................................................................... 71 No enough knowledge ............................................................................................................................ 71 Too expensive ......................................................................................................................................... 71 No consideration of the relevance of these methods ............................................................................ 72 The protection can disclose information to competitors ....................................................................... 72
. CONCLUSION ..................................................................................................................................... 73 8.1 DISCUSSION OF KEY FINDINGS OF THE SURVEY IN THE CONTEXT OF THE NATIONAL BACKGROUND ............................... 74 8.1.1 Macro‐level (Environment) .............................................................................................................. 74 8.1.2 Meso‐level (Institutional) ................................................................................................................ 75 8.1.3 Micro‐level (Enterprise) ................................................................................................................... 76 8.2 IMPLICATIONS .......................................................................................................................................... 76 8.2.1 For Government and policy makers................................................................................................. 76 8.2.2 For SMEs .......................................................................................................................................... 77 8.3 LIMITATIONS AND FUTURE RESEARCH ............................................................................................................ 77
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. REFERENCES ...................................................................................................................................... 78 9.1 9.2
BOOKS, PUBLICATIONS & REPORTS .............................................................................................................. 79 WEBSITES ............................................................................................................................................... 81
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10 . APPENDIX ......................................................................................................................................... 83 10.1 APPENDIX: THE SURVEY ............................................................................................................................. 84 10.1.1 Questionnaire .............................................................................................................................. 84 10.2 APPENDIX: STATISTICAL DATA ..................................................................................................................... 89 10.2.1 Descriptive statistics ................................................................................................................... 89 10.2.2 Correlation between manifest variables and latent variables .................................................... 95 10.2.2.1 Unidimensionality ................................................................................................................................... 95 10.2.2.1.1 Firme Size ......................................................................................................................................... 95 10.2.2.1.2 Degree of Internationalization ......................................................................................................... 95 10.2.2.1.3 Protection Efficiency ........................................................................................................................ 95 10.2.2.1.4 Administrative Procedures ............................................................................................................... 95 10.2.2.1.5 Protection Costs ............................................................................................................................... 96 10.2.2.1.6 Costs Related .................................................................................................................................... 96 10.2.2.1.7 IP Office Satisfaction ........................................................................................................................ 96 10.2.2.1.8 IP Track Record ................................................................................................................................. 96 10.2.2.1.9 Informal Protection Methods ........................................................................................................... 97 10.2.2.2 Convergent Validity ................................................................................................................................ 97 10.2.2.2.1 Firm Size ........................................................................................................................................... 97 10.2.2.2.2 Degree of internationalization ......................................................................................................... 97 10.2.2.2.3 Protection Efficiency ........................................................................................................................ 97 10.2.2.2.4 Administrative Procedures ............................................................................................................... 98 10.2.2.2.5 Protection Costs ............................................................................................................................... 98 10.2.2.2.6 Costs Related .................................................................................................................................... 98 10.2.2.2.7 IP Office Satisfaction ........................................................................................................................ 99 10.2.2.2.8 IP Track Record ................................................................................................................................. 99 10.2.2.2.9 Informal Protection Methods ......................................................................................................... 100
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1. INTRODUCTION
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Aygün Erkaslan
1.1 INTRODUCTION Nowadays, Intellectual Property Rights due to their ubiquity play clearly an increasing role in our society. Indeed, they can foster innovation by allowing individuals searchers and companies generating new cutting‐edge products or technologies to obtain recognition and therefore, to take profit from the benefits of their discoveries. Thus, Intellectual Property plays an important role in the commercialization of innovation technology. At the same time, intangible assets help greatly to enhance the competitiveness of companies that use technology that these companies are trying to market a new product or provide a service based on a new technology. For most technology‐based companies, an effective protection of their innovations constitutes the key of the success. In addition, Intellectual Property often plays a crucial role as a means to facilitate access to trading partners, sources of initial funding, and also facilitate the establishment of joint ventures. However, it is important to highlight that the consideration of such rights is relatively recent in industrialized countries and therefore, the gaps to be filled as regards developing countries are still numerous. Such a problem is to be quickly resolved, because nowadays, more and more companies are madding their products in developing countries in order to lower costs and considerations relating to the protection of intangible assets are not perceived in the same way everywhere in the world. Without adequate protection, it seems to be very difficult for companies of any size to be competitive and maintain a competitive advantage over the competition.
1.2 RESEARCH OBJECTIVE This international study was conducted jointly with the Enterprise Institute of the University of Neuchâtel in Switzerland. The research objective is to lead an investigation on the environment of the Intellectual Property Rights in South Korea in order to provide information to companies and therefore, to take stock of the country's current situation. In addition, the purpose is also providing information to companies about how to protect their intangibles assets in South Korea and, which procedures to follow in case of infringements. Finally, the survey is also aiming to make an international comparison with others developing countries.
1.3 RESEARCH STRUCTURE The research structure is divided into two main parts. The first part of the research focuses exclusively on an academic investigation. This latter consists of an analysis of the national context for intellectual property rights. It includes three different levels: the Macro‐Environment, the Institutional framework, and the Enterprise level.
The Macro‐Environment level attempts to determine the level of commitment and attitude of the Korean Government towards the Intellectual Property Rights. It includes the structure of the instruments, the legal support and regulatory environment. Therefore, it is really crucial to analyze the macroeconomic level to try to take stock of the current situation of the Intellectual Property Rights in South Korea.
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Regarding the Institutional level, this latter is aimed to draw a map of Korean institutions. Institutions covers a wide range of services provided by the Government, such as the Korean Intellectual Property Office or all Governmental institutions that help companies to be protected effectively against infringements. To this end, we will focus on three different aspects, ranging from an analysis of the institutional framework to the level of proactivity in the country as well as their effectiveness.
Finally, the last level of analysis has for purpose to determine what is the level of use of IPR protection instruments, to focus on the level of infringements and to figure out whether the legal system is effective and if this latter is capable to punish any misuse of an intangible assets.
Regarding more accurately the second part of the report, the main purpose is to survey companies based in South Korea. To this end, a questionnaire was set up to better identify the positive and negative aspects of the protection of intangible assets in South Korea. Therefore, more than 1.500 companies were contacted. However, it is important to outline that various problems were encountered at this stage of the study because fewer than 10 companies responded to the survey. Going one step beyond what is being said, the report concludes with a detailed conclusion on the three levels of analysis. In addition, numerous recommendations are made for the Government and the limits of the study are outlined.
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2. ANALYSIS OF THE NATIONAL CONTEXT FOR IPR
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2.1 OVERVIEW O OF THE OVERALL OPERATTING ENVIRO ONMENT
2.1.1 FOREIGN DIREECT INVESTMEENT IN SOUTHH KOREA Followin ng the Asian Financial Crisis in 1997, the Republiic of Korea a adopted a m more liberal e economic policy in n order to en nhance foreign direct innvestment an nd foster the e economic recovery. In ndeed, as shown o on the figuree 1, foreign d direct invest ment experiienced a possitive growthh from 1998 to 2000. However, due to thee terrorist atttacks of Septtember 11, 2 2001, and the bursting off the dotcom m bubble, FDI decliined consisteently after peaking in 20 00 and continued their d decline until 2003. Betwe een 2004 and 20008, the inbou und FDI experienced a sstrong recovvery amountting over USS $ 10 billion n for five consecuttive years un ntil 2008 (so ource: Ministtry of Knowle edge Econom my, South Koorea). Moreo over, it is importan nt to highlight that the ccurrent goveernment led,, since 2008,, a "pro‐busiiness" policyy in order to prom mote foreign direct invesstment. The refore, desp pite the glob bal slowdow wn, FDI resumed and increaseed for the firsst time in four years. Altthough the current environment is n ot favorable e because of the gglobal econo omic crisis, South Koreaa "out of th he storm" through the efforts and d policies undertakken in variou us direction including th e simulation n of M&A ma arket (Mergeers and Acqu uisitions), and streengthening policies p in orrder to attraact foreign direct d investment, not oonly from th he United States and the European Union,, but also froom various regions inclu uding the M Middle East and China Economy, Soouth Korea). (source: Ministry of Knowledge E
FIGURE 1
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2.1.2 GOVERNMEN NT POLICY AND D INCENTIVE As menttioned earlieer, FDI experrienced a veery rapid incrrease during g the last deecade, and therefore, are conssidered as beeing the engine of the Koorean econo omy. In order to engendeer an increasse of FDI, incentivees promoted d by the Govvernment deesigned to attract FDI by removing thhe additional costs or disadvan ntages comp pared to Ko orean firms (source: invvestkorea.org g). These inncentives incclude tax relief, crreation of in ndustrial site es and speciaal zone, site e location an nd acquisitioon, and cash granting and otheer types of financial supp port.
2.1.3 MARKET
FIGURE 2
K economy suffereed with the (current) Alt hough the Korean finaancial crisis (figure 2), Korean K markket offers numerous n advvantages an nd developm ment opporrtunities forr foreign com mpanies. One of the majjor characte ristics of the Korean maarket is the following: a a domestic market with a very sopphisticated consumerss driving demand (source: invvestkorea.orgg). With a GD DP amountinng to one USS $ trillion dolllars, South Korea is an attractive e market for foreign invvestors. Nearly half of Global 500 world companies is present in south Korrea (245 firm ms in 2008, soource: investtkoreag.org). Therefore, consumers w with high purchasiing power arre one of the e major facttors attractin ng foreign co ompanies loooking for an overseas businesss base in Korrea (source: investkorea..org). Thus, tthe sophisticcated consum mers drivingg demand means th hat Korean cconsumers are continuouusly looking ffor the mostt advanced teechnologies. "Korean consumeers are very familiar with the produccts manufacctured by the e world’s leaading corporrations, a reality w which has consequently lled to a sharrp expansion n in Korea’s domestic maarket1". For instance, many wo orldwide fam mous compa anies such ass P&G, Micro osoft, Motorrola, Ebay, O Olympus and Siemens are consstantly laun nching their new produuct into the Korean ma arket as a ttest market (source: investko orea.org). Another major chaaracteristic of the Korean market is th hat South Ko orea is considerred as bein ng a "big trading t nation" having many international trade eexchange with w the biggest b economyy around thee world, as shown on the figure 3. This confirms its opennesss to the world eco onomy. FIGURRE 3 Moreoveer, as an nother imp portant characteeristic to no ote, it is important to hhighlight thaat the Korean market, due to its strategic 1
Investm ment Environm ment & Busine ess Opportunitties Report ‐ Invest Korea, p p.10
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location, is considered as being the "gateway to the Northeast Asia". Indeed, Korea lies between Japan and China, two giants markets. This factor is particularly relevant for foreign companies intending to conquer the Asian market.
2.1.4 HUMAN RESOURCES The high education level of Koreans has effectively allowed South Korea to become one of the major economy around the world: the world’s 11th largest trading nation (source: Global Competitiveness Report). Indeed, the 2008 global competitiveness report outlines that 53% of Koreans aged 25 to 34 have a university degree. This rate is the highest of all OECD countries except Japan and Canada. This high figure shows the taste of Koreans for higher education. Therefore, we can say without retained that the Koreans citizens are highly educated, efficient at work and highly involved in their day‐to‐ day tasks. Moreover, other important factors to outline are the following: growing female workforce and improving labor‐management relations (source: investkorea.org).
2.1.5 INFRASTRUCTURE The importance of infrastructure, seen from the perspective of transport is easily understood. The transport infrastructure includes roads, railways, ports and airports, which facilitate the delivery of goods. Regarding more accurately South Korea's infrastructures, the Incheon International Airport (the transportation hub of Northeast Asia), the Busan Port and the Trans‐Korean Railway are considered by far the most important for the country (source: investkorea.org). For instance, the Incheon International Airport welcomes over 30 million passengers per year around the world. It is positioned at the second largest airport in the world for cargo (source: investkorea.org). Moreover, freight companies known worldwide such as DHL, FedEX, TNT, UPS, Polar Air, and KWE have installed freight terminals and logistics centers (source: investkorea.org). Regarding maritime road, the Port of Busan is located at the 5th place worldwide in terms of container transport. It lies at the crossroads of Maritimes routes linking Europe, Asia and North America. In addition, it is also important to highlight the following: South Korea welcomes R&D centers of international companies. For instance, Microsoft opened is Microsoft Innovation Center (MIC); IBM an Ubiquitous Computing Laboratory; Google an R&D center, and so on (source: investkorea.org). To conclude, the quality of infrastructure provided by Korea are very attractive and very suitable for companies.
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2.2 STTATISTICAL O OVERVIEW O OF INTELLECCTUAL PROPEERTY Followin ng the end of Japanese ccolonization and the end d of the Worrld War II, w when the new w Korean Governm ment launched its first economic e deevelopment plan (WIPO: Intellectual Prooperty in Asiann Countries, chapter 2.11, brief history in IP laws and po olicies in Korea, 2009), South Korea experienced a rap pid economiic growth until thee beginning o of the 1990ss. In 1993, KKorea becam me an active member of the Organizzation for Economic Cooperation and Deve elopment (soource: investtkorea.org). However, frrom 1997 the Korean economyy suffered frrom the Asian Financial CCrisis, and therefore the Governmentt was forced to call in the International Monetary Fun nd, when SM MEs and Largge companie es went bankkrupt (WIPO: Intellectual Property in n Asian Countries, chapter 2.1,, brief history inn IP laws and policies p in Korea a, 2009). The 1997 Asian Financial Crisis led d the Korean Governme ent to the vverge of ban nkruptcy with an increasse of domesstic debt, increasee of youth employment e t, reduction of FDI as well as investment in enterprises (source: investko orea.org). Du uring this da ark period (11997‐2002), the number of applicaations by IPR R type in South Korea decreaased dramattically, but aas shown on the figure e 4 (source: KIPO), South Korea experien nced a posittive growth in term of applicationss until 2008 (the onset of the international financiall crisis).
FIGURE 4 In additiion, it is imp portant to re emind that thhe Korean economy exp perienced a ppositive grow wth from 2002, esspecially when the World Cup footbball finals were held in Korea and JJapan (sourcce: KIPO). Thereforre, major economic indiccators have been rising and the num mber of pateent applications have also incrreased, as shown by the sstatistical abbove. ng more acccurately Regardin the 2008 statistical w, South Korrea was overview FIGURE 5 the worrld's fourth largest country for Inteellectual Propertyy Right applications, as shown on the figu ure cons n 2008, the o overall numbber of applicaations for pa atents, utilityy models, tra ademarks (Figure 55). Indeed, in and desiign amounteed to 368,56 65, ranking SSouth Korea of Fourth in n the World after China a, the US, and Japaan (source: KIPO, annua al report 20008). More in detail, "Pa atents" is thhe category with the 8
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ollowed by tthe tradema rks (127,139 9), design highest number of aapplications with 167,90 4 records, fo els (17,226). (56,296)), and finally utility mode a South Korea was ranked as being b the In additiion, as well as for the IPR applicattions, once again world's ffourth largesst country un nder the Pattent Cooperaation Treaty (PCT), and ttherefore, the second regardin ng Asian cou untries afterr Japan. 7,9 08 applicatiions under PCT were reecorded in 2008, as presenteed below (fiigure 6). Mo oreover, froom 2003 to 2008, it wa as noted ann significant increase concerniing the number of appliccations undeer PCT. The fiigure 7 displa ays this phennomenon. Th herefore, we can aassume thatt the more liiberal econoomic policies adopted byy the Governnment after the 1997 Asian Fin nancial Crisis have foste ered the incrrease of IPR type applica ations from foreign and national companies.
FIGURE 6
NUMBER OF APPLICATION
9000 8000 7000 6000 5000 4000 3000 2000 1000 0
7911 7066 5 5945 4690 294 42
2006 2007 2008
FIGURE 7
9
2004 2005
3565
APPPLICATION UNDER PCT
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2.3 SOUTH KOREA'S INTELLECTUAL PROPERTY ‐ FROM THE PAST TO THE PRESENT First of all, it is important to highlight that the earliest Korean intellectual property system was not established by the Korean government itself, but was forced by numerous foreign powers such as the US and Japan at the beginning of the 20th century (Ji‐Hyng Park, 2008). Indeed, to be more accurate, the first Korean intellectual property laws was voted by foreign countries in 1908, engendering the proliferation of several decree as well as Patent, Design, Trademark, and Copyright decree (Ji‐Hyng Park, Paul Goldstein, 2008). To this end, the Korean Patent Ordinance was established in August 12, 19082. However, following the annexation of Korea by Japan in 1910, the Korean Patent Ordinance was cancelled and the Japanese Patent Act were instituted remaining into effects until 1945, the end of the World War II (Ji‐Hyng Park, Paul Goldstein, 2008). From 1945, following the end of Japanese colonization and Wolrd War II, the current system of intellectual property protection's foundations was laid by the new Korean Government. Therefore, the first Patent Office was created in order to protect inventions, designs, and utility models. Regarding the Trademark Act, it was passed into laws in 1949 ((Ji‐Hyng Park, Paul Goldstein, 2008). Concerning more accurately Korean's copyright, the Government applied the Japanese law until 1957. From 1961 to 1963, the Korean Government established and enacted its own patent act which was very similar to that of Japan and the US, and in the same time, promulgated a new Trademark Act. Both Patent and Trademark Acts are still considered as being the foundations of the current Patent and Trademark Acts of the country (Ji‐ Hyng Park, Paul Goldstein, 2008). Furthermore, the Trademark Act promulgated in 1964 was amended in 1997, in order to allow South Korea to adopt international treaty such as Madrid System of International Registration of Marks and the Trademark Law Treaty. Regarding the Patent Act enacted in 1961, this latter one has also undergone numerous revisions. From 1980, for instance, the Korea Patent system joined international treaties, such as the Paris Convention in 1980, the Patent Cooperation Treaty in 1994, the Budapest Treaty in 1988, TRIPS in 1995, and UPOV in 20023. In addition, under commercial pressure from the US Government, the Korean Government has forced to introduced in 1986 a substance patent system which led to grant patents covering chemical substances as well as medicines (Ji‐Hyng Park, Paul Goldstein, 2008). From 1998, the Korean Intellectual Property Office was established its own guidelines related to biotechnology inventions by which numerous patents relating to plants, animals and human genes could be granted as well (WIPO, 2009). In addition, since 2000, it is possible to grant patents for any invention related to a business model, thank the special guideline developed by the Korean Intellectual Property Office. Furthermore, it is also important to highlight that in order to strengthening the copyrights in films as well as sound recordings' enforcement, the Korean Government promulgated the Phonogram Act and the Motion Picture Act (Ji‐Hyng Park, Paul Goldstein, 2008). Finally, "The government also issued interpretations of the new legislation that may help the music industry in its legal battles against downloading, uploading, and exchanging computer files of sound recordings without the permission of the rights holders4". In addition, South Korea is member of the World Intellectual Property Organization since 1979. 2
WIPO: Intellectual Property in Asian Countries, chapter 2.1, brief history in IP laws and policies in Korea, 2009 WIPO: Intellectual Property in Asian Countries, chapter 2.1, brief history in IP laws and policies in Korea, 2009 4 Godlstein, P., et al, 2008, Intellectual Property in Asia: Law, Economics, History and Politics, , Springer‐Verlag Berling and Heidelberg Gmbh & Co. k357 p. 3
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Regarding the current intellectual property system in South Korea, this latter one includes patents, trademarks, utility models, designs, and copyright (source: KIPO). Although all IPR category is vital to build a sound business environment, and therefore to foster innovation and foreign direct investment, the one that has been the more changed, reviewed, and strengthened by the Korean Government is the Patent System. Indeed, since its inception in 1961, the Patent System has undergone 30 revisions (source: WIPO: Intellectual Property in Asian Countries, 2009). For the Korean Government, in order to foster rapid industrialization and to attract foreign companies, it was a necessity to strengthen the Patent System. The importance to strengthen the IP system is easily understood and can be shown by the increase in the number of patent application. According to the World Intellectual Property Indicators (source: WIPO, 2009), the Korean Intellectual Property Office is the fourth largest recipients in terms of the number of patent application in 2007. Moreover, it is important to stress that all the efforts undertaken by the Government had for purpose to be in comply with international patents systems (source: WIPO: Intellectual Property in Asian Countries, 2009). According to Dr. Han Ji‐ Young, professor at the College of Law of Chosun University in Korea, all the efforts undertaken hold following features: "to enlarge patentable subject matters; to increase effectiveness of patent examination; to strengthen patent protection such as extension of patent protection term; to control misuse of patent right; to join international agreements on patent; to comply with international trend for patent protection etc". The Korean Patent System in South Korea has been internationalized thanks to such revisions.
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3. THE MACRO‐ENVIRONMENT
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3.1 GOVERNMENT ATTITUDE & COMMITMENT Overall, Korean Government's attitude towards the protection of intellectual property right is well recognized. Indeed, according to Dr Ruth Taplin5, for nearly 2 decades, the Government has undertaken numerous efforts to foster and strengthen the development in industry throughout fair competition, and therefore, to engender invention and innovation. "The Korean Government is fully aware of the compelling economic regards that result from an advanced IPR protection regime. The Korean Government has embarked on a bold path of upgrading its IPR protection regime. The Korean Government has promoted its government‐wide efforts to further improve the level of IPR protection by cracking down on IPR infringements under the Master Plan for IPR protection established in 2004"6. Thus, the Korean Government has made numerous progresses on the field of Intellectual Property Right and all these endeavors have been fruitful as outlined by the following statement: "The significant progress achieved led the U.S. Government in May 2005 to remove Korea from the Section 301 priority watch list countries and place Korea on a separate, lower‐level watch list"7. Moreover, compared to other Asian countries, the Korean intellectual property system is more advanced and more in comply with the international treaties (source: ipaustralia.gov.au). Furthermore, as outlined by the Australian Government, Korean Government's attitude towards the prosecution of patent rights has some similarities with European countries and Japan regarding the protection that can be granted (source: Department of Foreign Affairs and Trade, www.dfat.gov.au). So, it is clear that the Korean Government pays great attention to build a sound intellectual property environment. For instance, the Korean State Council took the initiative to set up the Policy Coordination Committee for intellectual property protection, in 2004 (source: APEC publication, Research and IP protection, 2007). The main purpose of this Committee was the following: "to establish a permanent system for infringement investigation and penalization, to make advanced laws and rules concerned, and to guide and build new‐style social culture8". In addition, during 2004, the Korean Policy Coordination Committee decided to establish another "body" which was directly attached to the committee: the Joint Intellectual Property Infringement Investigation Center. Moreover, during these recent years, and in order to enforce the execution of Intellectual Property protection, South Korea, in addition to the Korea Intellectual Property Office, set up an International Patent Research and Training Center (source: APEC publication, Research and IP protection, 2007). This "body" is specialized in training professional patent personnel and providing materials and tools to the public in order to increase the public's awareness towards the importance of intellectual property protection (source: Korea Intellectual Property Rights Information Service). Already in 2003, the Korean Government established the Intellectual Property Protection Center given the fast development of electronic‐commerce and Internet‐based activities. All these efforts undertaken by the Government demonstrate that the importance of Intellectual Property protection in South Korea has achieved great results. As a reminder, less than a decade ago South Korea was reputed as being a nation that did not respect intellectual property right (Rajendra K. Bera, April 2009). However, as 5
Protect and Survive: Managing Intellectual Property in the Far East ‐ The Case of South Korea, 2004 Korea's Economy 2006, a publication of the Korea Economic Institute and the Korea Institute of International Economic Policy, Volume 22 7 Korea's Economy 2006, a publication of the Korea Economic Institute and the Korea Institute of International Economic Policy, Volume 22 8 APEC, Research Report on Paperless Trading Capacity Building and Intellectual Property Protection, 2007, p. 57 6
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ned before, tthe Korean G Governmentt has undertaken great e endeavors a nd now are boasting mention an IP sysstem in comply with inte ernational sttandards (Rajendra K. Be era, April 20009). To conclude, it is also imp portant to highlight the following: ""As part of Korea’s K conttinuing efforrts to furtheer protect rights ho olders of inteellectual pro operty, legisllative bills to o revise Kore ea’s Copyrighht Act and Computer C Program m Protection n Act were introduced in the National Assem mbly. Furtheermore, thee Korean governm ment’s enforccement auth horities havee been workiing tirelesslyy to remove counterfeit p products. The Koreean governm ment also acctively coopeerated in im mplementing the U.S. goovernment’s Strategy 9 Targetin ng Organized d Piracy (STOP!) initiativee" .
3.1.1 GOVERNMEN NT DECLARATIO ONS REGARDIN NG IPR PROTECTION AND E ENFORCEMENTT K Goveernment in term t of inte ellectual prooperty right are well‐ In generral, statements of the Korean recognizzed. Indeed, as outlined by the Koreean Intellectual Propertyy Office's Co mmissioner,, Jung‐Sik Koh, South Korea is going to provide furtther endeavvors in orde er to strenggthen and make m the intellectual propertyy system more efficient ((source: KIPO O Annual Report, 2008). Moreover, M Mr. Jung‐ Sik Koh h highlights th hat the intern national coo peration hass been at the e forefront oof Korea's en ndeavors, and will also be in the future. In additionn, he also underlines th hat his Goveernment hass actively participaated in the meeting of the IP5 offfices, which corresponds to the exttent of the trilateral cooperation (the USS, Japan and Europe) thaat include Ko orea and Chiina, as repreesented by the figure cons (source: KIPO).
FIGURE 8 Addition nally, the Government underlines its strong interest to bring a moore meaningful and construcctive contribution to a ra ange of globbal intellectu ual property issues (sourrce: KIPO). R Regarding more acccurately thee internation nal cooperat ion, South K Korea expresss without reetained the desire to share itss knowledgee and succe essful exper ience with developing countries (ssource: KIPO O Annual Report, 2008). Indeed, the Govvernment w ould really assist develo oping counttries through h various ms such as Technologiccal Solutionss for Basic Need and One Villagee One Bran nd10. For program informattion, during tthese recentt years, the KKorean Gove ernment has established a strong and d reliable networkk with more than 200 loccal governmeents, including both developed and developing ccountries (source: KIPO Annuaal Report, 2008). On toop of this, So outh Korea is also respoonsible for examiner e training for ASEAN ccountries and all these ccommitmentts reflect the e Governme nt's vision o of making Korea ass being an intellectual property‐orie p ented country (source: KIPO). Indeeed, it is impo ortant to 9
Korea's EEconomy 2006, a publication off the Korea Eco nomic Institute and the Korea Institute of Inteernational Econoomic Policy, Volume 222 10 Improvinng the quality of life for low‐inccome countries by providing infformation on appropriate technnologies for basic need, and boosting tthe level of in ncome in developing countriees by supporting the brandin ng and tradem marking of loca al products: www.ipforrliving.org
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highlightt that one off the most re elevant Goveernment's go oal for the future is to sshift from the e current manufaccturing‐inten nsive society into an inteellectual prop perty‐intensive country ((source: KIPO O Annual Report, 22008). Thereefore, it is ea asily underst ood that botth a sound b business enviironment as well as a strongerr IPR protecttion remain Governmentt's top priorrities. Furthe ermore, the G Governmentt also set up a "Caampus Paten nt Strategy U Universiade" in order to ffoster professsional and aacademician to share ideas and to collaborrate in open innovation ((source: KIPO O Annual Report, 2008). Regardin ng more accu urately the sstrategic com mmitments, the Governm ment has sett five main o objectives in term of Intellectual Propertyy Rights, as presented on o the figurre below (soource: KIPO website, Vision & & Goals). Indeed, South K Korea confirrms its intentions "to become an IP powerhousee through innovative IP adminiistration, and d to enhancee technological innovatio on and indusstrial develop pment by 11 1 facilitatiing the creattion, utilizatio on, and proteection of IP ". STRATEGICC GOAL 1
TO PRROVIDE A WORLD D‐CLASS IP SER RVICES
STRATEGIC GOAL O 2
S TRATEGIC GOALL 3
STRA ATEGIC GOAL 4
STRATEEGIC GOAL 5
TO EXPAND GLOBAL IP COOPERRATION
TO IMPROVE IP COMPETITIVENESS OF COMPANIE ES
TO PROMOTE THE
THE CREATE A
CREATION AND UTILIZATION OF IP
CULTURE OF RE ESPECT FOR IP
FIGURE 9 Moreoveer, for each strategic co ommitment the Governm ment has se et performannce goals. In n fact, all expectattions are preesented usingg the diagram m below (source: KIPO w website, Visioon & Goals). GOAL 1 1 EXPECTED PERRFORMANCE
GOAL 2 EXPECTED PERFFORMANCE
•To provid de High‐quality eexaminations and trials •To makee our examination ns and trial systems more customer‐ffriendly •To operaate customer‐orieented IP systems and establish thee related ucture infrastru
•To contribbute to the IP5 co ooperation frameworrk •To promoote bilateral and m multilateral cooperatiion •To suppo rt for the develop ping and least deveeloped countries
GOAL 3 EEXPECTED PERFO ORMANCE •To expandd IP‐centered tech hnology procuremeent strategies •To promotte IP‐R&D interacctive strategies •To reinforcce the IP competitiveness of small & meedium enterprise es
GOAL 4 EXPECTEED PERFORMANCCE GOAL 5 EXPECCTED PERFORMAANCE •To rreinforce the capacity to create IPP and •T To reinforce dome estic IP protectioon to p promote technolo ogy transfers systems •To eenhance the IP ca apacity of universsities •T To establish IP pro otection systems s and research institutte overseas o •To ffoster the human resource •T To cultivate talentted next‐generattion IP development of IP professionals entrepreneurs e FIGURE 10 In additiion to thesee commitments, it is alsso importantt to outline that since 22006, Korea Customs Services mobilized significant resources to sstrengthen itts actions ag gainst counteerfeiting and d thereby 11
Korean IIntellectual Propperty Office: ww ww.kipo.go.kr ‐ V Vision & Goals
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ea Customs Services). In ndeed, as enhancee the protection of intellectual propperty right (ssource: Kore outlined by the Ausstralian Custtoms Servicee, "Korea Cu ustoms Services gave prriority to Intellectual Propertyy Right protection and d drawing uup the Stra ategy for IP PR Protectioon for efficient and compreh hensive enfo orcement: prrotect the rrights of con nsumers and d businessess and build national credibilitty on IPR enfforcement an nd protectio n and Expan nd Customs’ authority forr IPR enforceement12". Since 20006, the Govvernment has introducedd "The anticounterfeiting reward sysstem", which has for purpose to reward companies with an ex cellent reco ord of expossing counterrfeit goods, but also people who report the manuffacture of ccounterfeit goods g (source: KIPO Annnual Report 2007). Furtherm more, the Ko orean Interna ational Propeerty Trainingg Institute (K KIPTI), which is a sub‐organization of the K KIPO, plays also a a very important rrole. Indeed, its contrib bution is vitaal and regarrds more specificaally on trainiing in the field of intell ectual prope erty. The main mission of the KIPTI are the 13 followingg : KKIPTI GOALS SUMMARY U •To offer specia al training coourses to help p KIPO staff achieve a a worrld‐class sttandard of pattent administtration •To develop th he expertise of IPR experrts in the priivate sector tthrough trraining courses tailored tto meet their needs and the needs oof their cu ustomers
•To introduce a system of ggrooming invvention geniuses with the help of exxperienced IP specialists annd the system mization of inve ention educattion •To establish in nternational ccooperation and a substantiial IPR educaation for
in nternational participants p soo as to make Korea K an IP hu ub •To create adva anced online IPR invention n education th hrough high‐leevel IPR ducation information systeems. ed In additiion, accordin ng to Xinhua, a Chinesee news agen ncy, the Korrean Governnment will undertake more refforms: "Soutth Korea willl ban importt of productss that violate e local intelleectual property rights starting from July, 2010: 2 the neew rules willl apply to products p that are in breaach of local patents, design, llogo and other exclusive rights held bby South Koreean companies"14. Regardin ng future acctivity plan, the followinng declaratio ons are particularly inte resting: "The Korean Governm ment announ nced the will to strengthhen the execcution again nst trademarrk counterfeiting and illegal co opying throu ugh the Korrean‐Americaan FTA negotiations. Th he Korean G Government is trying positivelly to streng gthen intelleectual propeerty protectiion by extending the sscope of intellectual propertyy right treatted by bordeer measure besides the things men ntioned in Koorean‐Ameriican FTA. Moreoveer, the Korea an Governm ment will do its best to embody e deve eloped patennt administrration, to raise national imagee to develop ped countries es' level thro ough the maintenance of of law and syystem by
12
APEC ‐ Inntellectual Property Rights Enfoorcements Strateegies, 2006, page 15 Internaational Properrty Training Institute Brochuure, 2009, pagge 5 14 http://english.peopledaaily.com.cn/900001/90778/908588/90863/69267444.html 13
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i intellectua al property protection and a the pro omotion of eeffective, su ubstantial internatiional level in 1 15 policies ccontinually" .
3.1.2 RESOURCES Accordin ng to what has been outlined o andd said abovve, it is easiily understoood that the e Korean Governm ment is dediicating impo ortant resourrces to Intellectual Prop perty Issues.. Indeed, wh hether in term of human reso ources or inffrastructuress, the Goverrnment's invvolvement iss relevant. Regarding R more in depth resou urces, the Ko orean Intelleectual Property Office's h human resouurces is com mposed of 1,511 highly educated people, and a are "dis patched" wiithin variouss regions of the countryy (source: KIPO Annual Report 28). Furthermore, the inncrease in expenditure off the Korean Intellectual Property Office co onfirms the commitments of the Goovernment to o become an advanced IP nation in the 21st century. Indeed, as shown on the t figure bbelow, betwe een 2005 to o 2009, the overall expe enditures nced an impo ortant contin nuing increasse (source: K KIPO Annual Report 20088). experien
EXPENDITURE
KOREAN N INTELLECTUA AL PROPERTY OFFICE EXPE ENDITURE 400'000 350'000 300'000 250'000 200'000 150'000 100'000 50'000 0 Expendituree (billion KRW)
2005
2006
2007
2008
2009
225'020
297'973
311'119
317'964
374'675
FIGURE 11 Moreoveer, without going g more into details at this stage e of the ana alysis, it is im mportant to highlight that the Governmen nt has set up p 29 local IP Centers nattionalwide in n order to suupport comp panies, as ource: KIPO A Annual Repo rt 2008). presenteed below (so
15
KIPO: Annticounterfeitingg activities of KIPPO, 2009
17
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In addition, Public Patent Attorneys Center provides free Intellectual Property consultations to individual inventors and companies (source: KIPO, Technical Cooperation Division, 2008). Moreover, it is also important to note that the Korean Government is also dedicating important focus on education. Indeed, as mentioned on the previous chapter (Government declarations), the Korean Intellectual Property Office established in 1987 the International Property Training Institute (KIPTI). Going on step further, Korean Intellectual Property Office has drawn up a specific budget amounting to 349.8 billion Korean Won for year 2010 (source: Barun IP & Law), which was diminished by 6.6% compared to 2009 (374.7 billion Korean Won). Therefore16:
"KIPO has allotted 30.1 billion Korean Won in examination and trial support including investigation, analysis and classification of prior art, trademark and design, and training of examiners to thereby improve quality of examination and trial".
"KIPO has allotted a total of 43.4 billion Korean Won in the information business, which falls within infrastructure of examination and trial, including allotment of 5.8 billion Korean Won in the development of third generation patent system which is required for signing international treaties such as Patent Law Treaty and Trademark Law Treaty".
"KIPO has allotted 25.2 billion Korean Won in technology acquisition, focusing on intellectual property rights, strategic aid to intellectual property rights and R&D in the high‐tech parts and materials and support of standard patents to improve competitiveness in R&D.
"KIPO has allotted 17 billion Korean Won in training intellectual property personnel such as fostering of next‐generation, talented enterprises based on intellectual property rights and management of IP specialist degree course to secure future growth".
"KIPO has allotted 2 billion Korean Won in the international relation section to support efficient bilateral and multilateral cooperation".
"KIPO has allotted 5.7 billion Korean Won in additional installation of IP‐Desk and introduction of intellectual property right lawsuit insurance to respond to Korean companies' intellectual property rights infringed overseas and international patent dispute".
"KIPO has allotted 11.6 billion Korean Won in the business facilitation sector to facilitate industrialization and transfer of excellent patent technology to operate the patent technology trading market".
Therefore, as witnessed by the previous lines, South Korea has dedicated a specific budget related to Intellectual Property Rights.
16
http://www.nahm‐patent.co.kr/eng/bbs_view.asp?boardid=5&num=226
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3.2 IPR INSTRUMENT STRUCTURE & SCOPE
3.2.1 FORMAL, LEGAL AND INFORMAL OPTIONS FOR INTELLECTUAL PROPERTY PROTECTION Companies wishing to sell their products and therefore desiring to be operational in South Korea need to register their intellectual property with the Korean Intellectual Property Office (KIPO). Indeed, as outlined by the U.S. Commercial Service, "the best way for any companies of any size to enforce a right‐holder's claims is to have their intellectual property recognized by the Korean Government"17. However, depending on the nature of IPR, various laws and authorities are taken into account. Accordingly, the Korean Intellectual Property Office (KIPO), the Ministry of Culture, Sports and Tourism (MCT), the Ministry of Knowledge Economy (MKC), the Ministry of Agriculture, Fisheries and Food (MAF), and Korea Customs Service (source: KIPO). The main formal and legal options available for protecting Intellectual Property in South Korea are summarized on the following table including the type of IPR, related law, and Authorities. TYPE OF IPR Industrial Property Rights
LAW
Patents Utility Models Designs Trademarks
Patent Act Utility Model Act Design Act Trademark Act
Unfair Competition Prevention and Unfair Competition Act Trade Secrets Protection
AUTHORITY
Korean Intellectual Property Office (KIPO)
Semiconductor Integrated Circuit Semiconductor Act Layout Right Copyright
Copyright Act
Sound Records, Video Products and Sound Records, Video Products and Game Software Game Software Act Computer Programs
Computer Programs Protection Act
New Breed of Plants
Seed Industry Act
Customs clearance regulation on Customs Act counterfeit goods
Ministry of Culture, Sports and Tourism (MCT) Ministry of Knowledge Economy (MKC) Ministry of Agriculture, Fisheries and Food (MAF) Korea Customs Service
Source: Korean Intellectual Property Office
17
U.S. Commercial Service. Url: http://www.buyusa.gov/korea/en/iproverview.html#2
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orean Government has undertaken several acttions in ordder to eradiicate the In addittion, the Ko commerrcialization of o counterfe eit productss, and therrefore stren ngthen the IPR protecttion. For instancee, the Korean n Intellectua al Property O Office is incrreasing its ad dvertising caampaigns in order to increasee public awarreness of the e illegality of counterfeitiing. Indeed, "KIPO is makking a lot of efforts to place an nti‐counterfeeiting flyers, posters, auudio an visu uals clips on n the Internnet, in publiic places, 18 subwayss, buses, etc"" . Moreove er, in order tto strengthe en its "fight" and discourrage the proliferation of countterfeit produ ucts, KIPO de ecided to takke serious actions such as "tracking g down, expo osing and 19 shutting down online and offlinee sales outleets that deall in counterffeited produccts" . In add dition, as ned previoussly (Chapter: Governmennt declarations), KIPO inttroduced "Thhe anticountterfeiting mention reward ssystem", wh hich has for purpose to reward com mpanies with an excellennt record of exposing counterffeit goods, b but also people who repport the man nufacture of counterfeit goods (sourrce: KIPO Annual Report 2007). The following figurre correspon nds to the "system of control counterfeit e main actorss involved in the fight productss" establisheed by the Korrean Governnments, whicch shows the against ccounterfeit p products (sou urce: KIPO).
ng more acccurately the Korean Inteellectual Pro operty Office e, its main aactivities are e to raise Regardin consumeers' recognittion, improve the system m for intellectual properrty, reinforcee the contro ol against counterffeit productss, and reinfo orce intellecttual propertyy's capacity (source: KIPO O, Anticountterfeiting activitiess, 2009). Lett us focus on n the contro l against cou unterfeit pro oducts. Indeeed, it is important to highlightt the followiing: "KIPO will w cope withh the processs systematiccally to eraddicate the co ounterfeit productss what are trransacted illlegally with the construcction of "24 hours monittoring system m against counterffeit productss" to stamp out online ttransactions of counterffeit productss in this firstt term"20. Thereforre, the systeem was esta ablished in oorder to facilitate investigation, certtification, monitoring and conttrol measurees. FIGURE 13 3
18
KIPO: Annticounterfeitingg activities of KIPPO, 2009 KIPO: Annticounterfeitingg activities of KIPPO, 2009 20 KIPO: Annticounterfeitingg activities of KIPPO, 2009 19
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3.2.2 INSTRUMENTS FOR THE COMMERCIALIZAATION OF IPR R First of all, it is imp portant to highlight thatt since 2005 5 the Korean n Governme nt has attem mpted to smooth the commeercialization of patentedd technologiies. To this end, severaal actions ha ave been undertakken: for insstance, furth her financiall support fo or commerccialization, eestablishmen nt of the Patented d Technologgy Commerrcialization Committee, and agree ements withh various financials f institutees in order to o facilitate th he granting oof loans to SSMEs and ve enture busineess (source: KIPO). In addition, the Govern nment:
iintroduced ssubsidies to SSMEs for the appraisal off their patentted technoloogies;
m made the sysstem of transferring pateented techno ology more ffavorable to ttechnology b buyers;
p promoted teechnology tra ansfers by off ffering inform mation on exxcellent technnologies;
o offered publlic universitiees a 50 perceent discount o on applicatio on fees;
ccontinued to o expand the patented teechnology da atabase;
a and, in conjjunction with h various teechnology tra ansfer organ nizations, annalyzed the trends in 21 ttechnology ttransfers .
Moreoveer, the Government also expanded thhe electronicc‐marketplacce for all pattented goodss in order to suppo ort SMEs forr enabling th hem to find bboth a suitable distributtion channel and suitable market (source: KIPO, Annu ual Report 2005). 2 Furthhermore, the e Government "also enccouraged SM MEs with patented d technologies to take ad dvantage of f the early bu uyer recomm mendation sys ystem for govvernment organiza ations: the syystem enablees SMEs to suupply patentted products to governmeent organiza ations"22. ng policy related to "Co ommercializaation", the following f fig gure has for r purpose to o present Regardin some of the most eleements prom mulgated by the Korean IIntellectual P Property offiice since 200 0523. FORR THE PATENTEEE WHO IS INCA APABLE OF INDEPENDENT C COMMERCIALIZA ATION
FOR THE PATENTEE WHO O WANTS TO
•Facilitaation of the trransfert of patentted technologgy •E.g. Un niversity and research institu utes
•Provisioon of financiaal aid •Supporrt of expandin ng market places: exhibitions, ccyber shoppinng malls
INDEPEN NDENTLY COMM MERCIALIZE AND INVENTIO ON
FOR FAAIR AND TRANSPPARENT SUPPORT
•Establishhment of an o objective appraisaal system
FIGURE 14 A more detailed an nalysis is pre esented in tthe following paragraph hs. Note thaat all these activities related tto the comm mercialization n are supervvised by the Commercialization Counncil. Indeed, the main services of the Com mmercializatiion Council revolve around three key k elementts: Financial Support, Collateraal Support, and Consulltations Nottifications, as a shown be elow (Sourcce: WIPO Re esources: Improvin ng IP recogniition in Enterprises, KIPO O, 2007). 21
Korea Inttellectual Propeerty Office, 2005 Annual Report,, p 51 Korea Inttellectual Propeerty Office, 2005 Annual Report,, p 51 23 WIPO Reesources: Improoving IP recognition in Enterprisees, KIPO, 2007 22
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FIGURE 15
More accurately, thee mains services providedd are the following24: COLLATERAL SUPPPORT
F INANCIAL SUPPORT
•Provision of IP inforrmation •Discou unted applicattion fees •Nurturing of IP expeerts •Autheentication and nteeing of new w guaran techno ologies •Evaluaation and marrketing of new teechnologies •Guidance on managgerial or techniical problems •Adverttising and marketing of new products
•Funds ffor R&D and aacquisition of IP •Funds ffor IP valuatio on and transacctions •Funds ffor launching new produccts •Funds ffor establishin ng enterprrises •Funds ffor facilities and mass producction
CONSULT LTATIONS NOTIFICATIONS
•Consultaations on general aspects of commercia alization ouncil’s •Notifica tion of the co support programs •KIPA
In addittion to servvices offered d by the CCommercializzation Council, Korea IInvention Prromotion Associattion (KIPA) has an im mportant rolle in the commercializ c zation of inntellectual property. p ngly, the com mmercializatiion services includes the following su upport: Accordin
ffunding for ccommercializzation,
ttechnology ttransfer supp port,
ttechnology vvaluation sup pport,
aand regionall intellectual property ceenter supportt (source: KIP PA website, sservices). Note: alll the follow wing definitio ons in italicss are from the Korea Invention Pro motion Asso ociation's website (http://www w.kipa.org/english/biz/suupport_b.jsp p).
24
WIPO Reesources: Improoving IP recognition in Enterprisees, KIPO, 2007
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The funding for commercialization has for purpose to financially support any companies of any size for the commercialization of pilot products of superior patented inventions (source: KIPA). Firstly, it includes the subsidization for international application fees, that is "providing assistance with international applications fees in order to encourage individuals inventors and SMEs to venture out internationally". Secondly, the support for the production of prototypes, which is intended to "boosts inventors' morale and helps commercialize invention by providing government financing for manufacturing pilot products". Thirdly, it comprises the industrial technology development loan project, which "encourages enterprises possessing patents to develop major capital goods and products requiring sophisticated technology, as well as disseminate innovative technologies by offering long‐term low‐interest loans that can be used to cover production costs from research and development to the manufacturing of pilot products". Fourth, the patented technology transfer promotion fund which has for purpose to "promotes the efficient transfer of superior patented technologies (from local universities, research institutes and other enterprises) to recipient firms by lending financial support and helping commercialize such patented technologies"25. Finally, the main activities of the assistance for the acquisition of good inventions are to "explore the market, increase the volume of trade, enhance the morale of SMEs and individual inventors, collect the funds for the development of patented technologies and secure profits". Regarding the technology transfer support, it includes the following support and assistance: the patent transfer information center, the IPMart, and the exhibition and fair assistance. For instance, the patent transfer information center provides free consulting services concerning technology transfer. Regarding the IPMART, this latter one provide via online marketplace a powerful information support regarding the transfer and commercialization of target technologies. It includes information about 50,000 technologies to be licensed (source: KIPA website, services). Finally, the exhibition and fair assistance has for purpose to "explores the demand for and market potential of superior patented technologies and encourages their transfer to private firms". The technology valuation support includes three mains activities, namely the invention valuation project, the exhibition and fair assistance, and finally the online patent valuation system. Regarding the invention valuation project, it "designates valuation organization and supports the costs of the valuation performed by them". Concerning the exhibition and fair assistance, from the point of view of the technology valuation support, it is intended to "assigns IP experts to provide valuation services at intellectual property rights‐related fairs for an onsite analysis of the technologies on display". Finally, the online patent valuation system "allows inventors to get an instant grade for their patents online which can be used to determine what to do with the technology in terms of budget, licensing strategy and competition". The last one concerns the regional intellectual property center support. It includes the following: support for the operation of local intellectual property centers, regional brand consultation, and workshops and seminars. Support for the operation of local intellectual property centers is intended to "provides centers with the funding and training necessary for them to give local inventors and SMEs full support for all stages of commercializing their inventions". Regarding the regional brand 25
KIPA. Url: http://www.kipa.org/english/biz/support_a.jsp
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consultation, it "puts a stronger focus on geographical indications and other types of regional branding to help less developed regions of Korea establish themselves both nationally and internationally". Finally, workshops and seminars are intended to "allows the exchange of up‐to‐date information and strategies in the world of intellectual property for centers to use for their client services".
3.2.3 INSTRUMENTS FOR THE ENFORCEMENT OF IPR In order to prevent IP infringements and the proliferation of counterfeit products, the Korean Government relies on an effective system with enforcement agencies. Indeed, seven agencies with different missions contributes to the protection of the intellectual property (and also to eradicate counterfeited goods) of companies, individuals, or inventors. These agencies are presented in the following. AUTHORITY
ACTIVITIES26
KOREAN INTELLECTUAL PROPERTY OFFICE
"is responsible for enforcing four major industrial property right (IPR) laws – Patent, Trademark, Utility Models and Design laws" "is responsible for enforcing other IPR laws, such as the Semiconductor Integrated Circuit Layout law and the Unfair Competition Prevention and Trade Secret Protection law" "carries out offline investigations to help track down and put a stop the manufacture, circulation and sale of counterfeit products because they usually result in unfair competition practices"
LOCAL OFFICES BY REGION
"aims to efficiently control counterfeiting activities within its region" "investigates and obtains detailed information about the modus operandi of illegal manufacturers and circulators within its region"
KOREAN INTELLECTUAL PROPERTY PROTECTION ASSOCIATION
"is working closely with major, medium and small‐sized companies to address the counterfeiting control problems that Korea currently has" "supports KIPO’s anti‐counterfeiting activities, receives complaints from companies in terms of the difficulties they face due to counterfeiting activities, monitors online circulation of counterfeit products and recommends policies for adequately fighting counterfeiting"
PROSECUTOR OFFICE AND THE POLICE
"special prosecutors established a “Joint Investigation Headquarters for Intellectual Property Violation Criminals” at the Prosecutor‐General’s Office to efficiently enforce intellectual property protection leading to the eventual eradication of counterfeit products and activities" "joint local investigation teams have been established and charged with the responsibility of prosecuting IPR violation cased within their jurisdiction"
KOREA CUSTOMS SERVICE
"responsible for managing imported and exported products through unified customs boundary, has, in line with the WTO/TRIPs agreement of January 1, 1994 and the Customs Law, been enforcing the protection of trademarks and copyrights" "is endowed with special judicial police authority to take action against IPR offenders in relation to the import or export of products that violate trademark, copyright, design, patent or utility model rights"
KOREAN TRADE COMMISSION
"has the authority to ban the importation, exportation, sale or production of IPR infringing products. The Korean Trade Commission, depending on specific circumstances, may give over an order for the IPR infringing products to be corrected, prohibited or disposed of"
LOCAL SELF‐GOVERNMENT
"KIPO has entrusted 256 local self‐governments throughout the nation with the right to investigate and eradicate counterfeit products"
26
Definitions: U.S. Commercial Service Website. Url: http://www.buyusa.gov/korea/en/iproverview.html#_top
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Going one step beyond what is being said, it is important to outline that South Korea's IP system is supported by what is called the "Trials System". Indeed, this latter one related to intellectual property rights is a three instance procedure which includes the Intellectual Property Tribunal, the Supreme Court and the Patent Court (source: KIPO). Its main purpose is to "promote and strengthen the protection of IPR while guaranteeing fair and prompt settlements of IPR‐related disputes"27.
3.3 SUPPORTING LEGAL AND REGULATORY ENVIRONMENT The protection of intellectual property is promulgated in Article 22(2) of the Korean Constitution, which underlines that « the rights of authors, inventors and artists shall be protected by law »28. Regarding Patents, Utility Models, and Designs, it is important to outline that in South Korea invention can be protected depending upon the concerned Act. For instance, patents are protected pursuant to the Korean Patent Act (source: KIPO). Concerning utility models, protection comes into force only when the registration is made pursuant to the Utility Model Act (source: KIPO). Note: in order to be protected by the law, an « invention » must fulfill the basic requirements in terms of industrial applicability, novelty, and inventiveness (Goldstein, 2009). Article II of the Patent Act states that « the term of protection for a patent is twenty years from the date of the filing of the patent application »29. The duration of protection for utility models is ten year from the filling date. In terms of Design protection, it comes into effect under the Design Act. Article II of the Design Act defines any designs as being « the shape, pattern or color of an article or any combination thereof which produces an aesthetic impression on the sense of sight »30. Note: patents, utility models, and designs must be registered with the Korean Intellectual Property Office in order to be protected by the law. Copyright : literacy, scientific work or artistic domain falls under the Copyright Act. Unlike patents, utility models, or designs, no registration is required in order to be protected (source: Copyright Act). However, the copyright holder has the possibility to register its work with the Ministry of Culture, Sports and Tourism. By registering, it enables the copyright holder to be more protected against third parties (Copyright Act, Article 52). Under the Korean law, Trademarks are protected according to the Trademark Act. Therefore, a trademark is qualified as being « a sign, character or figure, or combination thereof which is used by a person who produces, manufactures, processes, certifies or sells goods for business, in order to distinguish his goods from those of others »31. Any marks, associated marks, service marks, collective marks, and non‐profit business emblems falls under the Trademarks Act (source: Trademark Act). In addition to the above, certain intellectual property rights are protected under the Unfair Competition Prevention and Trade Secrets Protection Act, which came into effect in 1992 (Goldstein, 2009). The main purpose of this Act is to avoid and prevent unfair competition such as 27
KIPO's website: Korean IP System ‐ Trials Goldstein, P., 2009, Intellectual Property in Asia: law, economics, history and politics, Springer, 357 p. 29 Patent Act, Article II 30 Design Act, Article II 31 Trademark Act, Article II 28
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the misuse of trademarks and trade names, and therefore to avoid trade secrets infringement (source: Unfair Competition Prevention and Trade Secret Protection Act). Going one step beyond what is being said, it is important to highlight that the protection of certain types of intellectual property rights such as computer program, semiconductor chip layout designs, sound records, video products and game software falls under specially legislated acts (Goldstein, 2009).
3.3.1 JUDICIARY INDEPENDENCE, TRANSPARENCY AND CORRUPTION In terms of transparency, this latter cannot exist "without a transparent legal system that are freely and easily accessible to all, strong enforcement structures, and an independent judiciary to protect citizens against the arbitrary use of power by the state, individuals or any other organization"32. Concerning the situation in South Korea, although the Government has undertaken many important reforms, it seems that a lack of transparency of regulations is a major concern for foreign investors (source: laposte‐exprort‐solutions). According to the Transparency International's Corruption Perception Index 2009, South Korea is ranked 39th out of 179 countries (source: transparency international). The obtained score is 5.5, and the rating scale ranging from 1 to 10, 10 being the best. Therefore, the level of corruption is perceived as present. In addition, according to the Global Corruption Barometer 2009, political parties are identified as being the most corrupt area, followed closely by parliament, private sector, public officials and finally general media. Indeed, much of the Korean population believes that corruption pervades South Korea (source: National Integrity System, Transparency International, 2006). For instance, two former Korean presidents who chaired between 1981 and 1992 were imprisoned for having received illegally bribes (source: National Integrity System, Transparency International, 2006). Unlike the above situation, the Korean Constitution states the following: "judges must follow the constitution, laws and regulation to maintain judicial independence according to their conscience and in conformity with the constitution and the Court Organization Act"33. The Government stipulates that the judiciary system has to maintain independence from any external institution (source: National Integrity System, Transparency International, 2006). Regarding more accurately the current state of judicial independence, as witnessed by Nack‐Song Sung34, the complete independence of the Korean judicial system is guaranteed. However, concern tends to regard the independence of judge (Sung, 2006). Furthermore, to ensure the judiciary independence, the Constitutional Court of Korea, as an and independent body, monitors governmental powers and protects the people's fundamental rights (source: National Integrity System, Transparency International, 2006). To conclude with this part, despite corruption affecting the country, and as outlined by the Korean Constitution, the independence of the judicial system is guaranteed. However, impartiality of judges is challenged.
32
www.lexisnexis.com National Integrity System, Transparency International, 2006, p. 47 34 Sung, Nack‐Song, Judicial Independence in Korea, Daegu High Court, 2006 33
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3.3.2 LABOUR LAW In South Korea, companies relying on secrets may conclude confidentiality and other agreements with employees in order to keep intellectual property from leaking out of the company. Indeed, employees are required and obligated not to disclose any confidential information related to IPR or trade secret to a third party during the period of employment contract as well as after retirement, which may be perceived as a business insurance (source: Ministry of Employment and Labor35). In addition, Article 10 of the Unfair Competition Prevention and Trade Secret Protection Act states the following: "Article 10 acknowledges the right to request the courts to take necessary measures to prohibit or prevent a person who holds trade secrets from committing any acts of infringing such secrets"36. Therefore, it may be stressed without retained that the Korean labour system offers a well‐defined legal framework for companies of any size. Thus, the Korean labour laws allows for the enforcement of these agreements.
35 36
Ministry of Employment and Labor, Labor Law Q&A for Foreign Investors, 131 p. Ministry of Employment and Labor, Labor Law Q&A for Foreign Investors, p. 17
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4. THE MESO‐LEVEL
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4.1 SECTOR REVIEW & ANALYSIS Overall, it is important to outline that the tertiary sector is the one that weights the most in regard with the Korean Gross Domestic Product, followed by the manufacturing industry (secondary sector) and agriculture (source: trade.ec.europa.eu). Indeed, the share of service industry amounted to 60.3 %, industry to 37.19, and agriculture about 2.5% of the 2008 GDP (source: trade.ec.europa.eu). We note therefore that the first and major part of South Korean Gross Domestic Profit consists of the service industry. The second biggest part of the GDP is made up by the manufacturing sector, and lastly, the smallest by the agricultural sector (source: seoulkoreaasia.com). Regarding more accurately the secondary sector (industry), this latter consists of electronics, shipbuilding, automobiles and automotives parts, armaments, construction, textiles and footwear, chemicals, and pharmaceuticals (source: countrystudies.us). However, concerning the current leading industries sectors, according to the Korea Chamber of Commerce, South Korea’s largest industries are electronics, telecommunication, automobile production and shipbuildings. Before going one step further, in terms of patents applications by technological field, namely electronical engineering, instruments, chemistry, mechanical engineering, and the so‐called « other fields », area that experienced the largest requests is the electronical engineering with 49.61% of the total number of applications. The second biggest field is the « mechanical engineering» with 16.27%, followed closely by chemistry (13.11%) and instruments (12.29%). Lastly, the « other fields » comprise 8.71% of the overall number of patents applications (source: WIPO database 2009). Note: among all technological « field », consideration of intellectual property issues is important, as evidenced by the figures below (source: WIPO, 2009). FIELD OF TECHNOLOGY
NUMBER OF PATENTS APPLICATIONS PERCENTAGE
Electrical engineering
372'435
49.61
Instruments
92'283
12.29
Chemistry
98'430
13.11
Mechanical engineering
122'099
16.27
Other fields
65'406
8.71
Total 750'653 100 Let us take each of the above technological field more in detail in comparison with Japan and Switzerland. It is important to bear in mind that only the percentages will be compared, not the number of applications. The purpose of this comparison is to provide an overall overview in order to display the respective share of each country by technological field. Electrical Engineering: in regard with the electrical engineering, compared to the overall number of patent applications filed by each country, Japan’s share amounts to 31.26%, Switzerland to 10.4% and South Korea to 49.61%. South Korea’s share confirms that the electronics industry is one of the Korean’s largest industries, and thus, IPR consideration is also vital. Indeed, among the 750,653 29
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applications filed in 2009, nearly 373,000 involved only electrical engineering (source: WIPO). In addition, among categories, most applications filed in South Korea related to telecommunication, semiconductors, audio‐visual technology, electrical machinery, and computer technology. For more details, please refer to the table below (source: WIPO). ELECTRICAL ENGINEERING
SOUTH KOREA
JAPAN
SWITZERLAND
Electrical machinery, apparatus, energy
58'493
264'686
4'691
Audio‐visual technology
65'493
268'218
1'851
Telecommunications
79'456
197'719
1'985
Digital communication
25'052
60'386
966
Basic communication processes
9'085
42'388
443
Computer technology
54'046
242'830
3'003
IT methods for management
8'339
50'958
958
Semiconductors
72'471
217'261
1'180
Total
372'435
1'344'446
15'077
Instruments: instruments comprises optics, measurements, analysis of biological materials, control and medical technology. Concerning the respective share of each country, Japan with about 30% is ranked in first position according to overall number of patents applications filed in 2009, followed by Switzerland, and then, South Korea. Regarding this latter one, the major applications regards optics instruments with 52,107, trailing far by measurements (15,439) and medical technology (13,893) , as witnessed by the figures cons (source: WIPO). INSTRUMENTS
SOUTH KOREA
JAPAN
SWITZERLAND
Optics
52'107
279'928
2'233
Measurement
15'430
147'329
7'747
Analysis of biological materials
1'664
18'210
2'108
Control
9'189
75'964
2'119
Medical technology
13'893
746'801
20'489
Total
92'283
1'268'232
34'696
Chemistry: the overall number of patent applications filed in 2009 in Japan amounted to 638,588, 98,430 regarding South Korea, and lastly, 55,995 for Switzerland. Japan’s figures are very impressive, justifying its ranking as a leader in terms of patenting. Regarding more in details Korea’s chemistry area, there are two major subfield recording the highest number of patents applications, namely: food chemistry and environmental technology.
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CHEMISTRY
SOUTH KOREA
JAPAN
SWITZERLAND
Organic fine chemistry
9'224
60'706
13'514
Biotechnology
7'652
37'252
5'067
Pharmaceuticals
7'873
43'451
15'263
Macromolecular chemistry, polymers
8'092
80'038
3'587
Food chemistry
11'378
27'257
3'517
Basic material chemistry
10'402
77'928
5'864
Material, metallurgy
10'960
77'897
1'763
Surface technology, coating
9'056
94'474
2'455
Micro‐structural and nano‐technology
1'736
5'758
118
Chemical engineering
10'713
73'566
3'913
Environmental technology
11'344
60'261
934
Total
98'430
638'588
55'995
Mechanical engineering: as outlined previously, the second biggest field is the mechanical engineering with 16.27% of the overall number of patents applications. The overall number of patent applications filed in 2009 in Japan amounted to 802'648, which represents a very impressive figure. Switzerland recorded 30'456 patents applications and South Korea 122'099. For more detailed information concerning South Korea, please refer to the table below (source: WIPO). MECHANICAL ENGINEERING
SOUTH KOREA
JAPAN
SWITZERLAND
Handling
10'517
100'002
8'074
Machine tools
11'556
75'586
3'377
Engines, pumps, turbines
13'476
92'695
2'527
Textile and paper machines
9'661
126'016
4'647
Other special machines
14'873
101'012
5'141
Thermal processes and apparatus
19'448
55'536
1'621
Mechanical elements
12'056
105'285
2'753
Transport
30'512
146'516
2'316
Total
122'099
802'648
30'456
Other fields: finally, patent applications regarding the "other fields" comprises of furniture, games, other consumer goods, and civil engineering. More detailed information are provided below. MECHANICAL ENGINEERING
SOUTH KOREA
JAPAN
SWITZERLAND
Furniture, games
19'027
95'748
2'730
Other consumer goods
23'415
62'845
3'007
Civil engineering
22'964
88'120
2'583
Total
65'406
246'713
8'320
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To conclude with this part, regarding both attitudes and commitments, the previous analysis display that consideration related to IPR issues is very strong, which shows that the Korean Government is strongly focusing to provide a very competitive business environment both to Korean and foreign companies. In addition, the figures also underline that the major tool used in order to secure the intellectual assets of firms is patenting, in regard with technological field.
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4.2 THE INSTITUTIONAL MAP
INSTITUTIONS INVOLVED IN CREATING POLICY AND INSTRUMENTS37: Concerning the creation of Intellectual Property policy, it must be highlighted that policy is created in the same way that other national policies are made in South Korea. Therefore, the Government introduces most of the IP‐related bills. The scope of its activity is nationally.
INSTITUTIONS INVOLVED IN REGISTRATION, SUPPORT AND ENFORCEMENT: In South Korea, Korean Intellectual Property Office is the major governmental institution that is in charge of intellectual property matters. Its main mission is to provide the necessary tools in order to foster industrial development, technological innovation, and secure intellectual assets. Regarding more accurately the main functions of the Korean Intellectual Property Office, this governmental institution is in charge to deal with affairs concerning utility models, patents, trademarks, and responsible for the examination and registration of Intellectual Property Rights. Its additional activities are as follows: “the conducting of trials on intellectual property disputes; the management and dissemination of information on intellectual property rights; the promotion and public awareness of invention activities; the promotion of international cooperation on intellectual property rights; and the training of experts on intellectual property rights”38. In addition to above, KIPO is also in charge of enforcing other Intellectual Property Rights laws, such as the Unfair Competition Prevention and Trade Secret Protection law and the Semiconductor Integrated Circuit Layout law (source: KIPO). Furthermore, it is important to highlight that KIPO’s website offers very effective tools for patents search. Indeed, the main research gears are KPA Search (Korean Patent Abstracts), K‐PION, and PCT‐ Service. All these allow both individuals and companies to access to information related to IPR, and obviously, which procedure to be followed in order to file in a patent application, but also information related to schedule of fee as well as application, substantive examination, and registration fee. Thus, companies can directly file in their patent application via the Korean Intellectual Property Office’s website. This latter is endowed with an effective online system. In addition, it is possible to get useful information on various international protections, such as how to be protected via the Patent Cooperation Treaty (PCT). Going one step further, Korean Intellectual Property Office has established an important and vast network of institutions affiliated with it. Indeed, this includes; Korea Invention Promotion Association, which has for purpose to offer assistance to companies, searchers, and individuals from inventions to commercialization, to foster intellectual property and patent management support, and lastly, to train people with IPR issues (source: KIPA); International Intellectual Property Training 37 38
According to Paul Goldstein, IP in Asia: law, economics, history and politics, 2009, 357p. Korean Intellectual Property Office’s website
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Institute, which is a sub‐organization of the Korean Intellectual Property Office, whose major mission is to provide education on intellectual property; Korea Institute of Patent Information, which fulfils various activities, such as dissemination of Korean patent information, patent information search for government‐funded R&D projects, and patent information search for the private sector (source: KIPA); Korea Patent Attorneys Association and IP Academy. In addition, South Korea is member of the World Intellectual Property Organization since 1979. In addition to above institutions, the Korean Intellectual Property Office naturally works in conjunction with the Korean Government, as well as Korea Customs Service and Prosecutor Office and the Police. For instance, Korea Customs Service may be sought in case of IPR infringements. Indeed, companies may require Customs to take serious actions against counterfeited products in order to protect their intellectual assets. Regarding IP enforcement, South Korea offers both judicial and administrative infrastructures (source: Goldstein, 2009). At a glance, in terms of judicial infrastructure, the primary means for the enforcement of Intellectual Property Rights is to bring a civil action before a court. In fact, as outlined by Goldstein (2009), “criminal sanctions may also be imposed on the infringer if the case is prosecuted based on related criminal charges”. Moreover, both criminal laws and civil laws apply to the enforcement of intellectual property rights (Goldstein, 2009). Therefore, in many cases, the enforcement of IPR relies on criminal prosecution. Concerning the administrative infrastructure, let us underline the following: “under the Patent, Utility Model, Design, and Trademarks Acts, administrative actions for trials that are closely related to the enforcement of industrial property rights may be brought before KIPO”39. As a reminder, the Korean IP System is endowed by the “Trial System”, which consists of the Intellectual Property Tribunal, the Patent Court and the Supreme Court (source: KIPO). Concerning more in depth the Patent Court, this latter comprises twelve permanent judges and seventeen technical examiners (source: Goldstein, 2009). Since its inceptions in 1994, the Patent Court handled more than 7,000 cases (source: http://patents.court.go.kr). In regard with “entities” which might act as role models for the country, Jeong Hwan Lee, executive vice‐president of LG Electronics, is by far the key figure in intellectual property. For instance, he is one of the protagonists who participate actively in the creation of the Korea Intellectual Property Association (source: managingip.com). Furthermore, as head of the company’s intellectual property centre, Mr. Hwan Lee is one of the most emblematic figures and influencer in South Korea in regard with intellectual property’s policy (source: managingip.com), as well as LG Electronics is considered as a pioneer by being systematically one of the top foreign filers at the USPTO and one of the biggest user of the PCT system in 2008 (source: managingip.com).
39
Goldstein, P., …….
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4.3 DEGREE OF INSTITUTIONAL PROACTIVITY 4.3.1 ATTITUDE AND COMMITMENT TO IPR RELATED ISSUES – ACTIVE PROVISION OF IPR RELATED INFORMANT AND SERVICES First of all, the consideration of IPR issues by the various institutions mentioned in the previous chapter is strong. In addition to above institutions, and as a reminder, 29 local IP centers were set up nationwide by the Korean Government in order to support the SMEs day‐to‐day activities related to intellectual property rights (source: KIPO). For instance, within each regional IP centers, at least two full‐time consultants are available to serve the various needs of SMEs (source: KIPO’s annual report 2008). Regarding the degree to which services are provided to SMEs, the regional IP centers offer IP consultations, patent information services and educational programs (source: KIPO). More in depth, “a patent information consultation provides customized searches for patent trend analysis and technology direction and also for preventing duplicate and redundant investment as well as patent disputes” – “a patent commercialization consulting service matches potential licensees with potential licensors for a successful technology transfer by utilizing KIPO’S database”40. In regard with customized searches, KIPO’s consultants provide advice on how to proceed and how to prepare an effective patent application. In addition, financial supports are granted to SMEs willing to file more patent applications overseas (source: WIPO). Moreover, regarding educational programs, as mentioned previously, Korean Intellectual Property Office set up the International Intellectual Property Training institute in 1987, whose major mission is to provide education on intellectual property, and therefore, to foster IP awareness. In addition to above, additional services are provided to SMEs, as the follow41:
“KIPO provides SMEs with free‐of‐charge consultations on IPR infringements in cooperation with the Korea Patent Attorneys Association”.
“KIPO also assists SMEs by offering a patent map on patent infringements. The patent map helps SMEs cope with patent infringements overseas”.
Furthermore, in order to make the system more efficient, the Government has established the so‐ called “IP Management Support Dream Team”, which is endowed of several specialists, such as patent agents and attorneys, whose main purpose are to support both local IP centers and SMEs (source: KIPO). Further, South Korea launched in 2008 a major project aimed for non‐English speaking markets in order to foster the penetration of SMEs (source: KIPO).
40 41
KIPO’s annual report 2008 Baek, J‐H., «Korean National Experience on Building Intellectual Property Awareness and Capacity of Small and Medium‐sized
Enterprises », July 30, 2008
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4.3.2 RESOURCES Information provided by the Korean institutional framework is very comprehensive, up to date, widely available and accessible to everyone. Indeed, online information are very accessible, and institutions are struggling to keep their website updated. Furthermore, It must also be stressed that all information is available in Korean, but also in English, Japanese, and Chinese. Moreover, the system is so well established that I have never met contradictory statements from one institution to another. In fact, the information is very consistent, as well as documentation. In addition, the Korean Government has built a very effective network within and outside the country. Indeed, at a national level, interactions between the various bodies and organizations are widely sufficient, as outlined in the previous chapter. As a reminder, Korean Intellectual Property Office has established an important and vast network of institutions affiliated with it. The various institutions interact with each other, as well as with other governmental bodies such as Korea Customs Service, Prosecutor Office and the Police for more improved IPR protection. At an international level, many collaborations were established. To date, South Korea has joined 13 international treaties related to Intellectual Property (source: KIPO). Furthermore, Korean Intellectual Property Office has built several collaborations with foreign Intellectual Property Office in regard with the “Patent Prosecution Highway” (PPH) project. The basic concepts of this latter is the following: “where the office of first filling has assessed the patentability of a patent application, the office of second filling ensure that the applicant is entitled to benefit from an accelerated examination for the corresponding application”42. Regarding Human Resources, it is important to stress that the level of knowledge of Korean specialists is high. Indeed, the Government ensure that population receive the best education possible. In the field of Intellectual Property Rights, one of the biggest objectives of Korean Intellectual Property Office is to improve the number of highly educated IP specialists (source: KIPO). In the same vein, South Korea adopted the WIPO’s World Wide Academy Programs that is an international IPR education program for universities (source: KIPO’S annual report 2008). It is easily understood that the willingness to provide the country with highly trained specialists is a Government’s objective. Thus, as a provisional conclusion, South Korean is not one of those countries, which still have some way to go in education. Finally, in terms of finance, financial supports may be granted to SMEs willing to file more patent applications overseas (source: KIPA). Indeed, since 1982 KIPO has been providing financial support to companies willing to secure their patents fillings or utility model applications overseas (source: KIPA). Note the following: “For invention proven to have superior quality, KIPO subsidizes the application costs incurred during the two‐year period preceding the day to which applicants request financial support. For PCT international applications, only applications that have entered the national phase are eligible for financial support; in this case, the application costs for the national phase and the
42
KIPO’s website – Objective and Outline of Patent Prosecution Highway
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international phase are covered”43. Furthermore, the Government is providing financial support for IPR assessment among SMEs. This latter has for purpose to help SMEs to assess if the technologies they plan to develop do not conflict with existing technologies before starting the development (source: KIPA). In most cases, the Korean Government covers 75 percent of the assessment costs. In addition to above, financial supports are also provided for promoting sales channels for women’s invention. This latter is aimed to fill in three main tasks: motivate the invention activities of women, help commercialize the patented technologies of women inventors, and support the business activities of women (source: KIPA)
43
Korea’s Invention Promotion Activities, Experience of the Korean Intellectual Property Office, KIPO, 2003
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5. THE MICRO‐LEVEL
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5.1 LEVEL OF USE OF IPR PROTECTION INSTRUMENTS First of all, the following chart highlights the number of patent fillings per million population from 2001 until 2007 in South Korea (source: WIPO’s database).
EVOLUTION OF PATENT FILLINGS 3000 2500
NUMBER
2000 1500 1000 500 0 Mill. Pop.
2000
2001
2002
2003
2004
2005
2006
2007
1549
1556
1607
1887
2190
2538
2598
2656
FIGURE 15 As witnessed by the data, the number of patents fillings has experienced a positive growth to reach the top in 2007. Analysts said the trend should continue (source: KIPO). Therefore, it must be stressed that South Korea has the highest patent fillings per million population worldwide, followed closely by Japan, and trailing far by the United States of America and Germany, as shown below (source: WIPO, 2007).
PATENT FILLING BY COUNTRY PER MILLION POPULATION REP. OF KOREA
2656
JAPAN
2610
USA
800
GERMANY
581
NEW ZEALAND
447
FINLAND
341
MONACO
336
DENMARK
303
DEM. OF KOREA
287
UNITED KINGDOM
284 0
1000
1500
2000
2500
3000
FIGURE 16
39
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Furthermore, as for the number of patent fillings per million population, South Korea has recorded the highest number of patent fillings per $billion Gross Domestic Product, and once again, is followed closely by Japan (source: WIPO, 2007). PATENT FILLING PER $BILLION GDP Rep. of Korea
114
Japan
82
Moldova
36
China
22
USA
17
New Zealand
17
Germany
17
Kyrgyzstan
15
Russia
13
Finland
10 0
20
40
60
80
100
120
FIGURE 17 Note: the same scenario is repeated once again regarding the number of patent fillings per $million R&D expenditure, ranking South Korea at the top of the list (source: WIPO). Regarding more accurately the number of patents granted by the Korean Intellectual Property Office, the finding is that since 1995 it has increased significantly, as witnessed by the figure below (source: WIPO). NUMBER OF PATENT GRANTED 900'000 800'000 700'000 600'000 500'000 400'000 300'000 200'000 100'000 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
18 FIGURE 40
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In regard with the overall number of patents in force, this latter has almost doubled between 2004 and 2008. For instance, the number of patents in force in South Korea amounted to 216,645 in 2004, to finally reach 443,318 in 2008 (source: WIPO). The following table summarize the number of patents in force with Korean Intellectual Property Office and country of origin (source: KIPO Statistics Database). As witnessed by the figure below, NUMBER OF PATENTS IN FORCE Japan
100673
USA
38997
Germany
12669
France
5109
Netherlands
4419
Switzerland
3426 0
20000
40000
60000
80000
100000
120000
Focusing now on the level of trademarks application, as for the previous trends, it has experienced a very positive growth until 2007 to reach up to 141,289 applications, before failing in 2008 to 137,461 (source: WIPO, 2010). This fall may be the result of the global financial crisis that we experienced. Finally, the trademark applications per Gross Domestic Product ($billion) in 2007 amounted to 99.3 (source: WIPO & World Bank). FIGURE 19
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5.1.1 LEVEL OF TRANSGRESSIONS Before drawing an overview of the level of IPR transgressions, the following must be stressed: South Korea is endowed with legislation on the intellectual property in compliance with the international requirements, as outlined previously. However, its implementation still presents shortcomings. The Korean authorities have made real endeavours to strengthen the intellectual property protection, but the risk of being copied is always a major concern of companies approaching the Korean Market (source: Embassy of France in Korea44). Note: thanks to efforts made by the Government, South Korea is no longer placed on the U.S. list of intellectual property rights violators45. Let’s focus now on the level of IPR transgressions. According to the European Commission’s Trade website, companies’ most cases of intellectual property rights infringements in 2006 related to trademarks, designs, and copyrights. The most concerned sectors were luxury goods, fashion, video games, as well as music industry (source: European Commission). The counterfeiting sector was estimated to € 800 million in 2006 (source: European Commission). In addition, it must be stressed that about 80% of the Korean population have broadband access, the highest in the world. Given this highest broadband access, software, video game and music industries were strongly affected because the number of unauthorized sources of downloads increased sharply and therefore, sales have fallen by more than 55% since 2001 (source: European Commission). Moreover, between 2000 and 2005, 160 of South Korean products were listed (source: Embassy of France in South Korea) Although it seems difficult to obtain accurate statistics, thanks to stricter regulation as well as Government pressure, the number of counterfeit products seized by Korean Customs Service amounted to 97,751 in 2008, which represents a 276 percent increase from 35,366 in 2007 (source: KIPO’s annual report 2008). The following chart highlights that the number of seized goods since 2003 is 9 times greater. NUMBER OF SEIZED COUNTERFEIT PRODUCTS 160000 140000 120000 100000 80000 60000 40000 20000 0 Number
2003
2004
2005
2006
2007
2008
10160
149555
17742
14852
35366
97751
FIGURE 20
44 45
Ambassade de France en Corée, La Propriété Intellectuelle en Corée, 2007 http://joongangdaily.joins.com/article/view.asp?aid=2919917
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ber of conviccted counterrfeiters expe erienced a 10 09.2 percentt increase frrom 1995 Moreoveer, the numb in 2007 tto 214 in 200 08 (source: K KIPO’s annuaal report 200 08). In additio on, more thaan 123 websites were shut dow wn in 2008,, representin ng a 256 peercent increa ase from 48 in 2007 (soource: KIPO’’s annual report 2008). In addittion to abovve, the follo owing tablee displays more m accurattely the nu mber of co ounterfeit productss seized in 2008 by bra and name a nd categoryy. Therefore, brand nam me most afffected by counterffeiting is Levvi’s, with nearly half of all seized go oods, as sho own below. TThe most co oncerned categoryy is “the otheers”, which m may comprisse glasses, sttationeries, medical suppplies, and labels with 43,700 seizures. Th he second most affectted is the “other trademarks”, acccounting to o 42,910 93), and Chaanel (1,737) a as shown counterffeit productss, trailing far by Louis Vu itton (3,626), MCM (1,99 below (ssource: KIPO,, 2009).
n step beyon nd what is b being said, reegarding mu usic piracy, th he number oof pirated m music files Going on found in n South Koreea dropped by 92 perccent, betwee en 2008 and d 2009, whicch represents a rare 46 victory aagainst piracy (source: Economist, 2010 ). Co onsequently,, music salees experiencced a 10 percent increase in 2 2009, to reacch $159 milli on, the articcle said. In regard with softw ware piracy, the followinng statemen nt is very intteresting: “w while Korea has long been a h hot spot for counterfeit ccopies of sofftware, how wever, the na ation appears rs to be making some 47 substanttial strides in n combating g piracy” . A According to a joint stud dy conductedd by the Wa ashington Businesss Software A Alliance and M Massachusettts IT, about 41 percent of software installationss in South Korea w were unlicenssed in 2009, below the gglobal average, as outlin ned by the fiigure cons. H However, 46
Economist, Repelling thee attach, April 222, 2010
47
Kim Hyuung‐eun, Piracy oof PC software ssinks, May 12, 20010 43
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orea still hass to make im mprovement. Indeed, as tthe report sa aid, “Althouggh Korea imp proved, it South Ko still has a ways to g go. Korea’s P PC software ppiracy rate w was still mucch higher thaan the avera age of 27 percent for countriies that aree members of the Orrganization for f Econom mic Cooperation and Developm ment”. For instance, the United Staates’ softwaare piracy ra ate is the low west, at 20 percent, followed d closely by Japan and Lu uxembourg, bboth with 21 1 percent (source: Kim Hyyung‐eun, 20 010).
FIGURE 21 1 Note: altthough Koreea’s piracy rate is still hig her than the e average (27 7%) of other r OECD members, it is ranked aamong the top t 30 Lowe est Piracy Raates in 2009 9 (source: Se eventh Annu al Business Software Alliance,, Global Softw ware Piracy Study). Going one step furtther, according to “The Economic Benefits B of Lowering L PCC software Piracy”, P a survey sponsored byy Business So oftware Alliaance, a ten p point reduction of Korea’’s PC softwa are piracy from 20008‐2011 wo ould engend der the creaation of an additional 7,600 new jobs, $700 millions regardin ng tax reven nues, and $1 1.3 billion inn economic growth, as witnessed by the figurre below (source: BSA, 2008). In addition, the figure aalso displays the consequ uences of noot reducing the piracy rate, outtlined in bluee.
FIGURE 22
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Moreover, the following table shows more accurately the potential impact of any reduction in piracy in regard with IT spending, IT Industry Employment, and IT Related Tax Revenues, as stressed above. To conclude with this chapter, counterfeiting is one of the biggest problem to which the Korean Government is confronted. Therefore, the level of IPR infringements is high, as witnessed by the previous figures, which constraint Korea to act quickly in order to counter this phenomenon. However, it must be stressed that South Korea has undertaken strong endeavours to eradicate counterfeit products.
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5.2 FROM AWARENESS TO ACTION
5.2.1 AWARENESS OF THE IMPORTANCE – KNOWLEDGE OF INSTRUMENTS AND INSTITUTIONS Korean SMEs are becoming better informed about the purpose and usefulness of methods of protecting intangible assets, especially through courses and seminars propelled by the Government for SMEs. Regarding more accurately IPR courses for SMEs, they cover the importance of IPRs, government policies on commercialization of patented technologies and the application procedure (source: KIPA). Therefore, the main purpose of the courses is to increase the awareness of IPRs among SMEs employees and executives, and therefore to incite them to consider the use of Intellectual Property Rights as being a core business asset. In addition to courses, KIPO has conducted seminars nationwide in order to encourage Intellectual Property Rights acquisitions among SMEs (source: KIPA48). Indeed, “KIPO’s IPR seminars, which are cohosted by IIPTI, local chambers of commerce, municipal governments and the Korea Industrial Complex Corporation, are aimed at providing SMEs with basic knowledge on such topics as the significance of IPRs and the government policies that promote IPR acquisition”49. Thus, seminars are conducted in order to heighten the awareness of the importance of IPR among SMEs. Note: even KIPO’s commissioner offered lectures. Therefore, it is easily understood that KIPO is actively engaged in heightening awareness of IPRs among SMEs. Moreover, the awareness on the importance of IPRs has also increased among women who manage SMEs through seminars dedicated exclusively for women (source: KIPA). To conclude with this part, Korean SMEs seems to be well informed about options available for protecting their intangible assets as well as institutions responsible for IP registration, support, and enforcement. Furthermore, the main advantage of the Korean IP system lies mainly in the accessibility to information, as well as the very effective network established by KIPO, as outlined previously. Moreover, the high number of patents fillings by Korean companies highlights that SMEs executives are aware of the importance of the Intellectual Property Rights.
5.2.2 BARRIERS TO THE ADOPTION OF IPR RELATED MEASURES Going one step beyond what is being said, it must be pinpointed that resources offered to companies seems to be sufficient for the management of their intangible assets. First of all, in terms of information, the following must be stressed: as witnessed by the number of patents fillings, or trademarks applications, it seems that the importance of Intellectual Property has been sufficiently understood by companies. Moreover, the various tools made available for protecting intellectual property seems also be clearly understood and used by SMEs, as emphasized in the previous
48 49
Korea’s Invention Promotion Activities, Experience of the Korean Intellectual Property Office, KIPO, 2003 Korea’s Invention Promotion Activities, Experience of the Korean Intellectual Property Office, KIPO, 2003
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chapters. As a reminder, the Government has established a very effective network to support SMEs day‐to‐day activities related to IPR issues. Regarding the following, I have to draw your attention to the fact that it is very difficult to get accurate information regarding the level of know‐how held by companies. However, it may be assumed that given the significant used of IPR tools, companies acquired a sufficient level of know‐ how. Furthermore, let’s remind that since more than a decade one of the biggest purposes of the Korean Government is to increase the number of IP specialists (source: KIPO’s annual report 2008). To this end, the idea is that each company is endowed by employees specialized in the field of intellectual property. Regarding Human Resources, let’s remind that according to the Global Competitiveness Report 2008‐ 2009, more than 53% of Koreans aged 25 to 34 held a university grade, which corresponds to one of the highest rate among all OECD countries. Therefore, it may be assumed that both multinational companies and SMEs have access to suitably skilled personnel. In addition, let’s also underline that Korean Intellectual Property Office has been introducing since 1999 “IPR Classes” as part of the university curriculum, which is aimed at building a Human Resources infrastructure for Intellectual Property Rights (source: Korea’s Invention Promotion Activities). Therefore, once again it may be assumed that human resources are not a concern, given the above and current situation in South Korea.
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6. GLOBAL SUMMARY
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6.1 SUMMARY
ELEMENT Environment
WEAKNESS
OPPORTUNITY
THREAT
INFO GAP
Although South Korea has made enormous progresses, counterfeiting is still a major problem to solve. Therefore, it is considered as an important challenge for the Government
Pursue the fight against counterfeit goods and piracy. Increase and strengthen public awareness through advertising campaigns
Be perceived as being a haven for counterfeit goods such as China.
GOVT ATTITUDE & COMMITMENT
Strong involvement, commitment, and motivation of Government towards IP. Serious measures taken in recent years, real long‐ term vision and strategy. International cooperation, treaties, and compliance with international standards
To undertake further improvements, such as having been taken in recent years (speed, efficiency, and reactivity).
Being content with current experiences and acquired: continuous improvements forgotten
IPR INSTRUMENTS & STRUCTURE
Availability, understandability and accessibility of tools for protecting Intellectual Property. Tools tailored for enterprises and individuals. Very effective network within the country Regulation covering the entire IPR (patents, trademark, design, copyright). IP laws in compliance with international laws, treaties and cooperation. Despite Corruption judicial independence is guaranteed
Transparency of regulations, fight against corruption.
Corruption could mitigate negatively the country's image. Risk: foreign companies move away from South Korea
LEGAL & REG. ENVIRONMENT
49
STRENGTH
Lack of transparency, although the Government is undertaking important reforms such as independence of judges. Furthermore, corruption is still a concern (not the most), but it must be taken into account
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ELEMENT Institutional
SECTOR ANALYSIS & REVIEW
INSTITUTIONAL MAP
INSTITUTIONAL PROACTIVITY
50
STRENGTH
WEAKNESS
OPPORTUNITY
THREAT
INFO GAP
Electrical Engineering, Instruments, Chemistry, Mechanical Engineering, Services, Shipbuilding. Unlike other Asian countries, South Korea has a good reputation (made‐in). Cutting‐edge technology, leading companies (LG, Samsung) Very well‐defined network and framework, continuous interaction between various institutions and no inconsistency. Accessibility, availability, consistency of information. Information available in Korean, English, Chinese, Japanese.
Continuous improvement. Become a global leader in the field of technology, promote further emergence of innovation‐ oriented enterprises such as LG, Samsung, etc).
Stay in situation of status quo
Continuous improvement and further interaction with international bodies
Stay in situation of status quo
International network, cooperation and treaties. Vision and Strategy in compliance with International Standards.
Continuous improvement.
Stay in situation of status quo
Availability of further information regarding the degree of institutional proactivity.
Education and courses related to IPR offer to enterprises and individuals (+University students)
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ELEMENT Enterprise
USE OF IPR INSTRUMENTS
INFRINGEMENT OF IPR
FROM AWARENESS TO ACTION
51
STRENGTH
WEAKNESS
OPPORTUNITY
THREAT
INFO GAP
Abundant use of tools available for protecting intellectual property rights: patents, trademarks, utility models, and designs (see statistics). Well above the world average, "the top of the pack". Importance of IPR well understood
Lack of detailed statistics regarding the number of applications by size of companies (large, SMEs).
Measures undertaken by the government to eradicate the counterfeiting (penalties, websites breakdown). Further tools established to monitor illegal activities, award system to foster denunciation.
Pursue the fight against counterfeit goods and piracy. Increase and strengthen public awareness through advertising campaigns
Being content with current experiences and acquired: continuous improvements are necessary in order to discourage the use of counterfeit products
Continue to provide information to population and companies in order to increase awareness. Further "specials events" such as concerts, cinema, movies
Being content with current experiences and acquired: continuous improvements are necessary in order to further engender people's and representatives' awareness.
Counterfeiting, although important improvements are undertaken.
Awareness of population, advertising campaigns (media, concert, cinema), increasing number of IPR tools utilization, which witness awareness of companies and individuals. Very important consideration of protecting intangibles assets
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7. THE SURVEY
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7.1 QUANTITATIVE METHODOLOGY
7.1.1 THE SAMPLE First of all, it is important to outline that given the small number of companies having participated in the survey, it is regrettably impossible to make generalizations, and therefore, impossible to infer the results. Although more than 1,500 companies were contacted and significant efforts have been provided, such as taking contact directly with enterprises' managers, the number of questionnaires received in return is unfortunately low. Indeed, the used sample size consists of data from 7 companies only. Several hypothesis can be made to try to explain this phenomenon.
First of all, the questionnaire was very comprehensive, and only managers and representatives were able to fill in the questionnaire. To this end, it must be emphasized that the filling of the questionnaire required significant processing time for managers.
In addition, cultural distance may also represent a major obstacle. Indeed, in highly hierarchical country, such as China, Japan, and Korea, people's behaviour differs substantially from "individualistic" countries (EU, US). Therefore, cultural differences may have an impact on response rate.
Furthermore, the survey period was not favorable. Indeed, companies were contacted during the summer period and especially during the holiday period, which may explain the difficulty to get in touch directly with companies' representatives. Therefore, many representatives were unreachable, or simply were not interested in this investigation. In addition, it is important to highlight that because of the jet lag, the contacting with companies was more difficult.
Moreover, I assume that companies having not participated to the survey have been reluctant because of confidentiality, although all information would have been confidentially handled. It is legitimate for companies to be reluctant about the use of information sent via the Internet.
Indeed, all these above factors may contribute to "justify" the very low response rate despite having contacted more than 1,500 companies and provided important efforts to get in touch with enterprises' representatives. In addition, one might think that other more weighing factors could be taken into account to try to explain this very low response rate, such as the political tensions with North Korea. However, from my point of view, relations with the North should have no impact on this study, according to the current situation. Note: given the above, it is very important to bear in mind that the following findings cannot be generalized and therefore must not to be considered as representative of the current situation in South Korea regarding Intellectual Property Rights.
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7.1.2 SURVEY INFORMATION First of all, the information of the survey included a first part relative to the company with questions regarding the company's age, the company's turnover, the number of employee, its industry, and so on. In a sense, introductory questions. Moreover, the second part included questions regarding Intellectual Property, more accurately questions, such as the level of protection of the company, its motivations to own intellectual property rights or not having any protection. To this end, a copy of the questionnaire is available in annex.
7.1.3 DATA ANALYSIS METHOD Overall, SPSS was used to analyze the results. Indeed, this powerful statistical tool was used to make a first descriptive analysis in order to try to understand key relationship of the questionnaire, such as finding out what are the main reasons causing companies to own Intellectual Property Rights. In addition, the second part of the analysis is more analytical, that is to say with the definition of various construct and their correlations with other variables. Initially, it was necessary to assess the reliability and the validity of measures. Indeed, in statistics, reliability deals with the extent to which the measurement process yields consistent results when the process is repeated in some way (Dröge, 1996). To this end, one basic assessment to measure the reliability with SPSS consists of using the Cronbach's Alpha. Therefore, the reliability is confirmed when the Cronbach's alpha value is over or equal to 0.6 (Dröge, 1996). In addition, the second assessment is the validity, which represents the degree to which a measure precisely describe what it is supposed to. Therefore, unidimensionality, convergent and discriminant validity are the main criteria that are used to measure the Validity. A more detailed description of methods will be provided in the following chapters of this report.
7.2 RESULTS
7.2.1 DESCRIPTIVE ANALYSIS At this stage of the investigation, 5 main tables will be presented. Indeed, the first ones, available in appendix, represents the table of descriptive statistics, which includes all variables and ordinal scale with the mean, the minimum and maximum values, and the standard deviation. To this end, many relevant prior information can be noticed, such as the average size of firms that responded to the survey, their annual turnovers, their ages, the percentage of turnover earned outside the country, and the number of countries in which they are established. All these information are summarized on the table cons. Indeed, concerning companies' size, as witnessed by the figures below, the mean 54
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amounts to 3.14. Therefore, the majority of companies having being surveyed are composed of at least 21 employees, and a maximum of 50 employees, according to our definition. This underlines that the surveyed companies are SMEs. Regarding more accurately their annual turnovers, the obtained mean amounts to 3.1. Therefore, according to our scale's definition, their annual turnovers are greater or equal to 3 millions, but in no case exceed 5 millions. In addition, the majority of companies are established since about 10 years, as witnessed by the figure. Finally, regarding more accurately their turnovers earned outside South Korea and the number of countries in which they are established, the majority of companies engender between 21% to 40% of their turnover abroad and have their factories within one country. For further and detailed information, please refer to appendix. MINIMUM
MAXIMUM
MEAN
ST. DEV.
FIRM SIZE (NUMBER OF EMPLOYEES)
1.00
7.00
3.1429
2.54484
ANNUAL TURNOVER
1.00
6.00
3.1429
1.95180
1.00
6.00
3.4286
2.14920
1.00
22.00
9.8571
8.35521
1.00
2.00
1.4286
0.53452
PERCENTAGE TURNOVER EARNED OUTSIDE THE COUNTRY
FIRM AGE NUMBER OF COUNTRIES WHERE YOU ARE ESTABLISHED
7.2.1.1 Motivation to own Intellectual Property Rights One of the most important question is to figure out what drives companies to own Intellectual Property Rights. As witnessed by the table below (in order of importance on a scale from 1 to 5), the primary reason that drives companies to protect their innovation is to have a stronger market position, and therefore, to overcome competition. MOTIVATION TO OWN IPR
55
MEAN
To have stronger market position
3.83
To prevent piracy of competitors
3.50
To have reputation creation
3.50
To have direct income by licensing
3.33
To have high return on investment
3.16
To block competitors
3.16
To have a better advertising impact
3.00
To facilitate R&D cooperation
3.00
To convince partners
3.00
To attract finance
2.50
To increase negotiation power
2.33
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Moreover, companies resort to intellectual property in order to prevent piracy, which represents still a major concern in South Korea, and also to have "reputation creation". Regarding more accurately the piracy, it is easily understood why companies are resorting to Intellectual Property Rights. Indeed, although South Korea has provided very important endeavors against counterfeiting, this latter ones represents still a major problem for both domestics and foreign companies. Regarding the others main reasons, SMEs are attracted by Intellectual Property in order to have direct income by licensing, to have high return on investment, and to block competitors. Note: according to companies having being surveyed, the bargaining power represents the least important motivation. The following histogram displays all the motivations to own IPR.
Level
MOTIVATIONS TO ONW IPR 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0
3.83
3.5
3.5
3.33
3.16
3.16
3
3
3 2.5
2.33
7.2.1.2
Reasons not to own Intellectual Property Rights
REASONS NOT TO OWN IPR
MEAN
You don't own IPRs, because it is difficult to enforcing rights
3.4000
You don't own IPRs, because it is too expensive
3.4000
You don't own IPRs, because we don't consider these methods relevant
3.2000
You don't own IPRs, because you don't have enough knowledge
3.2000
We don't protect our IP because it can disclose information to competitors
3.0000
You don't own IPRs, because you don't need IPR
2.8000
You don't own IPRs, because too bureaucratic
2.6000
As witnessed by the table above (in order of importance on a scale from 1 to 5), the major reasons that lead companies not to own Intellectual Property Rights regard the enforcing of rights and the 56
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costs required to protect intellectual assets. Indeed, it seems that the real problem does not concern the awareness or the availability of tools to protect innovations, but the difficulty to enforce rights and the costs required by the Government in order to be protected by the law. In addition, companies are not resorting to Intellectual Property Rights because they feel not having enough information about. Another important reason regards the disclosure of information to competitors. Finally, the following histogram displays the major reasons of companies of not owning IPR.
Level
REASONS NOT TO OWN IPR 4 3.5 3 2.5 2 1.5 1 0.5 0
3.4
3.4
3.2
3.2
3
2.8
2.6
Colonne1
7.2.1.3
Informal Protection Methods
INFORMAL PROTECTION METHODS (IN ORDER OF IMPORTANCE ON A SCALE FROM 1 TO 3)
MEAN
We keep secret key knowledge from some of the employees, partners, clients
2.50
We conclude confidentiality agreement with employees, partners, clients
2.28
We divide knowledge between several employees in the aim to have no single person knowing all concerning a new product or service
2.14
We conclude agreement of non-competition with employees
2.00
We conclude agreement on transfer of rights with employees
1.71
According to companies having being surveyed, the most important informal protection methods resorted is to keep secret key knowledge from some of the employees, partners, and clients. Indeed, this way of doing allows companies to keep Intellectual Property from leaking out of the company. The second most informal protection methods used is to conclude confidentiality agreement with employees, partners, and clients. As a reminder, in South Korea, employees are obliged not to disclose any confidential information related to IPR or trade secret to a third party during the period of employment contract as well as after retirement, according to Ministry of Employment and Labor. It easily understood why companies are resorting to confidentially agreement. Finally, SMEs are 57
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rarely concluding agreement on transfer or rights with employees, as shown above. The following histogram has for purpose to display the major informal protection methods.
INFORMAL PROTECTION METHODS 3 2.5 2.5 2.28
2
2.14
2
1.5
1.71
1 0.5 0 We keep secret key knowledge from some of the employees, partners, clients
We conclude We divide We conclude confidentiality knowledge between agreement of non‐ agreement with several employees competition with employees, in the aim to have employees partners, clients no single person knowing all concerning a new product or service
We conclude agreement on transfer of rights with employees
7.2.1.4 List of barriers to operate in this country comparing with the problem of IP In order of importance on a scale from 1 to 3, the analysis displays that the most relevant concern regards the cost of establishing a legal entity, followed closely by high taxation. However, one of the most amazing "finding" regards the access to quality labor force. Indeed, the 2008 global competitiveness report outlines that 53% of Koreans aged 25 to 34 have a university degree, which represent the highest of all OECD countries, except Japan and Canada. In addition, it is also amazing to figure out that transport and logistics infrastructures represent a major "Barrier" to operate in South Korea. LIST OF BARRIERS
58
MEAN
Cost of establishing a legal entity
2.16
High taxation
2.00
Access to quality labor force
2.00
Difficulties with administrative requirements
2.00
Transport & logistic infrastructures
2.00
Banks lack of credit accessibility
1.85
Risk of inflation
1.71
Lack of access to innovation
1.71
Banks high interest rates
1.71
Telecommunication infrastructures
1.71
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In addition to above, telecommunication infrastructures, credit accessibility, risk of inflation and the lack of access to innovation seem not to be considered as being barriers to operate in South Korea comparing with the problem of Intellectual Property. The following histogram has for purpose to summarize the above score obtained.
LIST OF BARRIERS 2.5
Level
2
2.16
2
2
2
2
1.5
1.85
1.71
1.71
1.71
1.71
1 0.5 0
7.2.2 RELIABILITY AND VALIDITY MEASURES 7.2.2.1 Reliability Measures In this section, the goal is to determine whether the reliability is respected. As a reminder, the reliability of measurement "denotes a function describing the probability of failure"50. A poor reliability may degrades the accuracy of a single measurement, and therefore, may reduce the aptitude to track changes in a measurement in experimental studies (statsoft.com). As stressed earlier, one basic appraisal to assess the reliability consists of using the Cronbach's Alpha. Therefore, the reliability is confirmed when the Cronbach's alpha value is equal or over to 0.6 (Dröge,1996). Focusing now on the Cronbach's Alpha, as witnessed by the table below, the degree of internationalization obtains an alpha less than 0.6. Indeed, the obtained coefficient is strongly low. The reliability is rejected, and this latter should therefore be taken off during the analysis. Apart from this, Cronbach's Alpha Coefficient of the other dimensions are greater than 0.6. Thus, the reliability is accepted.
50
http://www.statsoft.com/textbook/reliability‐and‐item‐analysis/
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CRONBACH'S ALPHA
SCORE
Firm Size
0.892
Degree of Internationalization
0.093
Country Protection Efficiency
0.915
Country Administrative Procedures
0.889
Country Protection Costs
0.940
Country Costs Related
0.912
IP Office Satisfaction
0.882
IP Track Record
0.762
Informal Protection Methods
0.652
Regarding the value obtained for the degree of internationalization, and as stressed above, the Cronbach's alpha is very low. To be very frankly, it is very difficult to figure out accurately the main reason that led to this result. However, I assume that there was inconsistency in responses, which may also be the result of the very low number of questionnaire received in return. Given that, the variables composing the "degree of internationalization" are taken off. 7.2.2.2 Validity Measures In addition to the previous chapter, the second assessment consists of the validity, which refers to "the extent to which a concept, conclusion or measurement is well‐founded and corresponds accurately to the real world"51. Therefore, unidimensionality, convergent and discriminant validity are the main criteria that are used to measure the Validity. To this end, Unidimensionality is done by conducting an exploratory factor analysis. "Scales which are unidimensional measure a single
trait. This property is a basic assumption of measurement theory and is absolutely essential for unconfounded assessment of variable interrelationships in path modeling"52. Convergent Validity is shown when each measurement item is strongly correlated with its construct, in others words, it refers to the degree to which a measure is correlated with other measures that is theoretically predicted to correlate with. In principle, convergent validity is usually satisfied by retaining variables whose loadings are greater than 0.5. Finally, Discriminant Validity "appears when each measurement item is weakly correlated with all other constructs except for the one to which it is theoretically associated"53. Regarding more accurately the unidimensionality, only the first eigen value should be over one (Dröge,1996). However, the computation suggests not to consider the scale of two constructs as being unidimensional: IP Track Record, and Informal Protection Method. Therefore, unidimensionality is rejected for these constructs. For a detailed overview, please refer to appendix. In addition to above, let us focus now on the convergent validity. First of all, as the loadings of all the indicators related to their constructs are not always over 0.5, convergent validity of some constructs
51 52 53
http://en.wikipedia.org/wiki/Validity_(psychometric) A.H. SEGARS, 1998, Assessing the unidimensionality of measurement, Clemson University
Enterprise Observatory, Results ‐ Analysis
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is not confirmed. Therefore, some indicators have been omitted when computing the Average Variance Extracted (see below). For more detailed information, please refer to the section regarding the discriminant validity. Going one step further what is being said, the discriminant validity is also not confirmed for all the constructs. Indeed, in order to be confirmed, the values of the diagonal have to be significantly higher than the other loadings in the same column and line. Therefore, discriminant validity is confirmed for the following constructs:
Company's Size
Administrative Procedures
Protection Costs
Costs Related
Note: The Average Variance Extracted of the "IP Track Record" is not higher than the other loadings in the same line, that is to say, the value is the same of another value (intercorrelation with Utility Model Commercial Value). Therefore, given what is said, the discriminant validity should not be confirmed.
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7.2.2.2.1
Discriminant validity (intercorrelation of the research constructs)
VARIABLES
1
2
3A
3B
4
5
6
7
8
9
10
11
12
13
14
15
1. Age
1
2. Size
0.86**
0.9496a
3A. Degree of internationalization
‐0.77*
‐0.78*
1
3B. Degree of Internationalization
‐0.29
‐0.43
0.07
1
4. Degree of innovation
0.63
0.53
‐0.02
‐0.52
1
5. Patent commercial value
0.66
0.58
‐0.13
‐0.60
0.97**
1
6. Utility model commercial value
0.56
0.37
‐0.01
‐0.74*
0.69*
0.69*
1
7. Trademark commercial value
0.03
‐0.38
0.36
0.51
0.21
0.17
‐0.11
1
8. Design commercial value
0.25
‐0.04
‐0.06
‐0.29
0.16
0.33
0.36
0.34
1
9. Copyright commercial value
0.23
0.01
0.05
0.07
0.45
0.53
‐0.01 0.74*
0.59
1
10. Protection efficiency
‐ 0.7*
‐ 0.87**
0.95**
0.36
‐0.142
‐0.264 ‐0.22
0.53
‐0.13
0.12
****
‐ 0.92** ‐ 0.96**
0.76*
0.45
‐0.63
‐0.68* ‐0.54
0.25
‐0.10
‐0.09 0.83* 0.913a
11. Administrative procedures
‐0.2
‐0.53
0.68*
0
0.28
0.28
0.13 0.75*
0.54
0.68* 0.67*
0.42
0.85a
‐ 0.92**
‐0.77*
0.72*
0.3
‐0.5
‐0.54
‐0.62
0.09
‐0.26
‐0.04 0.74* 0.90**
0.35
0.907a
14. Government measures
‐0.38
‐0.64
0.43
0
‐0.26
‐0.14
‐0.04
0.41
0.77*
0.43
0.40
0.54
0.72*
0.36
1
15. IP Office Satisfaction
0.26
0.15
0.26
‐0.14
0.97**
0.89*
0.22
0.64
0.15
0.81*
0.23
‐0.34
0.72
‐0.18
0
**** 0.8525
12. Protection cost 13. Costs related
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Aygün Erkaslan
SÉMINAIRE DE SYNTHÈSE
1
16. IP track record
0.5
2
3A
3B
4
0.5 ‐0.86
1**
1**
6
1** 0.86
7
10
11
12
13
14
15
16
17
18
19
20
0
1
0.86a
‐ ‐0.14 0.73
0
1
0.5
‐0.5
0.84 ‐0.5
‐0.21 ‐0.31 ‐0.31 ‐0.60
‐ ‐0.70 0.90
0.09
0.10
‐0.57 0.30
18. External IP assistance
0.29 0.10 ‐0.7 0.73 0.72 0.51 ‐0.3 * ‐ ‐0.9 0.41 ‐0.1 0.31 0.37 0.28 ‐0.68 0.85
20. Informal protection methods
9
‐0.5 0.86
‐0.49 0.09 0.10
19. Check infringements
8
0.5
17. IP management strategy
0
0
5
0
0.10
‐0.09
‐0.31
0
‐0.10 ‐0.21 0.74
1
0.33
1
0
‐0.1
‐0.32
‐0.28 ‐0.26 0.01 ‐0.19 0.18
1
0.4
0.8*
1
‐0.41 ‐0.49 0.43 ‐0.4 ‐0.06 0.09 0.12 ‐0.06 0.47 0.16
0.31
0.39
0
0.53 0.31 0.8*
0.34
‐0.14 0.74 0.73
**** 0.6986
NOTES: * Correlation is significant at the 0.05 level. ** Correlation is significant at the 0.01 level. a Diagonal: (Average Variance Extracted)1/2 = (Σλi2/n)1/2 IF THE VALUES OF THE DIAGONAL ARE SIGNIFICANTLY HIGHER THAN THE OTHER LOADINGS IN THE SAME COLUMN AND LINE, DISCRIMINANT VALIDITY IS CONFIRMED. **** : The Average Variance Extracted should not be computed because the loadings of the indicators related to "Protection Efficiency" are less than 0.5, namely ‐0.23 and ‐0.39. However, the current loadings would have engendered the following AVE: ( (‐0.23)2 + (‐0. 39)2 )0.5 / 2 = 0.3201. Discriminant validity rejected. ****: Not all the indicators related to the construct are over 0.5. For a detailed overview, please refer to the following. IP OFFICE SATISFACTION. Among the four indicators, the loading of one is less than 0.5. The indicators are the followings: 0.918, 0.289, 0.889, and 0.74. Therefore, the ones inferior to 0.5 should not be taken into account. AVE without the loading less than 0.5: ( (0.918)2 + (0.889)2 + (0.74)2 )0.5 / 3 = 0.8525. Discriminant validity is rejected, because the other loadings in the same line and column are higher than the value of the diagonal. INFORMAL PROTECTION METHODS. Among the five indicators, one of them obtains a loading inferior to 0.5. The indicators are the following: 0.42, 0.89, 0.503, 0.503, and 0.80. AVE without the loading inferior to 0.5: ( (0.89)2 + (0.51)2 + (0.51)2 + (0.8)2 )0.5 / 4 = 0.6986. Discriminant validity is rejected, because the other loadings in the same line and column are higher than the value of the diagonal.
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Aygün Erkaslan
7.2.2.2.2 Intercorrelation of the research constructs' analysis Note: for the sake of simplicity and clarity, the following analysis has for purpose to highlight only some of correlations having been identified. For a detailed overview, please refer to the "general pattern" and the previous table, which display accurately all the significant correlations found. The correlations having been found thanks to the table above are highlighted in the following lines. Therefore, the first finding regards the commercial value of patents. Indeed, patent commercial value is strongly correlated with the degree of innovation, which means that companies will tend to hold patents, the more they will be innovation‐oriented. Afterwards, the second interesting finding regards the commercial value of utility model, which reveals initially a negative correlation with the number of countries in which the company is established, and secondly, a positive correlation with the degree of innovation. Indeed, the first one means that the more the company is operational abroad, the less it will use utility model. The second underlines that companies tend to possess utility model as one goes along their degree of innovation will increase. In addition to above, the results reveal that protection efficiency is correlated with the company's age and company's size, as well as the percentage of turnover engendered abroad. Therefore, the perception of protection efficiency within the country in which companies operate will depend on the firm profile, more accurately the company's age and company's size, and its commitment abroad. Going one step further in the analysis, another interesting correlation regards the External IP assistance with the degree of innovation. Indeed, the more the company's degree of innovation, the more the external IP assistance. The assumption is that companies will tend to seek the assistance of external offices or institutions when their degree of innovation increases, that is to say, when they produce cutting‐edge technologies/products requiring effective protection in order to prevent any infringements. Finally, the last highlight regards the informal protection methods. Indeed, informal methods are correlated with the government measures, which is once again, a very interesting finding. The more the Government's measures for improving the protection of IPRs will be effective, the more company will take support on informal protection methods, such as by concluding confidentiality agreement or agreement of non‐competition with employees, and vice versa.
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7.2.2.2.3
General Pattern
Firm profile Country of the Head Office (qu0.2) Type of firm (qu0.3)
0.97** 0.67* ‐0.74*
Mode of establishment (qu0.8) Age (qu0.7) Size (qu0.4, qu0.5 Degree of internationalization (qu0.6, qu0.9) Sector (qu0.10) Degree of innovation (qu2)
‐0.7* 0.88** 0.95** ‐0.92* ‐0.96** 0.76*
Firm perception of the importance for capturing commercial value for each of these methods of protection Patent (qu9.1) Utility model (qu9.2) Trademark (qu9.3) Design (qu9.4) Copyright (qu9.5)
Protection efficiency (qu10.1, qu10.2)
Administrative procedures (qu10.10, qu10.11)
Motivations to own IPR To attract financing (qu5.1) To be more attractive to partners (qu5.2) To increase bargaining power (qu5.3) To facilitate R&D cooperation (qu5.4) To have high return on investment (qu5.5) To have direct income through licensing (qu5.6) To have a stronger market position (qu5.7) To improve the advertising impact (qu5.8) To enhance the reputation (qu5.9) To prevent piracy by competitors (qu5.10) To block competitors (qu5.11) 0.8*
Protection costs (qu10.5, qu10.6, qu10.11) Costs related (lawyers, assistance) (qu10.8, qu10.9) Government’s measures & efficiency (qu10.13) IP office satisfaction (qu13.1 to qu13.4) 0.97**
65 1.00** ,1.00** , 0.73*
Reasons to NOT own IPR No need (qu4.1) Too bureaucratic procedure (qu4.2)
No enough knowledge (qu4.3)
1.00**
IP track record & operational issues IP Track Record (qu3.1 to qu3.4)
IP Management strategy (qu6) External IP assistance (qu7) Check infringements (qu0.8) Informal protection Informal protection methods methods (qu11.1 to (qu11.1 to qu11.5) qu11.5)
Too expensive (qu4.4) Difficult to enforce rights (qu4.5) No consideration of the relevance of these methods (qu4.6) The protection can disclose information to competitors (qu4.7)
Aygün Erkaslan
SÉMINAIRE DE SYNTHÈSE
7.2.3 CORRELATION BETWEEN THE MOTIVATIONS TO OWN IPR VARIABLES AND OTHER VARIABLES
1
2
3A
3B
4
5
6
7
8
9
10
11
12
13
14
15
16
17
To attract financing
‐0.7
‐0.8*
0.89**
‐0.11
0.01
‐0.06
0.36
0.14
‐0.14
‐0.25
0.75*
0.68
0.45
0.5
0.31
0.13
1
0.21
0.21 ‐0.06
0.54
To be more attractive to partners
‐0.33
‐0.39
0.46
‐0.22
0.03
‐0.03
0.61
‐0.18
‐0.18
‐0.53
0.27
0.22
0
0
‐0.03
0.0
1
0.31
0.31
0.03
0.52
0.10
‐0.19
‐0.28
‐0.18
0.22
‐0.31
0.13
0.9**
0.93**
0.52
0.9**
0.33
0.026
1
0.3
0
‐0.09
0.28
0
‐0.36 ‐0.37
To increase bargaining power
19
20
To facilitate R&D cooperation
0.06
0
0
0.43
0
‐0.12
0.12
0
‐0.55
‐0.49
0.06
‐0.12
‐0.35
‐0.3
‐0.58
0.16
‐
0.4
To have high return on investment
‐0.23
‐0.9
0.46
‐0.22
0.76*
0.68
0.09
0.28
‐0.09
0.46
0.43
0.09
0.45
0.31
‐0.01
0.86
1
0.21 0.73* 0.39
0.46
To have direct income through licensing
‐0.52
‐0.2
0.53
‐0.25
0.33
0.22
0.22
‐0.21
‐0.53
‐0.32
0.42
0.22
0
0.32
‐0.33
0.44
1
0.7
0.42
0.44
To have a stronger market position
0.20
0.52
‐0.17
‐0.33
0.73*
0.72
‐0.03
‐0.04
‐0.4
0.46
‐0.17
‐0.42
0
‐0.06
‐0.31
0.73
‐
0.21 0.73* 0.63
0.18
To improve our advertising impact
0.97**
0.71
‐0.8*
0
0.32
0.38
0.38
0
0.36
0.18
‐0.78*
‐ 0.88**
‐0.35
‐ 0.98**
‐0.25
0.18
‐1
0.40
0
To enhance our reputation
0.83*
0.38
‐0.47
0.32
0.44
0.43
0.31
0.45
0.31
0.37
‐0.37
‐0.62
0
‐0.8*
‐0.12
0.36
‐1
‐0.5
‐0.1
‐0.4
To prevent piracy by competitors
0.01
0.02
0.12
0.32
0.46
0.4
‐0.5
0.59
‐0.04
0.72
0.32
0.06
0.43
0.3
0.01
0.68
‐1
‐0.1
0.1
‐0.06 ‐0.23
To block competitors
‐0.62
‐0.38
0.56
0.32
0.07
‐0.03
‐0.62
0.31
‐0.5
0.19
0.71
0.56
0.34
0.78*
‐0.06
0.28
‐
0.4
0.1
0.01
66
‐0.94** ‐0.88** 0.95**
18
0.7
‐0.12 ‐0.21
‐0.28
‐0.1
SÉMINAIRE DE SYNTHÈSE
Aygün Erkaslan
First of all, as a reminder, below the necessary conditions to accept or reject any correlation. Indeed, in statistics, correlation is confirmed when the p‐value is less than 0.05, which means that there is only a risk of 5% to make a mistake by accepting the correlation. Note: when the result is followed by **, it means that the relationship is significant at the 0.01 level, when followed by *, the relationship is significant at the 0.05 level.
REMINDER ‐ CORRELATION ACCEPTANCE CONDITION We must reject H0 and conclude that the relationship between variables exists if the p‐value (asymptotic significance bilateral) is less than 0.05 (95%) or 0.01 (99%)
Si p > 0.05
Correlation not confirmed. The relationship does not exist until proven. Independency.
Si p 0.05
Correlation confirmed. The relationship exists. Dependency.
Therefore, regarding more accurately the correlation between the motivations to own Intellectual Property Rights variables and others variables, the following analysis has for purpose to present the most relevant correlations found between variables. For a detailed overview of all correlations , please refer to appendix. 7.2.3.1 To attract financing Korean firms correlate the attraction of funds with the percentage turnover earned outside the country, and the protection efficiency. Indeed, going one step further what is being said, companies desiring to attract financing will generate a share of their turnover outside the country in which they are established. The assumption is that by interacting not only within the country but also with foreign partners, firms have more opportunities to attract foreign investors. In addition, enterprises seeking further funds will (probably) be more aware about the protection efficiency by assessing if IPR are clearly defined and well protected by law within the country. 7.2.3.2 To increase bargaining power Results reveal significant correlations with the percentage turnover earned abroad, the protection efficiency and administrative procedures within the country in which companies are established, and costs related. Indeed, in order to increase their bargaining power, once again firm tend to generate a portion of their turnover abroad and focus on the efficiency protection within the country. In addition, they also tend to carefully determine whether the necessary time to protect their innovations is short or long, as well as the administrative procedures are reasonable. Finally, the higher the related costs, the more the power of negotiation.
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SÉMINAIRE DE SYNTHÈSE
Aygün Erkaslan
7.2.3.3 To have high return on investment In addition to above, enterprises correlate to have a high return on investment with the degree of innovation, and the external IP assistance. Indeed, innovation‐oriented is significantly correlated with expectation of high return on investment. Therefore, the higher companies are innovation‐oriented, and the more they are expecting high ROI. Furthermore, it also seems to have a significant relationship between having an external IP assistance and to have high return on investment. 7.2.3.4 To have a stronger market position At this stage of the analysis, results reveal significant correlations between the fact of having a stronger market position with the degree of innovation, the satisfaction of IP Office concerning trademark, and the external IP assistance. First of all, it seems to be easily understood that being strongly innovation‐oriented may provide the company with a stronger market position, and therefore, to overcome competition. In addition, the more satisfaction of IP Office within the country regarding trademark, the highest probability to have a stronger market position. Moreover, companies correlate also a stronger market position with an external IP assistance. Indeed, the assumption is that if companies are provided with external assistance regarding Intellectual Property Rights from specialized agencies or offices, opportunities for having a stronger market position could increase because they will receive tailored and professional assistance. 7.2.3.5 To improve our advertising impact First of all, the first finding reveals a significant relationship with the company's age. Therefore, given the high level of correlation, the desire to improve advertising impact is correlated with the company's age. Going one step further what is being said, the protection efficiency is negatively correlated with the fact to improve advertising impact, which means that a lack of efficient protection within the country will lead companies to improve their advertising impact. In the same vein, the more administrative procedures, the more advertising impact. The last finding regards the related costs. Indeed, the analysis reveals a positive correlation, that is to say that Korean companies tend to improve their impact when the costs are high, such as lawyers costs and IP assistance costs. 7.2.3.6 To prevent piracy by competitors The only correlation that results reveals concerns the satisfaction of IP Office regarding trademark. Therefore, it seems that preventing piracy by competitors is more facilitate when companies are satisfied with the domestic IP Office. Thus, the assumption is the following: if companies are satisfied with the domestic IP Office, it means that services and advices provided by the Korean office are well‐done, and therefore, allow companies to prevent any piracy or infringements. 68
SÉMINAIRE DE SYNTHÈSE
Aygün Erkaslan
7.2.3.7 To block competitors Above all, the fact to protect the company from the competition requires logically important funds, and therefore, requires to mobilize enough resources. To this end, the analysis reveals a positive relationship with the related costs. Indeed, the motivation to own Intellectual Property Rights, more accurately in order to block competitors, engender an increase of both attorneys and IP Assistance.
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Aygün Erkaslan
SÉMINAIRE DE SYNTHÈSE
7.2.4 CORRELATION BETWEEN THE REASONS TO NOT OWN IPR VARIABLES AND OTHER VARIABLES
2
3A
3B
4
5
6
7
8
9
10
11
12
13
14
15
16
‐0.1
0
‐0.5
0.54
‐0.16
0.57
0.07
0.13
0.18
0.13
0.14 0.94*
‐ 0.86
‐0.88*
0.15
‐0.91*
‐0.14
0.14
0.3
‐0.61
0.3
‐0.66
0.0
‐ 0.86
0
0.47
0.35
0.8
‐0.8
‐0.82*
0
‐0.82*
0
0.31
0
17
18
19
20
‐0.27 0.54
‐0.26
0.39
0.57
‐ 0.57
‐1**
‐0.44
‐0.81
0
0
‐0.22
0
‐0.14
‐0.57
‐0.72
No need
‐0.28 ‐0.26 0.02 0.44
Too bureaucratic procedure
‐0.29 ‐0.29 ‐0.14 1** ‐0.44 ‐0.59
No enough knowledge
0.68
0.8
Too expensive
0.74
0.59 ‐0.14 ‐0.16 0.88* 0.88*
0.44
0.91*
0.30
0.88*
‐0.14
‐0.76
0.61
‐0.76
‐0.16
0.89 0.86
‐0.57 0.57
Difficult to enforce rights
0.72
0.72 ‐0.72 0.40
0.36
‐0.18
0.55
‐0.18
0.54
‐0.54
‐0.74
‐0.25
‐0.74
‐0.61
0.25
0
‐0.33
No consideration of the relevance of these methods
0.76
0.76 ‐0.52 ‐0.14 0.65 0.81*
0.26
0.73
0.43
0.94**
‐0.55
0.86*
0.36
‐0.86*
0
0.6
0.5
‐0.77 0.25
0
‐0.132
The protection can disclose 0.97** 0.87* ‐0.41 ‐0.28 0.87* 0.87* information to competitors
0.56
0.63
0.36
0.667
‐0.41
‐ 0.94**
0.35
‐ ‐0.28 0.94**
0.6
0.5
‐0.77 0.25
0
‐0.46
70
1
‐0.8
0
0.34
0.36
0.57
‐ 0.33
SÉMINAIRE DE SYNTHÈSE
Aygün Erkaslan
7.2.4.1 No need First of all, the fact of not to need Intellectual Property Rights is strongly correlated with the IP Office Satisfaction. Indeed, this finding is somehow amazing because the more the IP Office Satisfaction is high, the more companies feel not to need IPRs. 7.2.4.2 Because too bureaucratic At this stage of the analysis, results reveal correlations with the number of countries in which companies are established, the commercial value of utility model and design, and check infringements. According to the results obtained, companies do not own Intellectual Property Rights because the process is too bureaucratic. More accurately, it seems that the more the number of countries where firms are established is high, the more companies consider the procedure as being too bureaucratic. However, the commercial value of both utility model and design are negatively correlated, that is to say, the more the companies hold utility model and design, the less the procedure is seen as being bureaucratic, and vice versa. 7.2.4.3 No enough knowledge Korean firms correlate "negatively" the lack of having enough knowledge with the administrative procedures and the related costs. First of all, according to the results, the more knowledge is low, the less administrative procedures are ineffective. Regarding more in‐depth the related costs, it is easily understood that when companies encounters difficult to got enough knowledge, the related costs are low. The assumption is that firms are therefore not spending funds to lawyers and IP Assistance, and thus, the expenditures decrease. 7.2.4.4 Too expensive Firstly, let us focus on the relationship with the degree of innovation. Indeed, the more the degree of innovation is high, the more IPR are seen as being too expensive. Therefore, protecting innovations and new cutting‐edge technologies are very high, regardless of company size. Thus, the assumption is that companies are not owing IPR because they requires to spend important financial resources. In addition, the commercial value of patent, trademark, and copyright are also correlated with "too expensive". Indeed, as stressed, the fact to protect innovations in order to prevent infringements is costly, and therefore, holding patent, trademark, and copyright will also engender an increase of perception of being too expensive.
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SÉMINAIRE DE SYNTHÈSE
Aygün Erkaslan
7.2.4.5 No consideration of the relevance of these methods In addition to above, companies tend to not own Intellectual Property Rights because they do not consider these methods as being relevant. This finding is correlated with patent and copyright commercial value, administrative procedure, and finally the related costs. Regarding more accurately the patent and copyright commercial value, companies do not use such method in order to be effectively protected against infringements, because they are perceived as being not relevant. In addition, the more the administrative procedure, the more no consideration of the relevance of these methods. And the more the related costs, the more no consideration of the relevance of these methods. 7.2.4.6 The protection can disclose information to competitors Additionally to above, and going one step further, some companies consider the protection as being a mean to disclose key information to competitors. Therefore, the more company's age and size are important, the more the risk to disclose information is high. Indeed, the surveyed companies do not own IPR due enterprise's philosophy and strategy. In the same vein, the more the degree of innovation, the more the risk of disclosing crucial information to competitors. The same scenario is repeated for the commercial value of patent.
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Aygün Erkaslan
SÉMINAIRE DE SYNTHÈSE
8. CONCLUSION
73
SÉMINAIRE DE SYNTHÈSE
Aygün Erkaslan
8.1 DISCUSSION OF KEY FINDINGS OF THE SURVEY IN THE CONTEXT OF THE NATIONAL BACKGROUND
8.1.1 MACRO‐LEVEL (ENVIRONMENT) Findings regarding the macro‐level reveals many interesting information that must be highlighted. Let us remind that the Government's attitude towards intellectual property is very favorable, as witnessed by the various measures and statements initiated. Indeed, many efforts have been undertaken to make the Korean system compatible with international requirements. Therefore, numerous agreements and treaties were signed, various international cooperations were established, and specialized bodies were set up in order to support the business environment as well the intellectual property field. South Korea is going to provide further endeavors in order to strengthen and make the intellectual property system more efficient and further international openness is still one of the highest goal of Government. In addition, in order to achieve the above ambitions, the Korean Government has allotted important resources, such as human resources, funds, spending increases, as well as specialized bodies dedicated to training related to intellectual property rights. But, among all the efforts undertaken by South Korea, one of the most important is certainly the wrestling against counterfeit products. Indeed, in just a few years, Government's behaviour has evolved positively and many measures were taken to combat this scourge. All these endeavors have been fruitful to allow South Korea to be removed from the Section 301 priority watch list countries and place Korea on a separate, lower‐level watch list. However counterfeiting is still an issue that Government must consider. In addition to above, South Korea has established a very comprehensive legal environment allowing companies to protect their Intellectual assets through formal tools such as patenting, trademark, utility models, design, trademarks, copyright, and so on. Moreover, to protect businesses, Korean Governments has also set up specialized courts to settle any dispute that may arise. Further, certain intellectual property rights are protected under the Unfair Competition Prevention and Trade Secrets Protection Act, which main purpose is to avoid and prevent unfair competition such as the misuse of trademarks and trade names, and therefore to avoid trade secrets infringement. However, although the Government has undertaken many reforms in the field of legal framework and has established a comprehensive legal environment, it seems that a lack of transparency and corruption are still a major concern for foreign investors. But despite a relatively moderate level of corruption affecting the country, and as outlined by the Korean Constitution, the independence of the judicial system is guaranteed. However, impartiality of judges is challenged. Going beyond what is being said and regarding more accurately labor law, companies relying on secrets may conclude confidentiality with employees to keep intellectual property from leaking out of the company. Employees are required not to disclose any confidential information to a third party during the period of employment contract as well as after retirement. Therefore, South Korea offers a comprehensive labor regulation to companies.
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SÉMINAIRE DE SYNTHÈSE
Aygün Erkaslan
Finally, , the final word is that South Korea attempts to provide a "sound environment" to companies of any size and any provenance, which is witnessed by the various endeavors undertaken by the Government.
8.1.2 MESO‐LEVEL (INSTITUTIONAL) First of all, among all technological field, consideration of intellectual property issues is relevant and seems to be very well understood by both Korean companies and foreign investors, as witnessed by the increasing number of applications (patent, trademark, utility models, designs, etc). But, the most remarkable thing is that the Government has established a very comprehensive institutional network. In fact, the various institutions interact with each other, as well as with other governmental bodies such as Korea Customs Service, Prosecutor Office and the Police for improving the level of IPR protection. At an international level many collaborations were established. To date, South Korea has joined 13 international treaties related to Intellectual Property. Furthermore, to foster an enabling environment, each institution is responsible for very specific tasks and are subject to Korean Intellectual Property Office. In addition, 29 local IP centers were set up nationwide by the Korean Government in order to support the SMEs day‐to‐day activities related to intellectual property rights. Each regional IP center offers IP consultations, patent information services and educational programs to companies. Moreover, consultants provide advice on how to proceed and how to prepare an effective patent application. In addition, financial supports are granted to SMEs willing to file more patent applications overseas. Going on step further, Korean Intellectual Property Office has set up the International Intellectual Property Training institute in 1987, whose major mission is to provide education on intellectual property, and therefore, to foster IP awareness. Therefore, it is easily understood that Korean Government is providing further endeavors to meet the needs of various businesses. Moreover, information accessibility and reliability and very well‐done websites provide additional value to the country. Let us remind that information is provided in various languages, such as Korean, English, Chinese, and Japanese. This accessibility improve the extent of information spread. Thus, information provided by the Korean institutional framework is very comprehensive, up to date, widely available and accessible to everyone. Finally, regarding resources, one of the biggest objectives of Korean Intellectual Property Office is to improve the number of highly educated IP specialists. Indeed, the purpose is to provide company with highly skilled employees. Moreover, financial supports may be granted to SMEs willing to file more patent applications overseas.
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8.1.3 MICRO‐LEVEL (ENTERPRISE) The first finding concerning the micro‐level reveals a very positive use of IPR protection instruments. Indeed, the number of patents fillings experienced a positive growth in recent years, which ranks South Korea as being the country with the highest patent fillings per million population worldwide and the highest number of patent fillings per $billion Gross Domestic Product. Therefore, the level of use of IPR protection instruments is undoubtedly remarkable, which witnesses again that businesses have absorbed the importance of protecting their Intellectual Assets. Although this finding is particularly interesting and that Korean authorities have made real endeavours to strengthen the intellectual property protection, the risk of being copied is always a major concern of companies approaching the Korean Market. Indeed, as mentioned earlier, the major problem that South Korea is facing regards the level of counterfeit products. However, thanks to impressive efforts made by the Government, South Korea is no longer placed on the U.S. list of intellectual property rights violators. Furthermore, in 2009, 41 percent of software installations in South Korea were unlicensed, but this figure is below the global average. However, South Korea still has to make improvements. And although Korea’s piracy rate is still higher than the average of other OECD members, it is ranked among the top 30 Lowest Piracy Rates in 2009. Moreover, benefits of lowering PC software piracy would provoke the creation of an additional 7,600 new jobs, $700 millions regarding tax revenues, and $1.3 billion in economic growth. Hence the importance of fighting against this scourge.
8.2 IMPLICATIONS
8.2.1 FOR GOVERNMENT AND POLICY MAKERS Overall, the country must avoid a situation of status quo. Indeed, it is vital to continue to provide efforts in a fast pace in order to further enhance the protection network and make it more effective. Therefore, to strengthen the global business environment, South Korea needs to mobilize more resources (financial, human, infrastructures) in order to intensify the fight against counterfeiting and piracy. In the same vein, South Korea should continue to bear a strong interest in training by further providing lectures and courses, which will lead to a strongest awareness of population as well as companies' employees and CEOs. Although significant steps are taken, awareness campaigns need to be intensified and the exposure of messages must be pervasive, which could lead the population to not buy counterfeit products as well as counterfeits not to produce imitations goods. In addition to above, another concern that South Korea is facing regards the level of Corruption. Indeed, the Korean Government has to take serious steps by further empowering anti‐corruption institutions with more investigative and authorities powers. Therefore, the level of Corruption may be reduced by the introduction of a whistleblowing system, which consists of denouncing any act of corruption. But the main challenge for anti‐corruption efforts will be the sustainability of political commitment towards a rational and sound anti‐corruption environment. Moreover, further law enforcement and transparency could help the Government's efforts to be successful. In addition, 76
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South Korea has to promote professional ethics and pursue to increase public, political high‐ranking officials, and businesses awareness to be able to implement a solid national integrity system.
8.2.2 FOR SMES According to the statistics and the various services provided by the government, it is important to note again that business support is particularly relevant especially for SMEs. This can be explained due to the large number of SMEs in South Korea. According to statistics, almost 99% of enterprises are considered as SMEs. From then on, it is easily understood why the system of intellectual property is so much tailored to this kind of companies. However, one of the major implications for SMEs regards the level of counterfeiting. Indeed, it would be particularly interesting to form pressure groups to create lobbies to pressure the Government to take further initiatives and measures to lower the level of counterfeit goods. At the same time, these pressure groups could include pressure to make the system more transparent, and the judiciary system more independent. Finally, the country must avoid a situation of status quo and should continue to provide additional resources to SMES and Big companies in order to become ever more attractive.
8.3 LIMITATIONS AND FUTURE RESEARCH One of the first reviews concern the number of companies surveyed. Indeed, given the small number of companies having participated in the survey, it is regrettably impossible to make generalizations, and therefore, impossible to extrapolate the results. The used sample size consists of data from 7 companies only. At first, it would have been interesting to question only companies, and from then on, to separate the present study in two different studies. Although significant efforts have been provided, such as taking contact directly with enterprises' managers and institutions54, the number of questionnaires received in return is unfortunately low. Several hypothesis can be made to try to explain this phenomenon. The first assumption concerns the survey period. Indeed, companies were contacted during the summer period and especially during the holiday period, which may explain the difficulty to get in touch directly with companies' representatives. The second hypothesis relates to the timing, that is to say, the time available to conduct the current investigation, in our case, about three months. To this end, it would be necessary to lead a specific study having for objective to sound only companies in order to increase the probability to receive more questionnaires in return, and therefore, to increase the credibility of the study. Indeed, it would have been ideal to survey at least hundred of companies, because otherwise, it is very difficult, even impossible, to make significant conclusions and to take stock of the current companies' viewpoints. Finally, my warmest recommendation is to conduct a joint study, that is to say, lead a survey collectively by group of students in order to increase the survey's credibility. 54
Korea Chamber of Commerce, European Chamber of Commerce in South Korea, Korean Intellectual Property Office.
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9. REFERENCES
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9.1 BOOKS, PUBLICATIONS & REPORTS
Ahn Chong‐Ghee, (2005), Korea's Economy 2006, Korea Economic Institute & Korea Institute of International Economic Policy, 8 p. Asama R. et al., (2008), Les Brevets, Nouvelle Arme de la Guerre Economique: Au pays des Samouraïs, le brevet supplante le sabre, Assocation de l'Ecole de Guerre Economique, 127 p. Asia‐Pacific Economic Cooperation Economic Policy Report, (2009), Republic of Korea: Developments in Regulatory Reform, 4 p. Asia‐Pacific Economic Cooperation, (2004), APEC Training Program on the Enforcement of Intellectual Property Rights for Developing Member Economies, APEC Publishing, 402 p. Asia‐Pacific Economic Cooperation, (2006), APEC IPR Public Education and Awareness: Platform Workshop on Effective Strategies for IPR Public Education, APEC Publishing, 351 p. Asia‐Pacific Economic Cooperation, (2006), APEC Workshop on Intellectual Property for Small and Medium‐Sized Enterprises and Micro‐Enterprise, APEC Publishing, 122 p. Asia‐Pacific Economic Cooperation, (2006), Intellectual Property Rights Enforcement Strategies, APEC Publishing, 35 p. Asia‐Pacific Economic Cooperation, (2007), APEC Research Report on Paperless Trading Capacity Building and Intellectual Property Protection, APEC Publishing, 185 p. Assafa Endeshaw, (2007), Do Asian Nations Take Intellectual Property Rights Seriously?, SCRIPT‐ ed, Volume 4, Issue 2, 14 p. Bakiewicz Anna, (2008), Small and Medium Enterprises in South Korea. In the Shadow of Big Brothers, ASIA & Pacific Studies, 26 p. Bhavan Nirman, (2010), Implementation of the Scheme Building Awareness on Intellectual Property Rights for Micro, Small and Medium Enterprises, Government of India, 38 p. Business Software Alliance, (2010), Seventh Annual BSA/IDC Global Software: 09 Piracy Study, BSA Publishing, 22 p. Goldstein Paul et al., (2009), Intellectual Property in Asia: law, economics, history and politics, Associate Editors, 357 p. Han Ji‐Young & Jang Kwang‐Chul, (), Intellectual Property in Asian Countires: Studies on Infrastructure and Economic Impact, WIPO Publication NO. 1018e, 287 p. Hunter Rodwell Consulting, (2008), Intellectual Property Rights Primer for Korea, UK Trade Et Investment, 40 p. Invest Korea, (2009), Korea your wise and profitable choice, Invest Korea, 40 p. Jun Ji‐Yun, (2003), La Propriété Intellecutelle en Corée du Sud, Mission Economique Française, DGTPE, 4 p. Korea Trade‐Investment Promotion Agency, The Investment Environment of Major Asian Countries, KOTRA, 176 p. Korean Intellectual Property Office, (2005), Annual Report, KIPO Publishing, 84 p. Korean Intellectual Property Office, (2008), Ubiquitous IPR Management, KIPO Publishing, 49 p. 79
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Korean Intellectual Property Office, (2009), Annual Report, KIPO Publishing, 88 p.
Korean Intellectual Property Office, (2009), Anticounterfeiting Activities of KIPO, KIPO Publishing, 6 p. Korea's Invention Promotion Activities, (2003), Experience of the Korean Intellectual Property Office, KIPO Publishing, 68 p. Linsu Kim, (1997), Imitation to innovation: the dynamics of Korea's technological learning, Harvard Business Press, 301 p. Linsu Kim, (2003), Technology Transfer & Intellectual Property Rights: The Korean Experience, UNCTAD‐ICTSD, 42 p. Meynard Sophie et al., (2005), Propriété Intellectuelle et lutte anti‐contrefaçon, Mission Economique Française, DGTPE, 4 p. Minxin Pei, (2005), Intellectual Property Rights: A Survey of the Major Issues, Asia Business Council, 12 p. Nack‐Song Sung, (2006), Judicial Independence in Korea, Daegu High Court, 19 p. Nagesh Kumar, (), Intellectual Property Rights, Technology and Economic Development: Experiences of Asian Countries, IPR Commission, 52 p. Nikkei Microdevices, (2006), Intellectual Property Strategies in Asia: Protecting Against Chinese, Taiwanese and Korean Intellectual Property Piracy, InterLingua Publishing, 138 p. Nugent Jeffrey B. et al., (2001), Small and Medium Enterprise in Korea: Achievements, Constraints and Policy issues, The International Bank for Reconstruction and Development/The World Bank, 42 p. OECD, (2003), Turning science into business: patenting and licensing at public research, OECD Publishing, 308 p. Rajendra K., (2010), Intellectual Property fuels a global sense of competitiveness, Current Science, Vol 96, NO 7., 6 p. Ryan Michael Patrick, (1995), Playing by the Rules: American trade power and diplomacy in the Pacific, 228 p. Sang‐Yirl Nam, (2005), Innovation and SME Development: Korea's Perspective and APEC Cooperation, APEC Publishing, 14 p. Silkenat James R. et al., (2009), The ABA guide to international business negotiations: a comparison of cross‐cultural issues and successful approaches, American Bar Association, 3rd Edition, 1106 p. Taplin Ruth, (2004), Protect and Survive: Managing Intellectual Property in the Far East ‐ The case of South Korea, Thomson Scientific, 3 p. Transparency International, (2001), Asia and the Pacific: South Korea, Transparency International Publishing, 58 p. Transparency International, (2006), National Integrity System: Republic of Korea, Transparency International Publishing, 78 p. 80
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Wei Shi, (2008), Intellectual Property in the Global Trading System: EU‐China, Springer, 324 p.
WIPO, (2007), Improving IP recognition in Enterprises: focus on IP and Economy, WIPO & KIPO, 24 p. WIPO, (2007), KIPO'S Policy for Supporting the Use of Intellectual Property Assets, WIPO & KIPO, 30 p. WIPO, (2009), World Intellectual Property Indicators, WIPO Publishing, 110 p. World Economic Forum, (2010), The Global Competitiveness Report, WEF Publishing, 492 p.
9.2 WEBSITES
AIPPI Korea. Url: www.aippikorea.org APEC Publication Database. Url: http://publications.apec.org Association Internationale pour la protection de la PI. Url: https://www.aippi.org Country Studies ‐ South Korea. Url: http://countrystudies.us/south‐korea/50.htm Economic Freedom. Url: www.heritage.org Economy Watch. Url: http://www.economywatch.com/ French Korean Chamber of Commerce and Industry. Url: www.fkcci.com Gobizkorea. Url: www.gobizkorea.com Intellectual Property Watch. Url: www.ip‐watch.org International Centre for Trade and Sustainable Development. Url: http://ictsd.org International Intellectual Property Training Institute. Url: www.iipti.org Invest Korea Journal. Url: www.ikjournal.com Invest Korea Online. Url: www.investkorea.org IP Academy. Url: http://global.ipacademy.net Korea Customs Service. Url: www.customs.go.kr/eng Korea Institute for International Economic Policy. Url: www.kiep.go.kr/eng Korea Institute of Patent Information. Url: http://eng.kipi.or.kr/main Korea Intellectual Property Rights Information Service. Url: http://eng.kipris.or.kr/eng/main Korea Invention Promotion Association. Url: www.kipo.org/english Korean Intellectual Property Office. Url: www.kipo.go.kr/en Managing Intellectual Property. Url: www.managingip.com Seoulkoreaasia. Url: www.seoulkoreaasia.com SMBA. Url: http://eng.smba.go.kr/main.jsp South Korea Business Information. Url: www.asianz.org.nz South Korea Trade Directory. Url: www.southkoreapages.com Statistics Korea. Url: http://kostat.go.kr
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The European Union Chamber of Commerce in Korea. Url: www.eucck.org The Korea Chamber of Commerce & Industry. Url: http://english.korcham.net/ U.S. Commercial Service. Url: www.buyusa.gov World Intellectual Property Organization. Url: www.wipo.int
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10 . APPENDIX
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10.1 APPENDIX: THE SURVEY
10.1.1 QUESTIONNAAIRE
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10.2 APPENDIX: STATISTICAL DATA
10.2.1 DESCRIPTIVE STATISTICS Statis stiques descriptives
F Firm Size (num mber of
N
Minimum
Maximum m
Moyenne
Ecart type e
7
1.00
7.00
3.1429
2.54484
7
1.00
6.00
3.1429
1.95180
7
1.00
6.00
3.4286
2.14920
7
1.00
22.00
9.8571
8.35521
7
1.00
2.00
1.4286
.53452
e employees): A Annual Turnovver P Percentage tu urnover earned d o outside the co ountry in which h yyou are opera ating: F Firm Age N Number of Co ountries where e yyou are establlished:
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1. Do you consider Intellectual Property (IP)
7
3.00
5.00
3.7143
.95119
7
2.00
5.00
3.5714
.97590
6
1.00
2.00
1.8333
.40825
3
4.00
50.00
20.6667
25.48202
4
1.00
2.00
1.5000
.57735
1
2.00
2.00
2.0000
.
4
2.00
2.00
2.0000
.00000
2
1.00
15.00
8.0000
9.89949
4
1.00
2.00
1.7500
.50000
1
3.00
3.00
3.0000
.
5
1.00
5.00
2.8000
1.48324
5
2.00
3.00
2.6000
.54772
5
2.00
5.00
3.2000
1.09545
5
3.00
4.00
3.4000
.54772
5
3.00
5.00
3.4000
.89443
5
1.00
5.00
3.2000
1.48324
5
1.00
5.00
3.0000
1.58114
protection a relevant issue for your company? 2. How innovative is your company? 3.a Does your firm own patents? 3.a Number Patent registered: 3.b Does your firm own utility models? 3.b Number Utiliry model registered: 3.c Does your firm own trademarks? 3.c Number Trademark registered: 3.d Does your firm own designs? 3.d Number Design registered: 4.1 You don't own IPRs, because you don't need IPR: 4.2 You don't own IPRs, because too bureaucratic: 4.3 You don't own IPRs, because you don't have enough knowledge: 4.4 You don't own IPRs, because it is too expensive: 4.5 You don't own IPRs, because it is difficult to enforcing rights: 4.6 You don't own IPRs, because we don't consider these methods relevant: 4.7 We don't protect our IP because it can disclose information to competitors
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5.1 You protect IPRs in the
6
1.00
4.00
2.5000
1.22474
6
1.00
4.00
3.0000
1.26491
6
1.00
4.00
2.3333
1.21106
6
2.00
4.00
3.0000
.89443
6
2.00
4.00
3.1667
.75277
6
2.00
4.00
3.3333
1.03280
6
3.00
5.00
3.8333
.75277
6
2.00
4.00
3.0000
.89443
6
2.00
5.00
3.5000
1.04881
6
2.00
5.00
3.5000
1.37840
6
2.00
5.00
3.1667
1.16905
6
1.00
2.00
1.5000
.54772
6
1.00
2.00
1.5000
.54772
6
1.00
5.00
2.8333
1.60208
aim to attract finance 5.2 You protect IPRs in the aim to convince partners 5.3 You protect IPRs in the aim to increase negociation power 5.4 You protect IPRs in the aim to facilitate R&D cooperation 5.5 You protect IPRs in the aim to have high return on investment 5.6 You protect IPRs in the aim to have direct income by licensing 5.7 You protect IPRs in the aim to have stronger market position 5.8 You protect IPRs in the aim to have a better advertising impact 5.9 You protect IPRs in the aim to have reputation creation 5.10 You protect IPRs in the aim to prevent piracy of competitors 5.11 You protect IPRs in the aim to block competitors 6. Do you have an IP Management strategy? 7. Do you have an external IP assistance? 8. Does your firm actively check for potential infringements?
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9.1 Please indicate level of importance to your firm's strategy for capturing
7
1.00
5.00
3.0000
1.63299
7
.00
5.00
2.5714
1.61835
7
2.00
5.00
3.7143
1.11270
7
1.00
5.00
3.2857
1.60357
7
2.00
5.00
3.5714
1.27242
7
3.00
5.00
3.7143
.75593
7
2.00
5.00
3.4286
.97590
7
2.00
3.00
2.7143
.48795
7
2.00
4.00
3.0000
.57735
commercial value from its innovation concerning patents: 9.2 Please indicate level of importance to your firm's strategy for capturing commercial value from its innovation concerning utility models: 9.3 Please indicate level of importance to your firm's strategy for capturing commercial value from its innovation concerning trademarks: 9.4 Please indicate level of importance to your firm's strategy for capturing commercial value from its innovation concerning designs: 9.5 Please indicate level of importance to your firm's strategy for capturing commercial value from its innovation concerning copyrights: 10.1 In this country, Intellectual Property Rights (IPRs) are clearly defined 10.2 IPRs are well protected by law 10.3 IPRs are not enforceable 10.4 In general the costs of formal protection are very cheap
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10.5 The cost of patent
7
2.00
4.00
3.0000
.57735
7
1.00
3.00
2.7143
.75593
7
1.00
3.00
2.7143
.75593
7
2.00
4.00
3.5714
.78680
7
1.00
4.00
3.1429
1.06904
7
1.00
5.00
3.5714
1.27242
7
1.00
5.00
3.1429
1.21499
7
1.00
3.00
2.5714
.78680
7
1.00
3.00
2.2857
.75593
7
1.00
3.00
2.1429
1.06904
7
1.00
3.00
2.2857
.75593
7
2.00
3.00
2.2857
.48795
7
1.00
3.00
2.0000
.81650
7
1.00
3.00
1.7143
.75593
6
2.00
3.00
2.5000
.54772
protection is too high 10.6 The cost of trademark protection is too high 10.7 The cost of design protection is too high 10.8 Lawyers cost is too high 10.9 IP Assistance cost is too high 10.10 The time of procedure to protect our innovations is very long 10.11 Administrative procedures to protect our innovations are heavy 10.12 Formal IP protection is not sufficient 10.13 Government's measures for improving the protection of IPRs are very effective 10.14 Right is unenforceable 10.15 Legal disputes concerning IP are easily resolved 11.1 We conclude confidentiality agreement with employees, partners, clients 11.2 We conclude agreement of non-competition with employees 11.3 We conclude agreement on transfer of rights with employees 11.4 We keep secret key knowledge from some of the employees, partners, clients
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11.5 We divide knowledge between several employees in the aim to have no single
7
1.00
3.00
2.1429
.89974
7
1.00
3.00
2.0000
1.00000
7
1.00
3.00
1.7143
.75593
7
1.00
3.00
2.0000
.57735
6
1.00
3.00
2.0000
.63246
6
1.00
3.00
2.1667
.75277
7
1.00
3.00
2.0000
.57735
7
1.00
2.00
1.7143
.48795
7
1.00
3.00
1.8571
.69007
7
1.00
2.00
1.7143
.48795
7
1.00
3.00
1.7143
.75593
6
2.00
5.00
3.3333
1.03280
6
.00
4.00
2.3333
1.36626
6
2.00
4.00
3.3333
1.03280
6
2.00
4.00
3.0000
1.09545
person knowing all concerning a new product or service 12.1 Transport & logistic infrastructures 12.2 Telecommunication infrastructures 12.3 Difficulties with administrative requirements (permits, regulations, etc...) 12.4 Access to quality labor force 12.5 Cost of establishing a legal entity 12.6 High taxation 12.7 Banks high interest rates 12.8 Banks lack of credit accessibility 12.9 Lack of access to innovation 12.10 Risk of inflation 13.1 Satisfaction of IP office of your country concerning patent 13.2 Satisfaction of IP office of your country concerning utility model 13.3 Satisfaction of IP office of your country concerning trademark 13.4 Satisfaction of IP office of your country concerning design
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14.1 In the country in which you are operating, do you
5
1.00
2.00
1.4000
.54772
have any other source of IP support 0
N valide (listwise)
10.2.2 CORRELATION BETWEEN MANIFEST VARIABLES AND LATENT VARIABLES 10.2.2.1 Unidimensionality 10.2.2.1.1 Firme Size Valeurs propres initiales
Extraction Sommes des carrés des facteurs retenus
Composante Total
% de la variance
% cumulés
dimen 1
1.834
91.704
91.704
sion0 2
.166
8.296
100.000
Total
% de la variance
1.834
91.704
% cumulés
91.704
Méthode d'extraction : Analyse en composantes principales.
10.2.2.1.2 Degree of Internationalization Valeurs propres initiales
Extraction Sommes des carrés des facteurs retenus
Composante Total
% de la variance
% cumulés
dimen 1
1.104
55.181
55.181
sion0 2
.896
44.819
100.000
Total
% de la variance
1.104
55.181
% cumulés
55.181
Méthode d'extraction : Analyse en composantes principales.
10.2.2.1.3 Protection Efficiency Valeurs propres initiales
Extraction Sommes des carrés des facteurs retenus
Composante Total
% de la variance
% cumulés
dimen 1
1.871
93.571
93.571
sion0 2
.129
6.429
100.000
Total
% de la variance
1.871
93.571
% cumulés
93.571
Méthode d'extraction : Analyse en composantes principales.
10.2.2.1.4 Administrative Procedures Valeurs propres initiales
Extraction Sommes des carrés des facteurs retenus
Composante Total
% de la variance
% cumulés
dimen 1
1.801
90.043
90.043
sion0 2
.199
9.957
100.000
Total
% de la variance
1.801
90.043
% cumulés
90.043
Méthode d'extraction : Analyse en composantes principales.
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10.2.2.1.5 Protection Costs Valeurs propres initiales
Extraction Sommes des carrés des facteurs retenus
Composante Total
% de la variance
% cumulés
1
2.690
89.675
89.675
2
.310
10.325
100.000
3
-3.605E-17
-1.202E-15
100.000
Total
% de la variance
2.690
89.675
% cumulés
89.675
dimen sion0
Méthode d'extraction : Analyse en composantes principales.
10.2.2.1.6 Costs Related Valeurs propres initiales
Extraction Sommes des carrés des facteurs retenus
Composante Total
% de la variance
% cumulés
dimen 1
1.878
93.876
93.876
sion0 2
.122
6.124
100.000
Total
% de la variance
1.878
93.876
% cumulés
93.876
Méthode d'extraction : Analyse en composantes principales.
10.2.2.1.7 IP Office Satisfaction Valeurs propres initiales
Extraction Sommes des carrés des facteurs retenus
Composante Total
% de la variance
% cumulés
1
3.097
77.420
77.420
dimen 2
.729
18.215
95.635
sion0 3
.175
4.365
100.000
4
-3.753E-17
-9.383E-16
100.000
Total
% de la variance
3.097
77.420
% cumulés
77.420
Méthode d'extraction : Analyse en composantes principales.
10.2.2.1.8 IP Track Record Valeurs propres initiales
Extraction Sommes des carrés des facteurs retenus
Composante Total
% de la variance
% cumulés
Total
% de la variance
% cumulés
1
1.866
46.654
46.654
1.866
46.654
46.654
dimen 2
1.064
26.611
73.265
1.064
26.611
73.265
sion0 3
.667
16.667
89.932
4
.403
10.068
100.000
Méthode d'extraction : Analyse en composantes principales.
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10.2.2.1.9 Informal Protection Methods Valeurs propres initiales
Extraction Sommes des carrés des facteurs retenus
Composante Total
% de la variance
% cumulés
Total
% de la variance
% cumulés
1
2.283
45.668
45.668
2.283
45.668
45.668
2
1.431
28.614
74.281
1.431
28.614
74.281
3
1.033
20.665
94.946
1.033
20.665
94.946
4
.253
5.054
100.000
5
1.212E-16
2.425E-15
100.000
dimen sion0
Méthode d'extraction : Analyse en composantes principales.
10.2.2.2 Convergent Validity 10.2.2.2.1 Firm Size Firm Size (number
Annual
of employees):
Turnover
SIZE_FIRM
Rho de Spearman
**
1.000
.935
Sig. (unilatérale)
.
.001
.000
N
7
7
7
SIZE_FIRM
.964
**
Coefficient de corrélation
**. La corrélation est significative au niveau 0,01 (unilatéral).
10.2.2.2.2 Degree of internationalization Percentage turnover
Number of
DEGREE_INTERN
earned outside the
Countries
AL
country in which you are
where you are
operating:
established:
**
Coefficient de corrélation
1.000
.954
.364
Sig. (unilatérale)
.
.000
.211
N
7
7
7
Rho de DEGREE_INTERNAL Spearman
**. La corrélation est significative au niveau 0,01 (unilatéral). Should be taken off
10.2.2.2.3 Protection Efficiency 10.1 In this country, Intellectual PROT_EFFICENC
10.2 IPRs are well Property Rights (IPRs) are clearly
Y
protected by law defined
Coefficient de Rho de Spearma
1.000
-.234
-.397
Sig. (unilatérale)
.
.307
.189
N
7
7
7
corrélation PROT_EFFICENCY
n
**. La corrélation est significative au niveau 0,01 (unilatéral).
97
Aygün Erkaslan
SÉMINAIRE DE SYNTHÈSE
10.2.2.2.4 Administrative Procedures 10.10 The time 10.11 Administrative of procedure to ADMINI_PROCED
procedures to protect protect our
URES
our innovations are innovations is heavy very long
Coefficient de 1.000
.898
**
.929
**
Rho de
ADMINI_PROCEDURE
corrélation
Spearman
S
Sig. (unilatérale)
.
.003
.001
N
7
7
7
**. La corrélation est significative au niveau 0,01 (unilatéral). *. La corrélation est significative au niveau 0,05 (unilatéral).
10.2.2.2.5 Protection Costs 10.5 The cost of
10.6 The cost
10.7 The cost of
patent
of trademark
design
protection is too
protection is
protection is too
high
too high
high
PROTEC_COSTS
Rho de Spearm PROTEC_COSTS
*
.764
.
.023
.023
7
7
7
Coefficient de corrélation
1.000
1.000
Sig. (unilatérale)
.
N
7
an
**
.764
*
**. La corrélation est significative au niveau 0,01 (unilatéral). *. La corrélation est significative au niveau 0,05 (unilatéral).
10.2.2.2.6 Costs Related 10.8 Lawyers
10.9 IP Assistance
cost is too high
cost is too high
COSTS_RELATED **
.970
**
Coefficient de corrélation
1.000
.840
Sig. (unilatérale)
.
.009
.000
N
7
7
7
Rho de COSTS_RELATED Spearman
**. La corrélation est significative au niveau 0,01 (unilatéral). *. La corrélation est significative au niveau 0,05 (unilatéral).
98
Aygün Erkaslan
SÉMINAIRE DE SYNTHÈSE
10.2.2.2.7 IP Office Satisfaction 13.2 13.4 13.1 Satisfaction
Satisfaction
13.3 Satisfaction
of IP office of
of IP office
of IP office of
your country
of your
your country
concerning
country
concerning
patent
concerning
trademark
Satisfaction of IP_OFFICE_
IP office of
SAT
your country concerning design utility model
Coefficient de 1.000
.918
*
.289
.889
*
.740
Sig. (unilatérale)
.
.014
.318
.022
.076
N
5
5
5
6
6
Rho de
IP_OFFICE
corrélation
Spearman
_SAT
*. La corrélation est significative au niveau 0,05 (unilatéral).
10.2.2.2.8 IP Track Record 3.b Does 3.a Does your IP_TRACKRE
3.d Does your your firm
3.c Does your firm
own utility
own trademarks?
firm own CORD
firm own
patents?
designs? models?
Coefficient de 1.000
.866
.866
0.866
.866
Sig. (unilatérale)
.
.167
.167
0.167
.167
N
3
6
6
6
6
Rho de
IP_TRACKRE
corrélation
Spearman
CORD
99
Aygün Erkaslan
SÉMINAIRE DE SYNTHÈSE
10.2.2.2.9 Informal Protection Methods 11.5 We divide knowledge 11.4 We 11.1 We
between 11.2 We
conclude
keep secret 11.3 We
conclude confidentiality
conclude agreement of
INFORMAL_P
agreement
employees in knowledge
agreement on non-
ROTECTION
several key
with
the aim to from some
transfer of competition
employees,
have no single of the
rights with with
partners,
person employees,
employees employees
knowing all partners,
clients
concerning a clients new product or service
Coefficient de Rho de
1.000
.426
.890
Sig. (unilatérale)
.
.200
N
6
7
INFORMAL_PR
corrélation
OTECTION
**
*
.509
.503
.800
.009
.151
.155
.028
7
7
6
7
Spearma n
**. La corrélation est significative au niveau 0,01 (unilatéral). *. La corrélation est significative au niveau 0,05 (unilatéral).
100
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