This paper consists of the study of Korean firms with respect to the condition of IPR in the past and the crisis faced by these firms in coming to follow stringent IPR policies in order to stand out in the developed nation category. Whereas the paper also consists of the crux of IPR history in India when compared to South Korea. India being at the stage of developing and not completely developed has laws and needs to follow and invest up to date on the same with upgrading the IP system even at MSMEs level. The paper mostly consists of data from the year 1970s to 2010 as mostly obtained from secondary sources. The interest of Korean firms and their rapid industrialization is an example of right time investment in human resources and development organisations in order to maximize human resources for better and latest technology at hand.
South Korea (herein further referred to as Korea) is paving its way eventually in global limelight. The more basic reason is about the entertainment industry which is well known to the majority of teens from developed cities being fondly interested in the pop music also known as KPOP or the drama scripts filled with mixed emotion. As for me, along with the attraction of binge-watching drama, what attracted me towards Korea was their firms who are airing their roots to various developed nations in a very short time. When the topic of a firm arises, what comes to the mind of a law student is about the structure of their innovation along with the process of patenting that innovation while grasping the attraction of many international consumers and developers. In my research paper I will be discussing the Korean firms in terms of their IPR and how they differ from Indian firms. To understand more lucidly I have divided the body of content into 3 sections. Section 1 includes history of Korean firms in IPR, section 2 includes history of Indian firms in IPR, section 3 includes the differences and developments followed by suggestion and conclusion at the end.
Keywords: Korea; Indian; IPR; research and development; IMF; WIPO; KIPO; IT
History of Korean firms in IPR
Korea, once a nation filled with lack of resources after world war 2, evolved into a high-income country from its capita income of $1,870 in 1981. In 2018, the per capita income of Korea reached $31,349 which gained them into the settlement of talks with the advanced countries.1 The reason for the same is the promotion of enterprises be it on large or small scale. The big firms were effective in taking advantage of extracting the resources and concentrating them together for an inactive export-oriented government macro policy in the early years of economic development.2 Since the 1990s Korea has encouraged open trade policies that helped them create an efficient innovation system and suitable exporting terms for the native enterprises. It was in the 2000s that Korea slowed down the multilateral trade agreements and encouraged bilateral free trade agreements which were also called Free Trade Agreements (FTA)3. When bilateral agreements come into effect the restraint of tariff, import quotas, and exports are eliminated. Through these trade policies, Korea emerged as the sixth largest trading partner in the world by trade volume in 2017.4 When such a developed nation is contemplating its process of industrialization, the protection of such innovations that makes the nation into a developed one must be quite robust.
Before analysing the strong patenting of Korea, it is interesting to read that the process of revision of Korean Patent Act (hereinafter ‘KPA’) was revised for 30 times since 1961.5 This aggressive revision was made in order to promote rapid industrialization. In a report of the WIPO the Korean Property Office (hereinafter ‘KIPO’) is the third largest recipient in the sector of the number of patent applications in 2004, after Japan and US.6 To come up to the international level the system also has internationalized with the following features:
- To enlarge patentable matters
- To increase the patent examination
- To control misuse of patent right
- To conform with international trend for patent protection
It was not in the history of Korea the existential patent right; the world powers were the one that forced for patent rights in order to dominate the native/domestic market. The first Korean Patent Ordinance was formulated on 12th August 1908 which was a result of agreement in between USA and Japan for protection the invention in Korea.7 After a few acts in the sense of industrial property, it was in 1961 when Korea enacted its own Patent Act whose skeleton was similar to Japan and US after World War 2.
History of patents in India
The first Patent Act was enacted in 1856, later there were amendments and replacement by different acts such as the Invention Act of 1883, Inventions and Design Act of 1888. Eventually the 1911 Patents and Design Act was replaced by previous acts. After Independence the Patent Act was enacted in 1970 which came into force in 1972 and was last amended in 2005 keeping in mind the need to fit in provisions of TRIPS (The Agreement on Trade- Related Aspects of Intellectual Property Rights)8. The Indian Patent Act states
“Patents are granted to encourage inventions and to ensure that the inventions are worked in India on the commercial scale and not merely to enable patentees to enjoy a monopoly for the importation of the patented article”9. The patent laws in India have gone under a lot of scape after India became a member of WTO and the Agreement on TRIPS.
The difference between Indian and Korean firms
The three most influential changes in 1980s in Korea that led to the growth in increase applications of patent were:
- Introduction of substance patent system in 198610
- Joining TRIPS in 199411
- IMF financial crisis in 199712
The major and severe IMF crisis majorly hit the Research and Development investment in the year 1997, it also resulted negatively upon the areas of automobile, IT and machinery. When we compare the relation between the GDP and IP activities around the 1197 and 1998 GDP standing at 200,000 Billion worth and IP in between at 20,000- 30,00013 (patent application), it can be analysed that GDP relation to that of IP protection is closely related. When looking after the data from 2001 the GDP stands at 500,000 billion won and patent applications are between 30,000-40,000.14 When the data from the automobile and IT areas is collected, the automobile industry KIA faced dishonour in 1997 during the crisis of IMF which gradually made an increase in Research and Development ratio since 1998. The same was with Hyundai after the IMF crisis the bent was more towards strengthening IP as the patent applications along with R&D was gradually increasing. The IT industry has been a vital part of Korea’s industrialization process since 2000 in terms of patent application as well as sales and yes also research and development. This can be seen with an example, where Samsung began its investment into more research and development among the eight leading companies in the IT sector including DOOSAN, along with a rise in patent application too. This shows that each company values its research and development and patent policy which seems to be affected by domestic situations.
Coming to India and its features of IP, India began spending 0.8% of its GDP on research and development, this process began long back in the 1970s. It has been said that almost 80% of contributions come from the government.15 After all this contribution of figures yet researchers were ignorant about IPR and their importance to research and development. There has been a National Innovation Council that has been established in order to amalgamate efforts in important areas. It was the department of science and technology that began taking initiative in the awareness of IPR by setting up the PFC (Patent Facilitation Cell); this cell has also managed to set up 20 Patent Information cells in order to address the locals.16 Upon the finding of the World Bank when studying PFC in India, the observation was “ to consider reducing domestic filing fees for individual and SME on need basis”. When institutions such as IIT Delhi was trying to set up a foundation called Foundation for Innovation and Technology Transfer 20 years back, which was aimed at obtaining IPR on the research conducted in institution, the main difficulty was shortage of funds for filing and continuing them abroad, second was the lack of resources specifically qualified human resources to carry it out successfully. The search in 2000 around IT areas with 125 MSMEs was carried out; it was revealed that not a single company belonging to this set of companies holds an Indian Patent.17 In fact the patent filing was pretty low and slow by Indian IT companies and in some sectors, it was non-existent before the 2005 Patent Act. The 3 big IT players TCs, Infosys and Wipro did not file any patent application until 2000 as per Indian Patent Database18. When the picture shows where the big firms were unaware or being aware did not file for patent application then an expectation from the small enterprises is unfair. But as the value of assets began flashing in the industry starting with Infosys with its brand value Rs.141,530 million in 2005 eventually enhanced to 323,450 million in 200919, followed by Wipro showing its IP value at Rs. 2744 million in 2010.20
When going through data and all theories it can be suggested from the Korean model that the relation of GDP which is basically the per capita income of the nation invested considerably on its research and development rips to the innovation of upliftment of small as well as large enterprises followed by filing for more patent applications. It is also seen that India being 80% into the patent activities still lacks behind in terms of human resources with a qualified population. Therefore, investment on education and better quality of institutions can bring human resources to the maximum utility may it be economic, IT or legal.
The analysis on the impact of the IP system on economic flourishment depicts that research and development as well as GDP are closely connected with patent protection in Korea. It also shows that the number of patent application filing is not the sole strengthening of IP protection but a positive influence on technology transfer, research and development and GDP is.21 In contrast to India there is a need for MSME to learn from large companies and carry out time to time evaluation of IPR. Whereas large companies are quite strengthened in terms of the importance of IPR.
By : RUPSEE NERLIKAR
1. Wonkyu Shin, Sehwan Oh and Sungho Rho, ‘Innovation and Exports of Korean Firms: How they differ by Size and Industry?’(2019) 10 (2) MA <https://www.researchgate.net/publication/337422739_Innovation_and_Exports_of_Korean_Firms_How_Do_They_Differ_by_Size_and_Industry> accessed 20 May 2021.
5. Prof. Dr. Han, Ji-Young, ‘Impact of the Intellectual Property System on Economic Growth’ Country Report-Korea <https://www.wipo.int/edocs/pubdocs/en/wipo_natstudy_sme_india.pdf> accessed 20 May 2021.
8. R Saha, ‘National Study on Intellectual Property and Small and Medium Sized Enterprises’ 2012 World Intellectual Property Organization Geneva <https://www.wipo.int/export/sites/www/about-ip/en/studies/pdf/wipo_unu_07_korea.pdf?force default=true >accessed 19 May 2021.
15. Supra at 8.
21. Supra at 5.