SMEs and Intellectual Property Rights - The Case of South Korea

SÉMINAIRE DE SYNTHÈSE Aygün Erkaslan

1

SMES AND INTELLECTUAL PROPERTY: THE CASE OF SOUTH KOREA

UNIVERSITY OF NEUCHATEL

MASTER OF SCIENCE IN INTERNATIONAL BUSINESS DEVELOPMENT

SÉMINAIRE DE SYNTHÈSE

AYGÜN ERKASLAN


TABLE OF CONTENTS

1 . INTRODUCTION ................................................................................................................................... 1

1.1 INTRODUCTION .......................................................................................................................................... 2

1.2 RESEARCH OBJECTIVE................................................................................................................................... 2

1.3 RESEARCH STRUCTURE ................................................................................................................................. 2

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

3 . 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

4 . 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

5 . 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


6 . GLOBAL SUMMARY ........................................................................................................................... 48

6.1 SUMMARY ............................................................................................................................................... 49

7 . 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 Motivation to own Intellectual Property Rights ..................................................................................... 55 7.2.1.2 Reasons not to own Intellectual Property Rights ................................................................................... 56 7.2.1.3 Informal Protection Methods ................................................................................................................. 57 7.2.1.4 List of barriers to operate in this country comparing with the problem of IP ........................................ 58

7.2.2 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 To attract financing ................................................................................................................................ 67 7.2.3.2 To increase bargaining power ................................................................................................................ 67 7.2.3.3 To have high return on investment ........................................................................................................ 68 7.2.3.4 To have a stronger market position........................................................................................................ 68 7.2.3.5 To improve our advertising impact......................................................................................................... 68 7.2.3.6 To prevent piracy by competitors .......................................................................................................... 68 7.2.3.7 To block competitors .............................................................................................................................. 69

7.2.4 Correlation between the reasons to not own IPR variables and other variables ............................ 70 7.2.4.1 No need .................................................................................................................................................. 71 7.2.4.2 Because too bureaucratic ....................................................................................................................... 71 7.2.4.3 No enough knowledge ............................................................................................................................ 71 7.2.4.4 Too expensive ......................................................................................................................................... 71 7.2.4.5 No consideration of the relevance of these methods ............................................................................ 72 7.2.4.6 The protection can disclose information to competitors ....................................................................... 72

8 . 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

9 . REFERENCES ...................................................................................................................................... 78

9.1 BOOKS, PUBLICATIONS & REPORTS .............................................................................................................. 79

9.2 WEBSITES ............................................................................................................................................... 81


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


1

1 . INTRODUCTION


2

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.


3

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.


4

2 . ANALYSIS OF THE NATIONAL CONTEXT FOR IPR

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7

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.

SÉMINAI

8

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SÉMINAI

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10

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 3 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.


11

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.


12

3 . THE MACRO‐ENVIRONMENT


13

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 6 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

SÉMINAI

14

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SÉMINAI

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18

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


19

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 LAW AUTHORITY

Industrial Property Rights

Patents Patent Act

Korean Intellectual Property Office (KIPO)

Utility Models Utility Model Act

Designs Design Act

Trademarks Trademark Act

Unfair Competition Prevention and Trade Secrets Protection

Unfair Competition Act

Semiconductor Integrated Circuit Layout Right

Semiconductor Act

Copyright Copyright Act Ministry of Culture, Sports

and Tourism (MCT) Sound Records, Video Products and Game Software

Sound Records, Video Products and Game Software Act

Computer Programs Computer Programs Protection Act Ministry of Knowledge

Economy (MKC)

New Breed of Plants Seed Industry Act Ministry of Agriculture, Fisheries and Food (MAF)

Customs clearance regulation on counterfeit goods

Customs Act Korea Customs Service

Source: Korean Intellectual Property Office

17 U.S. Commercial Service. Url: http://www.buyusa.gov/korea/en/iproverview.html#2

SÉMINAI

20

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against c

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18 KIPO: An19 KIPO: An20 KIPO: An

RE DE SYNTH

tion, the Ko

rcialization o

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nti‐counterfe

s, buses, etc"

terfeit produ

down onlin

ned previous

system", wh

feit goods, b

Report 200

s" establishe

counterfeit p

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ers' recognit

feit products

s, 2009). Let

t the followi

s what are tr

feit products

re, the syste

trol measure

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23

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


24

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


25

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 28 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


26

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 33 National Integrity System, Transparency International, 2006, p. 47 34 Sung, Nack‐Song, Judicial Independence in Korea, Daegu High Court, 2006


27

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 Ministry of Employment and Labor, Labor Law Q&A for Foreign Investors, 131 p. 36 Ministry of Employment and Labor, Labor Law Q&A for Foreign Investors, p. 17


28

4 . THE MESO‐LEVEL


29

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


30

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.


31

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


32

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.


33

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 According to Paul Goldstein, IP in Asia: law, economics, history and politics, 2009, 357p. 38 Korean Intellectual Property Office’s website


34

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., …….


35

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 KIPO’s annual report 2008 41 Baek, J‐H., «Korean National Experience on Building Intellectual Property Awareness and Capacity of Small and Medium‐sized

Enterprises », July 30, 2008


36

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


37

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


38

5 . THE MICRO‐LEVEL


39

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).

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).

2000 2001 2002 2003 2004 2005 2006 2007

Mill. Pop. 1549 1556 1607 1887 2190 2538 2598 2656

0

500

1000

1500

2000

2500

3000

NUMBER

EVOLUTION OF PATENT FILLINGS

284

287

303

336

341

447

581

800

2610

2656

0 500 1000 1500 2000 2500 3000

UNITED KINGDOM

DEM. OF KOREA

DENMARK

MONACO

FINLAND

NEW ZEALAND

GERMANY

USA

JAPAN

REP. OF KOREA

PATENT FILLING BY COUNTRY PER MILLION POPULATION

FIGURE 15

FIGURE 16


40

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).

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).

10

13

15

17

17

17

22

36

82

114

0 20 40 60 80 100 120

Finland

Russia

Kyrgyzstan

Germany

New Zealand

USA

China

Moldova

Japan

Rep. of Korea

PATENT FILLING PER $BILLION GDP

0

100'000

200'000

300'000

400'000

500'000

600'000

700'000

800'000

900'000

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

NUMBER OF PATENT GRANTED

FIGURE 17

FIGURE 18


41

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,

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).

3426

4419

5109

12669

38997

100673

0 20000 40000 60000 80000 100000 120000

Switzerland

Netherlands

France

Germany

USA

Japan

NUMBER OF PATENTS IN FORCE

FIGURE 19


42

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.

44 Ambassade de France en Corée, La Propriété Intellectuelle en Corée, 2007 45 http://joongangdaily.joins.com/article/view.asp?aid=2919917

2003 2004 2005 2006 2007 2008

Number 10160 149555 17742 14852 35366 97751

0

20000

40000

60000

80000

100000

120000

140000

160000

NUMBER OF SEIZED COUNTERFEIT PRODUCTS

FIGURE 20

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45

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.


46

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 Korea’s Invention Promotion Activities, Experience of the Korean Intellectual Property Office, KIPO, 2003 49 Korea’s Invention Promotion Activities, Experience of the Korean Intellectual Property Office, KIPO, 2003


47

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.


48

6 . GLOBAL SUMMARY


49

6.1 SUMMARY

ELEMENT STRENGTH WEAKNESS OPPORTUNITY THREAT INFO GAP

Environment

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

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.

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

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

LEGAL & REG. ENVIRONMENT

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

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

Transparency of regulations, fight against corruption.

Corruption could mitigate negatively the country's image. Risk: foreign companies move away from South Korea


50


Institutional

SECTOR ANALYSIS & REVIEW

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)

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

INSTITUTIONAL MAP

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 and further interaction with international bodies

Stay in situation of status quo

INSTITUTIONAL PROACTIVITY

International network, cooperation and treaties. Vision and Strategy in compliance with International Standards.

Education and courses related to IPR offer to enterprises and individuals (+University students)

Continuous improvement. Stay in situation of status quo

Availability of further information regarding the degree of institutional proactivity.


51


Enterprise

USE OF IPR INSTRUMENTS

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).

INFRINGEMENT OF IPR

Measures undertaken by the government to eradicate the counterfeiting (penalties, websites breakdown). Further tools established to monitor illegal activities, award system to foster denunciation.

Counterfeiting, although important improvements are undertaken.

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

FROM AWARENESS TO ACTION

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

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.


52

7 . THE SURVEY


53

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.


54

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


55

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

PERCENTAGE TURNOVER EARNED

OUTSIDE THE COUNTRY 1.00 6.00 3.4286 2.14920

FIRM AGE 1.00 22.00 9.8571 8.35521

NUMBER OF COUNTRIES WHERE YOU

ARE ESTABLISHED 1.00 2.00 1.4286 0.53452

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 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


56

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.

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

3.833.5 3.5 3.33 3.16 3.16 3 3 3

2.5 2.33

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

Level

MOTIVATIONS TO ONW IPR


57

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.

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

3.4 3.43.2 3.2

32.8

2.6

0

0.5

1

1.5

2

2.5

3

3.5

4

Level

REASONS NOT TO OWN IPR

Colonne1


58

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.

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 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

2.52.28

2.142

1.71

0

0.5

1

1.5

2

2.5

3

We keep secret keyknowledge fromsome of theemployees,

partners, clients

We concludeconfidentialityagreement withemployees,

partners, clients

We divideknowledge betweenseveral employeesin the aim to haveno single person

knowing allconcerning a newproduct or service

We concludeagreement of non‐competition with

employees

We concludeagreement on

transfer of rightswith employees

INFORMAL PROTECTION METHODS


59

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.

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/

2.162 2 2 2

1.851.71 1.71 1.71 1.71

0

0.5

1

1.5

2

2.5

Level

LIST OF BARRIERS


60

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 http://en.wikipedia.org/wiki/Validity_(psychometric) 52 A.H. SEGARS, 1998, Assessing the unidimensionality of measurement, Clemson University 53 Enterprise Observatory, Results ‐ Analysis


61

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.


62

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 ****

11. Administrative procedures ‐ 0.92** ‐ 0.96** 0.76* 0.45 ‐0.63 ‐0.68* ‐0.54 0.25 ‐0.10 ‐0.09 0.83* 0.913a

12. Protection cost ‐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

13. Costs related ‐ 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


63

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.

1 2 3A 3B 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

16. IP track record 0.5 0.5 ‐0.86 1** 1** 1** 0.86 0.5 ‐0.5 0.86 0.5 ‐0.5 0.84 ‐0.5 0 1 0.86a

17. IP management strategy ‐0.49 0.09 0.10 0 ‐0.21 ‐0.31 ‐0.31 ‐0.60 ‐0.90

‐0.70 0.09 0.10 ‐0.57 0.30 ‐0.73

‐0.14 0 1

18. External IP assistance 0 0.29 0.10 ‐0.7 0.73*

0.72 0.51 ‐0.3 0 0.10 ‐0.09 ‐0.31 0 ‐0.10 ‐0.21 0.74 1 0.33 1

19. Check infringements ‐0.9 0.41 ‐0.1 ‐0.85

0.31 0.37 0.28 ‐0.68 0 ‐0.1 ‐0.32 ‐0.28 ‐0.26 0.01 ‐0.19 0.18 1 0.4 0.8* 1

20. Informal protection methods ‐0.41 ‐0.49 0.43 ‐0.4 ‐0.06 0.09 0.12 ‐0.06 0.47 0.16 0.31 0.39 0.53 0.31 0.8* 0.34 0 ‐0.14 0.74 0.73 **** 0.6986


64

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.

65

7.2.2.2.3 General Pattern

Firm perception of the importance for capturing commercial value for each of these methods of protection

Firm profile

Country of the Head Office

(qu0.2)

Type of firm (qu0.3)

Age (qu0.7)

Degree of

internationalization (qu0.6,

qu0.9)

Sector (qu0.10)

Degree of innovation (qu2)

Protection efficiency (qu10.1, qu10.2)

Administrative procedures (qu10.10,

qu10.11)

Costs related (lawyers, assistance)

(qu10.8, qu10.9) Government’s measures & efficiency

(qu10.13)

IP office satisfaction (qu13.1 to

qu13.4)

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)

Reasons to NOT own IPR

No need (qu4.1)

Too bureaucratic procedure (qu4.2)

No enough knowledge (qu4.3)

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)

IP track record & operational issues

IP Track Record (qu3.1 to qu3.4)

IP Management strategy

(qu6)

Informal protection methods (qu11.1 to qu11.5)

Patent (qu9.1)

Utility model (qu9.2)

Trademark (qu9.3)

Design (qu9.4)

Copyright (qu9.5)

External IP assistance (qu7)

Mode of establishment

(qu0.8)

Size (qu0.4, qu0.5

Informal protection methods

(qu11.1 to qu11.5)

Check infringements (qu0.8)

0.97** 0.67* ‐0.74*

Protection costs (qu10.5, qu10.6,

qu10.11)

‐0.7* 0.88** 0.95** ‐0.92* ‐0.96** 0.76*

0.97**

1.00** ,1.00** , 0.73*

1.00**

0.8*


66

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 18 19 20

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

To increase bargaining power

‐0.94** ‐0.88** 0.95** 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

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 0 ‐0.36 ‐0.37

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 0.7 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 ‐0.12 ‐0.21

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 ‐0.28

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 ‐0.1


67

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.


68

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.


69

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.


70

7.2.4 CORRELATION BETWEEN THE REASONS TO NOT OWN IPR VARIABLES AND OTHER VARIABLES

1 2 3A 3B 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

No need ‐0.28 ‐0.26 0.02 0.44 ‐0.1 0 ‐0.5 0.54 ‐0.16 0.57 0.07 0.13 0.18 0.13 0.14 0.94*‐

0.86‐0.27 0.54 ‐0.26 0.39

Too bureaucratic procedure

‐0.29 ‐0.29 ‐0.14 1** ‐0.44 ‐0.59 ‐0.88* 0.15 ‐0.91* ‐0.14 0.14 0.3 ‐0.61 0.3 ‐0.66 0.0 ‐

0.860.57

‐0.57

‐1** ‐0.44

No enough knowledge

0.68 0.8 ‐0.8 0 0.34 0.57 0 0.47 0.35 0.8 ‐0.8 ‐0.82* 0 ‐0.82* 0 0.31 0 ‐0.81 0 0 ‐0.22

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 0 ‐0.14

Difficult to enforce rights

0.72 0.72 ‐0.72 0.40 0.36 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‐

0.33‐0.57 ‐0.72

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 information to competitors

0.97** 0.87* ‐0.41 ‐0.28 0.87* 0.87* 0.56 0.63 0.36 0.667 ‐0.41 ‐

0.94**0.35

‐0.94**

‐0.28 0.6 0.5 ‐0.77 0.25 0 ‐0.46


71

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.


72

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.


73

8 . CONCLUSION


74

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.


75

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.


76

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,


77

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.


78

9 . REFERENCES


79

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 CapacityBuilding 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.


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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.


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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

SÉMINAI

84

10.1 A

10.1.1 Q

RE DE SYNTH

APPENDIX: T

QUESTIONNA

ÈSE

THE SURVEY

AIRE

AyAygün Erkaslaan

SÉMINAI

85

RE DE SYNTHÈSE

AAygün Erkaslaan

SÉMINAI

86

RE DE SYNTHÈSE AAygün Erkaslaan

SÉMINAI

87

RE DE SYNTHÈSE

AAygün Erkaslaan

SÉMINAI

88

RE DE SYNTH

ÈSE

AAygün Erkaslaan

SÉMINAI

89

10.2 A

10.2.1

F

e

A

P

o

y

F

N

y

RE DE SYNTH

APPENDIX: S

DESCRIPTIVE

Firm Size (num

employees):

Annual Turnov

Percentage tu

outside the co

you are opera

Firm Age

Number of Co

you are establ

ÈSE

TATISTICAL

STATISTICS

mber of

ver

urnover earned

ountry in which

ating:

ountries where

lished:

DATA

Statis

N

7

7

d

h 7

7

e 7

stiques descr

Minimum

1.00

1.00

1.00

1.00

1.00

iptives

Maximum

7.00

6.00

6.00

22.00

2.00

A

m Moyenne

3.1429

3.1429

3.4286

9.8571

1.4286

Aygün Erkasla

Ecart type

2.54484

1.95180

2.14920

8.35521

.53452

an

e


90

1. Do you consider

Intellectual Property (IP)

protection a relevant issue for

your company?

7 3.00 5.00 3.7143 .95119

2. How innovative is your

company? 7 2.00 5.00 3.5714 .97590

3.a Does your firm own

patents? 6 1.00 2.00 1.8333 .40825

3.a Number Patent

registered: 3 4.00 50.00 20.6667 25.48202

3.b Does your firm own utility

models? 4 1.00 2.00 1.5000 .57735

3.b Number Utiliry model

registered: 1 2.00 2.00 2.0000 .

3.c Does your firm own

trademarks? 4 2.00 2.00 2.0000 .00000

3.c Number Trademark

registered: 2 1.00 15.00 8.0000 9.89949

3.d Does your firm own

designs? 4 1.00 2.00 1.7500 .50000

3.d Number Design

registered: 1 3.00 3.00 3.0000 .

4.1 You don't own IPRs,

because you don't need IPR: 5 1.00 5.00 2.8000 1.48324


because too bureaucratic: 5 2.00 3.00 2.6000 .54772


because you don't have

enough knowledge:

5 2.00 5.00 3.2000 1.09545


because it is too expensive: 5 3.00 4.00 3.4000 .54772


because it is difficult to

enforcing rights:

5 3.00 5.00 3.4000 .89443


because we don't consider

these methods relevant:

5 1.00 5.00 3.2000 1.48324

4.7 We don't protect our IP

because it can disclose

information to competitors

5 1.00 5.00 3.0000 1.58114


91

5.1 You protect IPRs in the

aim to attract finance 6 1.00 4.00 2.5000 1.22474


aim to convince partners 6 1.00 4.00 3.0000 1.26491


aim to increase negociation

power

6 1.00 4.00 2.3333 1.21106


aim to facilitate R&D

cooperation

6 2.00 4.00 3.0000 .89443


aim to have high return on

investment

6 2.00 4.00 3.1667 .75277


aim to have direct income by

licensing

6 2.00 4.00 3.3333 1.03280


aim to have stronger market

position

6 3.00 5.00 3.8333 .75277


aim to have a better

advertising impact

6 2.00 4.00 3.0000 .89443


aim to have reputation

creation

6 2.00 5.00 3.5000 1.04881


aim to prevent piracy of

competitors

6 2.00 5.00 3.5000 1.37840


aim to block competitors 6 2.00 5.00 3.1667 1.16905

6. Do you have an IP

Management strategy? 6 1.00 2.00 1.5000 .54772

7. Do you have an external

IP assistance? 6 1.00 2.00 1.5000 .54772

8. Does your firm actively

check for potential

infringements?

6 1.00 5.00 2.8333 1.60208


92

9.1 Please indicate level of

importance to your firm's

strategy for capturing

commercial value from its

innovation concerning

patents:

7 1.00 5.00 3.0000 1.63299





innovation concerning utility

models:

7 .00 5.00 2.5714 1.61835






trademarks:

7 2.00 5.00 3.7143 1.11270






designs:

7 1.00 5.00 3.2857 1.60357






copyrights:

7 2.00 5.00 3.5714 1.27242

10.1 In this country,

Intellectual Property Rights

(IPRs) are clearly defined

7 3.00 5.00 3.7143 .75593

10.2 IPRs are well protected

by law 7 2.00 5.00 3.4286 .97590

10.3 IPRs are not

enforceable 7 2.00 3.00 2.7143 .48795

10.4 In general the costs of

formal protection are very

cheap

7 2.00 4.00 3.0000 .57735


93

10.5 The cost of patent

protection is too high 7 2.00 4.00 3.0000 .57735

10.6 The cost of trademark


10.7 The cost of design


10.8 Lawyers cost is too high 7 2.00 4.00 3.5714 .78680

10.9 IP Assistance cost is too

high 7 1.00 4.00 3.1429 1.06904

10.10 The time of procedure

to protect our innovations is

very long

7 1.00 5.00 3.5714 1.27242

10.11 Administrative

procedures to protect our

innovations are heavy

7 1.00 5.00 3.1429 1.21499

10.12 Formal IP protection is

not sufficient 7 1.00 3.00 2.5714 .78680

10.13 Government's

measures for improving the

protection of IPRs are very

effective

7 1.00 3.00 2.2857 .75593

10.14 Right is unenforceable 7 1.00 3.00 2.1429 1.06904

10.15 Legal disputes

concerning IP are easily

resolved

7 1.00 3.00 2.2857 .75593

11.1 We conclude

confidentiality agreement

with employees, partners,

clients

7 2.00 3.00 2.2857 .48795

11.2 We conclude agreement

of non-competition with

employees

7 1.00 3.00 2.0000 .81650

11.3 We conclude agreement

on transfer of rights with

employees

7 1.00 3.00 1.7143 .75593

11.4 We keep secret key

knowledge from some of the

employees, partners, clients

6 2.00 3.00 2.5000 .54772


94

11.5 We divide knowledge

between several employees

in the aim to have no single

person knowing all

concerning a new product or

service

7 1.00 3.00 2.1429 .89974

12.1 Transport & logistic

infrastructures 7 1.00 3.00 2.0000 1.00000

12.2 Telecommunication

infrastructures 7 1.00 3.00 1.7143 .75593

12.3 Difficulties with

administrative requirements

(permits, regulations, etc...)

7 1.00 3.00 2.0000 .57735

12.4 Access to quality labor

force 6 1.00 3.00 2.0000 .63246

12.5 Cost of establishing a

legal entity 6 1.00 3.00 2.1667 .75277

12.6 High taxation 7 1.00 3.00 2.0000 .57735

12.7 Banks high interest

rates 7 1.00 2.00 1.7143 .48795

12.8 Banks lack of credit

accessibility 7 1.00 3.00 1.8571 .69007

12.9 Lack of access to

innovation 7 1.00 2.00 1.7143 .48795

12.10 Risk of inflation 7 1.00 3.00 1.7143 .75593

13.1 Satisfaction of IP office

of your country concerning

patent

6 2.00 5.00 3.3333 1.03280



utility model

6 .00 4.00 2.3333 1.36626



trademark

6 2.00 4.00 3.3333 1.03280



design

6 2.00 4.00 3.0000 1.09545


95

14.1 In the country in which

you are operating, do you

have any other source of IP

support

5 1.00 2.00 1.4000 .54772

N valide (listwise) 0

10.2.2 CORRELATION BETWEEN MANIFEST VARIABLES AND LATENT VARIABLES

10.2.2.1 Unidimensionality

10.2.2.1.1 Firme Size

Composante Valeurs propres initiales Extraction Sommes des carrés des facteurs retenus

Total % de la variance % cumulés Total % de la variance % cumulés

dimen

sion0

1 1.834 91.704 91.704 1.834 91.704 91.704

2 .166 8.296 100.000

Méthode d'extraction : Analyse en composantes principales.

10.2.2.1.2 Degree of Internationalization



dimen

sion0

1 1.104 55.181 55.181 1.104 55.181 55.181

2 .896 44.819 100.000


10.2.2.1.3 Protection Efficiency



dimen

sion0

1 1.871 93.571 93.571 1.871 93.571 93.571

2 .129 6.429 100.000


10.2.2.1.4 Administrative Procedures



dimen

sion0

1 1.801 90.043 90.043 1.801 90.043 90.043

2 .199 9.957 100.000



96

10.2.2.1.5 Protection Costs



dimen

sion0

1 2.690 89.675 89.675 2.690 89.675 89.675

2 .310 10.325 100.000

3 -3.605E-17 -1.202E-15 100.000


10.2.2.1.6 Costs Related



dimen

sion0

1 1.878 93.876 93.876 1.878 93.876 93.876

2 .122 6.124 100.000


10.2.2.1.7 IP Office Satisfaction



dimen

sion0

1 3.097 77.420 77.420 3.097 77.420 77.420

2 .729 18.215 95.635

3 .175 4.365 100.000

4 -3.753E-17 -9.383E-16 100.000


10.2.2.1.8 IP Track Record



dimen

sion0

1 1.866 46.654 46.654 1.866 46.654 46.654

2 1.064 26.611 73.265 1.064 26.611 73.265

3 .667 16.667 89.932

4 .403 10.068 100.000



97

10.2.2.1.9 Informal Protection Methods



dimen

sion0

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


10.2.2.2 Convergent Validity

10.2.2.2.1 Firm Size

SIZE_FIRM Firm Size (number

of employees):

Annual

Turnover

Rho de Spearman SIZE_FIRM

Coefficient de corrélation 1.000 .935** .964**

Sig. (unilatérale) . .001 .000

N 7 7 7

**. La corrélation est significative au niveau 0,01 (unilatéral).

10.2.2.2.2 Degree of internationalization

DEGREE_INTERN

AL

Percentage turnover

earned outside the

country in which you are

operating:

Number of

Countries

where you are

established:

Rho de

Spearman DEGREE_INTERNAL

Coefficient de corrélation 1.000 .954** .364


N 7 7 7

**. La corrélation est significative au niveau 0,01 (unilatéral). Should be taken off

10.2.2.2.3 Protection Efficiency

PROT_EFFICENC

Y

10.1 In this country, Intellectual

Property Rights (IPRs) are clearly

defined

10.2 IPRs are well

protected by law

Rho de

Spearma

n

PROT_EFFICENCY

Coefficient de

corrélation 1.000 -.234 -.397


N 7 7 7



98

10.2.2.2.4 Administrative Procedures

ADMINI_PROCED

URES

10.10 The time

of procedure to

protect our

innovations is

very long

10.11 Administrative

procedures to protect

our innovations are

heavy

Rho de

Spearman

ADMINI_PROCEDURE

S

Coefficient de

corrélation 1.000 .898** .929**


N 7 7 7


*. La corrélation est significative au niveau 0,05 (unilatéral).

10.2.2.2.5 Protection Costs

PROTEC_COSTS

10.5 The cost of

patent

protection is too

high

10.6 The cost

of trademark

protection is

too high

10.7 The cost of

design

protection is too

high

Rho de

Spearm

an

PROTEC_COSTS

Coefficient de corrélation 1.000 1.000** .764* .764*

Sig. (unilatérale) . . .023 .023

N 7 7 7 7



10.2.2.2.6 Costs Related

COSTS_RELATED10.8 Lawyers

cost is too high

10.9 IP Assistance

cost is too high

Rho de

Spearman COSTS_RELATED

Coefficient de corrélation 1.000 .840** .970**


N 7 7 7




99

10.2.2.2.7 IP Office Satisfaction

IP_OFFICE_

SAT

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

Rho de

Spearman

IP_OFFICE

_SAT

Coefficient de

corrélation 1.000 .918* .289 .889* .740

Sig. (unilatérale) . .014 .318 .022 .076

N 5 5 5 6 6


10.2.2.2.8 IP Track Record

IP_TRACKRE

CORD

3.a Does your

firm own

patents?

3.b Does

your firm

own utility

models?

3.c Does your firm

own trademarks?

3.d Does your

firm own

designs?

Rho de

Spearman

IP_TRACKRE

CORD

Coefficient de

corrélation 1.000 .866 .866 0.866 .866

Sig. (unilatérale) . .167 .167 0.167 .167

N 3 6 6 6 6


100

10.2.2.2.9 Informal Protection Methods

INFORMAL_P

ROTECTION

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

11.5 We divide

knowledge

between

several

employees in

the aim to

have no single

person

knowing all

concerning a

new product

or service

Rho de

Spearma

n

INFORMAL_PR

OTECTION

Coefficient de

corrélation 1.000 .426 .890** .509 .503 .800*

Sig. (unilatérale) . .200 .009 .151 .155 .028

N 6 7 7 7 6 7



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SMEs and Intellectual Property Rights - The Case of South Korea

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