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KIPO published ‘measures for IP transaction activation’(News Letter No.444)



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1. KIPO published ‘measures for IP transaction activation

KIPO announced the ‘measures for Intellectual Property (IP) transaction activation’ in the 116th State Affairs Inspection and Coordination Conference held under the auspices of the Prime Minister.

As a rapid innovation is demanded through the conversion with different technology and the acquisition of external technology in the digital 4th industrial revolution era, the importance of IP translation has emerged.

South Korea is a strong IP nation which is the 1st in the world in R&D investment to GDP and 4th in the world in filing about 220,000 patent applications per year.

However, the size of technology transaction of universities and public research institutes which use 70% of the government R&D budget is about only 6% of that of US universities.

Therefore, KIPO prepared 3 major strategies and 12 tasks to activate the IP transaction market and to improve the transaction environments. The major content of the aforementioned measures is as follows:

󰊱 To foster a private agency and prepare a transaction system:

The IP exchange (belonging to the Korea Invention Promotion Association) selects a potential private agency and together proceeds the entire process of IP transaction, to transfer consulting know-how to foster a private agency with professionalism. (to 36 professional institutions for the next 5 years)

A ‘transaction hope’ button is provided at a patent search service (KIPRIS) to induce a transaction so that at the (patent) prior art search stage which is the beginning of R&D, a rapid innovation determination can be performed by transacting the already developed patents.

An ‘idea transaction platform’ where a company purchases an idea proposed by a consumer is built to make an environment which actively transacts from a small idea. An introduction of an IP auction system by a delegated bidder method is carried forward.

󰊱 To create a demand for an IP transaction:

The transaction-related public institutions including Technology Guarantee Fund, the Korea Invention Promotion Association, the Korea Intellectual Property Strategy Agency, the Agency for Defense Development build a cooperation system, to carry forward a cooperative IP transaction combining the advantage of each institution.

Fund of Funds is used to raise an IP transaction support fund (120,000,000,000 Korea Won in 2021) to invest in a company which takes over a patent from a university or institute, to create a demand for an IP transaction.

A standard contract and an accounting service are supported to expand an IP transaction in the post-paid ordinary license fee type which is preferred by a company.

󰊱 To prepare an infrastructure for IP transaction:

An IP action is activated in the type of exclusive license to exclusively use a patent being transferred.

A law and system for IP transaction activation are improved by transferring to an inventor a patent that a university or public research institute is about to give up, to continue to try to commercialize the patented invention.

The market conditions and the legal and institutional environments to transact IP are expected to be improved by these measurements, so that the IP transaction can be more activated to continue as the technical competitiveness improvement of Korean companies.

2. KIPO starts eradicating the exploding online distribution of counterfeit products

-The number of reported cases of online counterfeit products has sharply increased by 204.4%.
-Online control is strengthened by additionally inputting crackdown personnel.
-Consumer damage is minimized by the cooperation of a trademark owner and an online platform company.

KIPO announced ‘online counterfeit product prevention measures’ in a meeting of the COVID-19 Central Disaster and Safety Countermeasure Headquarters (Head: the Prime Minister Sye-kyun CHUNG) which was presided over by the Prime Minister and was held in the Central Government Complex.

Over the transaction fever through online shopping malls due to the spread of COVID-19, the number of cases reporting online counterfeit products by August 2020 sharply increased by 204.4% compared to the same period of the last year.

However, due to a lack of investigation manpower, an investigation has initiated as to only 2.8% of the reported cases and the crackdown support personnel have taken the measures of restraining sales by deleting the relevant posts and closing the relevant sites as to the unprocessed reported cases and the self-monitoring cases.

Therefore, KIPO prepared the current measures to efficiently block the rapidly increasing online distributions of counterfeited products and to minimize consumer damages by the limited crackdown manpower.

First, KIPO plans to preemptively block consumer damage by strengthening the online control.

As on-site control is limited due to COVID-19, the offline crackdown experts of the Intellectual Property Protection Agency will temporarily be involved in online monitoring, to expand and conduct the measures of restraining sales by deleting the relevant posts and closing the relevant sites, focusing on the areas threatening the public health ad safety.

In addition, as to the relevant mass distributors and regular sellers, the trademark special judicial police will intensively investigate and block the distribution of counterfeit products. In the mid to long term, the investigation manpower will be reinforced and the advancement of investigation techniques, such as digital forensics, etc., will be carried forward in preparation for a continuous increase of online distribution.

Next, KIPO plans to improve the effectives of consumer damage relief.

In cooperation with a trademark owner, KIPO will provide appraisal results of counterfeit products as to much more brands, to support a victim who has purchased a counterfeit product to directly get a refund and request compensation from a seller.

A damage compensation system will be expanded to operate so that an online platform company first compensates the damage by purchasing a counterfeit product and then request a particular open market for a right to indemnify, thereby creating the environment that a consumer can more easily and rapidly get a compensation for the damage.

Last, KIPO plans to improve the system and to expand a public private partnership to prevent the online distribution of counterfeit products.

To strengthen the responsibility for preventing the counterfeit product distribution of a product seller, such as an online platform company, etc., an amendment to the Trademark Law has been carrying forward to impose responsibility for preventing a trademark infringement to the product seller.

KIPO plans to strengthen the promotion show for the citizens, IP protection education and joint enforcement through the counterfeit product distribution prevention council forming of online platform companies, trademark owners, KIPO and the Korea Communications Standards Commission.

3. The IP protection laws including treble damages to a design infringement are promulgated and enforced

-Trademark Law, Design Protection Law and Patent Law (effective on October 20, 2020)

◆The treble damage system to trademark • design infringement is enforced (October 20, 2020)
- Trademark • design infringement: In case of intentional infringement, a compensation is required up to three times of the damages.
- Trademark • design: The calculation standard of a usage fee (license fee) is amended (from ‘general’ to ‘rational/reasonable’)
- Trademark: A legal damage compensation amount is up (from 50,000,000 Korea Won to 100,000,000 Korea Won and in an intentional case, 300,000,000 Korea Won)

◆A patent infringement crime is converted from ‘an offense subject to complaint’ to ‘a crime not prosecuted against objection’ (victim complaint unnecessary) (October 20, 2020).

Without limitation of the period of a patent infringement criminal complaint (6 months), it is possible to punish by an investigation agency’s ex officio investigation.

According to KIPO, the IP protection laws, including the Trademark Law and the Design Protection Law introducing ‘treble damages’ as to the trademark • design infringement, promulgated and enforced on October 20, 2020.

As the main content, the partially amended laws of the Trademark Law and the Design Protection Law are outlined as the introduction of the punitive damages under which when anyone infringes a trademark right or a design right on purpose, the infringer must compensate up to 3 times of the amount recognized as the actual damage. The punitive damages to the patent infringement and the trade secrete infringement, which were introduced into the Patent Law and the Unfair Competition Prevention Law in 2018, are expanded to the trademark and design areas.

When a trademark or a design is infringed, the damage calculation standard by a royalty basis has been amended from ‘an amount to be generally received’ to ‘an amount to be reasonably received’. In the previous judicial precedents, since the ‘amount to be generally received’ is judged as the royalty usually recognized in the trading industry, the actual damage calculation was indicated as insufficient. For reference, for the same reason, the royalty recognition rate was increased after deleting the term, ‘generally’, in Japan.

In addition, the maximum limit of the legal damage compensation system, which was introduced into the Trademark Law in 2011, was upward from 50,000,000 Korea Won to 100,000,000 Korea Won (in an intentional case, 300,000,000 Korea Won). This is to consider the expansion of Korean product trading market and the inflation factor since the system introduction and to improve the effectives of the trademark protection, together with the treble damage system

4. The five (5) Patent Offices advanced in the trademark and design systems agreed to cooperate to jointly cope with the COVID-19 crisis

Through an annual conference, TM5 (Trade Mark 5 Forum) and ID5 (Industrial Design 5 Forum), which are the consultative groups of the world five (5) Patent Offices in trademark and design areas, discussed the direction and task of the trademark and design systems during the worldwide crisis due to COVID-19 and announced a joint statement containing a cooperative vision thereon.

In the meantime, to overcome the COVID-19 crisis, each of these Patent Offices has implemented its own relief steps, for example, by extending a due date of submitting documents of an applicant and performing a preferential examination of a trademark • design application related to COVID-19. In this meeting, the joint cooperation direction was sought to share the support matters to cope with the COVID-19 crisis, to overcome the global economic recession after COVID-19 and to plan the convenience of a user.

The content of the joint cooperation is to include (i) the exchange of information regarding each Patent Office’s effort to provide the continuous and stable examination services, such as the activation of online communications among the cooperative offices, and (ii) the strengthening of cooperation in a new technology area to improve the examination services of trademark and design applications.

In the meantime, KIPO has provided a way to communicate with a user by building the TM5 website (tmfive.org) and the ID5 website (id-five.org). The two sites are a place to share information regarding trademarks and designs of the five countries to enable a user to easily confirm the results of the joint cooperation programs which have been carried forward by the activities of TM5 and ID5.  


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