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Half of trade secret leaks by retirees.(News Letter No. 503)



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1. Half of trade secret leaks by retirees.

- KIPO published the 2022 survey results of intellectual property (IP) protection.
- A rate of experiencing unfair competition acts including idea stealing, etc. was 5.2%.
- 3.9% of companies experienced damages by IP infringement including trademarks.

Among the trade secret leaks experienced by Korean companies, leaks by retirees totaled more than half.

On April 5, 2023, KIPO published the results of the 2022 IP protection survey.

To use as basic information to establish a policy relating to unfair competition prevention and trade secret protection, the survey has been taken every year since 2021 according to Article 2(4) of the ‘unfair competition prevention and trade secret protection law’.

This survey was taken by 8,269 Korean companies from comprehensive views of the status of holding a trade secret• an IP right, the damage status thereof, and the recognition and experience of unfair competition, etc.

< Survey Summary >

º survey target: 8,269 Korean companies, each having more than 10 employees
º survey period: June ~ November 2022
º survey content: the status of holding a trade secret• an IP right, the damage status thereof, and the status of experiencing unfair competition, the relevant policy demand and protection level, etc.
º survey method: non-face-to-face survey (phone, online, fax) by surveyors.

ㅁ Trade secret-related status

Among the Korean companies, 76.8% responded that they held a trade secret, and 1% of the companies holding trade secrets responded that they experienced damages due to a trade secret leak over the last 5 years (2017~2021).

Upon reviewing the type of trade secret leak, trade secret leaking by retirees was more than half (51.2%) which is the highest. Since the management effort, such as receiving an interview and a written oath for secret protection’, etc., from a retiree, was only 44.8%, it turns out that there is an urgent need to build a retiree management system to protect trade secrets.

By the type of business, the highest trade secret leaks (2.3%) were in the manufacturing field of food and drink, etc. which were in the spotlight as ‘Korean food (K-food)’ due to the Korean wave, followed by the leaks (2.1%) in the electrical and electronics industry, such as semiconductors, etc., as Korea’s leading industry.

ㅁ Unfair competition-related status

5.2% of the Korean companies directly experienced or indirectly witnessed an unfair competition over the last 5 years (2017~2021).

By the type of an unfair competition act (multiple responses), the highest, 2%, was an imitation of the shape of a product. This is considered as being due to a rapid increase in online consumption since the number of people preferring luxury goods has increased and the non-face-to-face industries have grown due to the long-term impact of COVID-19.

ㅁ IP right (patent•trademark•design)-related status

The rate that a Korean company holds an IP right was 22.2%. By the type of an IP right (multiple responses) held by a Korean company, a patent right was highest, 18.2%, followed by a trademark, 6.9%, and a design right, 4.8%.

Among the Korean companies holding an IP right, 3.9% were the companies which experienced damages by IP infringement over the last 5 years (2017~2021). By the type of an IP right, a trademark right was the highest, 1.7%. The reason that the damages by infringement of a trademark right were highly increased is considered due to an rapid increase in counterfeit distribution through online, such as social network service (SNS) and open market, etc.

According to Korea Intellectual Property Protection Agency (KIPPA)’s performance of sales suspension on an online open market, based on KIPPA’s information collection (monitoring), the number thereof greatly increased from 2020 with in 2022 it being 24,687 showing about 3 times or more compared to 2019.

2. The number requesting an IP dispute settlement by ‘agreement instead of litigation’ has increased.

- The number of applying for dispute coordination increased by an annual average of 19% over 4 years.
- 95% were small and medium companies and individuals, and when two parties participated a dispute coordination, 66% of disputes were settled.

A small business “A” and a middle market enterprise “B” were in dispute over 4 years by proceeding with a trial for confirming the scope of a trademark and a criminal complaint. However, the two agreed to mediation through the IP Dispute Coordination Committee, cancelled the trial and criminal complaint and settled the dispute over 4 years within about 2 months.

While interest has been heightened in an IP dispute, such as idea stealing, trade secret infringement, etc., the number of cases to settle disputes through the KIPO’s IP dispute coordination system has increased.

6.6 of 10 companies agreed to mediation after applying for an IP dispute coordination system, showing a high adjustment rate. Therefore, this system becomes a reasonable alternative to rapidly solve an IP dispute.

【 IP dispute coordination system 】

An IP dispute coordination system is to settle disputes on the IP rights, such as patent, trademark, design and utility model, a trade secret, an unfair competition, and an employee’s invention, etc., through conversation and agreement between the parties directly concerned, by an expert’s help. Compared to a trial or lawsuit, this system has an advantage capable of rapidly and smoothly settling a dispute. When the coordination is established, since ‘reconciliation in trials’, which is equivalent to a final judgment, takes effect, it is also possible to enforce it if the other party does not fulfill the agreement.

According to KIPO, the number of cases for applying for IP dispute coordination, which was only 45 in 2019, increased to 76 in 2022, showing an annual average of 19% increase over 4 years. Notably, as of April this year (based on April 21, 2023), 38 cases were received and the number of cases for applying for coordination is expected to pass 100 cases in December of this year.

Among the companies applying for an IP dispute coordination for the same period, the adjustment rate of the company where the other party agreed to coordination reached an average of 66% for 4 years, indicating that the effect of dispute settlement was high. Based on 2022, when the other party participated the coordination system, the adjustment rate was about 64%. 47% of the total cases for applying for dispute coordination were settled even including the cases of not agreeing to coordination.

From the view of the status of applying for IP dispute coordination by company over the last 5 years (2019~April 21, 2023), 297 (95%) of a total of 312 cases were applied by individuals, small and medium companies, showing that the utilization by small and medium companies was high.

This is considered as that when using the IP dispute coordination system, a case was processed within an average of 2 months and that since any separate application fee was not charged, the relevant process was not complicated, small and medium companies with insufficient capital were able to easily use the system. Further to rapid and low-cost merits, this system has a high dispute settlement effect.

3. Keeping pace with the Government’s effort for export promotion, an increase in the number of patent applications filed in a foreign country is to overcome the economic crisis.

- Key IP5 statistical indicators 2022 were published and a total of about 2,930,000 patent applications were filed.
- The number of overseas applications was 77,000, increasing by 9.1% compared to the previous year.
- The number of the applications increased as the center of the export main industries, such as computers, semiconductors, communications, etc.

Keeping with the Government’s effort for export promotion even in the global economic recession crisis, the number of applications filed in US, China, etc. by Korean companies in 2022 increased.

According to Key IP5 strategic indicators jointly-published by the IP5, which is a forum of the five largest IP offices in the world, KIPO, USPTO, EPO, JPO and CNIPA, the number of the patent applications filed with IP5 in 2022 totaled about 2,930,000 and increased by about 1.4% compared to the previous year (2,892,936 in 2021 to 2,934,230 in 2022). This number corresponds to 85.1% of the total of the worldwide patent applications filed in 2022.

Among these applications, 1,620,000 applications (55.2%) were filed with CNIPA China, 590,000 (20.3%) with USPTO, 290,000 (9.9%) with JPO, 240,000 (8.1%) with KIPO, and 190,000 (6.6%) with EPO.

Regarding the number of the patent applications filed with KIPO by foreign applicants, 17,678 (35%) were filed by US applicants, holding more than one third, followed by 13,860 (27%) by Japanese applicant, 12,936 (25%) by European applicants, and 6,320 (12%) by Chinese applicants. Regarding the increase rate compared to the previous year, the increase rate in the number of applications filed by US applicants is highest at 14%.

This appears to show that US consider the Korean market important and preoccupy the advanced technology through patent applications.

<9.1% increase in the number of overseas patent applications filed by Korean companies in 2022 compared to the previous year>

Especially, the Korean efforts to preoccupy the global markets can be seen by looking at the overseas patent applications filed by Korean companies. The number of patent applications filed in US, China, Japan and Europe by Korean companies steadily increased every year, to reach 76,592 in 2022 with an increase of 9.1% compared to the previous year [66,792 in 2019 → 69,661 (▲4.3%) in 2020 → 70,218 (▲0.9%) in 2021 → 76,592 (▲9.1%) in 2022].

Upon reviewing the status of overseas applications filed by Korean companies by country, 40,814 US applications were filed, thereby occupying more than half (53.3%), followed by 18,262 Chinese applications (23.8%), 10,367 European applications (13.5%) and 7,149 Japanese applications (9.3%). Upon comparison with the previous year, the increase in the number of Japanese applications was highest as 20.4%, followed by European applications as 10.4%, US applications as 9.7% and Chinese applications as 3.2%.

By technical field, overseas applications in the Korean high-tech flagship industries, such as computer technology, batteries (electric machines/energy), semiconductors and communication technology, have a high proportion. The increase in the number of overseas applications for these high-tech technologies can be considered as showing that the Government’s active export promotion policy is effective.

Registration rates of overseas patents of Korean companies were 87% for US patents and 73.7% for European patents. The registration rates of US and Europe patents of Korean companies were highest compared to the applications filed by the other nationalities of IP5. The registration rate of Japanese patents by Korean companies was 75.6%, which was second high following the registration rate of Japanese patents filed by Japanese applicants.

The increase trend in the number of patent applications filed by Korean companies shows a result of reflecting the efficient IP management to selectively file good quality patent applications to preoccupy the global markets, rather than simply quantitative expansion.

4. South Korea makes an examination bureau in charge of semiconductors.

- On April 11, 2023, reorganization was carried out launching a ‘semiconductor examination bureau’ consisting of 167 staff.
- Korean companies’ super gap technologies are supported with a rapid and accurate examination.

According to KIPO and the Ministry of Public Administration and Security, on April 4, 2023 the Cabinet meeting passed the KIPO’s organization with the main point of an establishment of a ‘semiconductor examination bureau’ taking charge of examining the semiconductor technology only and the revision has come into effect on April 11, 2023.

Under the situation that the competition among major countries is intensive to strengthen the semiconductor industrial competitiveness, such as the reorganization of semiconductor supply chain, the expansion of facility investment, etc., the establishment of the semiconductor examination bureau contains the Government’s clear will to build a proactive protection system of the core semiconductor technology of a Korean company.

When the semiconductor examination bureau fully operates, since a tight examination is possible covering the entire semiconductor field, fabrication and assembly processes, materials, equipment, etc., it is expected to have a dense patent network on the high-tech technology developed by Korean companies.

In addition, since 167 dedicated examiners arranged for the semiconductor examination bureau conduct a precise examination of the technology filed in an application so that the technology is decided as a right as soon as possible, they are expected to contribute such that Korean companies continue to maintain a global super-gap advantage on the basis of advanced technology patents.

On March 2023, KIPO hired 30 semiconductor-related civilian experts as examiners, to prevent a technology leak and to provide rapid and accurate patent examination.

However, since the previous semiconductor examiners were distributed in the electricity (elements, processes), chemistry (materials), machinery (equipment) bureaus, even though new manpower was input, a synergistic effect by gathering examination capability was not seen

Additionally, despite the advent of the advanced process technology, such as 3 nano or less, etc., there were limits in systemically protecting the core technology of a Korean company due to a lack of a specialized semiconductor examination organization.

Therefore, KIPO continued to discuss with the Ministry of Public Administration and Security about a plan to establish a semiconductor-dedicated examination organization in the direction of shortening an examination process period through the expansion of prioritized semiconductor examination by concentrating existing examiners and new manpower in one place and improving performance of the three (3) examiner’s consultation examination.

The semiconductor examination bureau was considered as being established with the intention of actively supporting President Yoon’s Government’s key national tasks, such as ‘protection and development of core national strategic technology, such as semiconductors, etc.’.

This KIPO’s organization and the major content of the revision of the rules of enforcement are as follows:

① Establishment and operation of a semiconductor examination bureau

The number* of patent examination bureaus expanded and reorganized from 5 bureaus to 6 bureaus due to the establishment of the semiconductor examination bureau. The semiconductor examination bureau was launched with 6 divisions and teams. To this end, 3 divisions of the electricity and communications examination bureau were decided to be transferred and 3 teams with total payroll cost systems were decided to be established by reducing the institution operating expenses.

*(before reorganization) patent examination policy bureau, convergence examination bureau, electricity & communications examination bureau, chemistry & biotechnology examination bureau and machinery & metals examination bureau → (after reorganization) 5 patent examination bureaus + semiconductor examination bureau

② Change in the organization name of a bureau

The convergence examination bureau is changed to ‘digital convergence examination bureau’, to fit the function of the convergence examination bureau to handle the cutting-edge technology, such as artificial intelligence (AI), big data, Internet of Things, intelligent robots, autonomous driving, etc. which are the heroes of the digital transformation (DX) era.

Information customer support bureau is changed to ‘industrial property information bureau’, to meet the implementation of a digital-based (platform) government and for a policy consumer to easily understand the features of an organization in charge of the management and utilization policy of extensive industrial property information and data, such as patents and trademarks, etc.

5. Korean and Japanese trademark expert meeting was resumed after 3 years.

- As a follow-up to the Korea-Japan Summit, cooperation and development directions in the trademark field were discussed.

An ‘18th Korea and Japan trademark expert meeting’, which was held as KIPO video conference, the two discussed the cooperation and development directions in the trademark field.

As a part of establishing a cooperation system between the two government departments and promoting a cooperation in various fields as presented after the Korea-Japan Summit, this meeting was carried forward to strengthen the cooperation in the trademark field between the two countries.

Since 2004, the Korea and Japan trademark expert meeting had been held to discuss a specific cooperation promotion plan to △ share both countries’ trademark examination systems and practices, △ mutually exchange an examination practice seminar, and △ interact with trademark examiners. However, the meeting was discontinued after 2020.

In this meeting resumed after 3 years, KIPO and JPO trademark experts shared opinions regarding △ trademark-related major policy direction and application trends, △ trademark law amendment direction, such as review of introduction of ‘trademark coexistence agreement’, and △ Korea-Japan cooperation plan within TM5.

The two countries shared an effort to shorten the trademark examination process period by hiring a term assistant examiner (Japan) and establishing an organization in charge of prioritized examination of service marks in most applications filed by small businesses (Korea). In addition, as a plan to fit a trading situation which has changed due to the expansion of online transaction and the emergence of virtual space, etc., the two shared a plan to eradicate counterfeits in a virtual space (digital space) (Japan) and an examination guideline of virtual goods (Korea), etc.

A prioritized service mark examination division has been established (January 2023) to be in charge of a prioritized examination in the fields of wholesale and retail business and restaurant business where small business owners filed the most applications.

Further, the two decided to also resume the exchange of a geographical indication list after 3 years. The two exchanged each country’s geographical indication list once a year from 2011 to 2020, to use it as reference materials for trademark examination. However, after the trademark expert meeting was discontinued, the exchange of the geographical indication list was also stopped.


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