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United States – Korea “Free Trade” Agreement and Intellectual Property Rights
By Kavya Mohankumar - July 2007
The United States and Korea entered into a historic “Free Trade” Agreement (FTA) in April 2007. Chapter 18 of the FTA deals with Intellectual Property Rights. This memorandum will go through and explain each major article discussed in the chapter and where relevant, will contrast these provisions with those of the TRIPS agreement. This memorandum will also discuss the three confirmation letters found alongside chapter 18. The text of the FTA is available here.
If the FTA is ratified, the language requires both U.S. and Korea to, at a minimum adopt all the provisions of the IPR chapter.
Under the General provisions, both parties affirm their rights and obligations under the TRIPS agreement. This indicates that unless specified or contradicted, the provisions of IP law enumerated under TRIPS continue to apply to both the United States and Korea. Both parties also agree to ratify or accede to the conditions of the widely accepted international treaties, including the Patent Cooperation Treaty (1970, 1979); the Paris Convention; the Berne Convention, etc.
The FTA also affirms that with respect to all categories of IP covered by the agreement, both parties will accord to the nationals of the other party, treatment no less favorable than it accords to its own nationals with regard to the protection and enjoyment of such IP rights. The agreement allows both parties to provide for more stringent IPR protection within their own territories, so long as these stringent rules are not in violation of the FTA. Each party is also required to ensure that all regulations, policies and procedures pertaining to the protection and enforcement of IPR are in writing and published. The publication requirement can be satisfied by making the information available to the public over the internet.
Clause 9 of the general provisions explains that the rules and obligations of chapter 18 apply to all IP subject matter existing (in the territory of either party) on the date of entry into force of the FTA.
Trademarks, including Geographical Indications
Under this category, each party affirms that it will require trademarks to include certification marks; that geographical indications are eligible to the same protection as trademarks; and that it will not require, as a registration requirement, that signs be visually perceptible. This last requirement is directly contradictory to TRIPS, which allows member nations to require as a condition of registration that the signs be visually perceptible.
The owner of a registered trademark in each territory has the exclusive right to prevent all third parties from using such and similar trademark, especially where such use will lead to confusion. Each territory may make fair use exceptions to the above mentioned rule.
Neither the U.S., nor Korea may require registration of the mark as a condition for determining that the mark is well known. Moreover, registration, inclusion on a list of well known marks, or prior recognition of the mark as well known, can not be basis for denial of any remedy or relief.
Each registration of a trademark and each renewal shall be valid for a term of ten years under the FTA. This provision is again deviant from the TRIPS, which only allows each trademark registration and each renewal to remain valid for seven years.
With regard to geographical indications, each party may refuse recognition or protection if the geographical indication is likely to cause confusion with a trademark that is either the subject of a good faith pending application; or the rights to which have been obtained through use in good faith; or the mark has become well known in the territory of the party, and that has a priority date that predates the protection of the geographical indication.
Copyright and Related rights
Under the FTA, each party must provide copyright protection to authors, performers and producers of phonograms. Additionally, such individuals retain the right to authorize or prohibit all reproductions of their work in any manner or form, regardless of whether they are temporary or permanent. The FTA is concerned about derogation of rights when there is a hierarchy established due to concurrent rights of authors and performers. In such situations, the language of the FTA specifies that the need for authorization from the author does not negate the need for authorization from the performer and vice versa.
In assessing the term of copyright protection for a work, the FTA calculates the term to be no less than the life of the author and 70 years after death. The TRIPS is different in its calculation in that, the term may be no less than the life of the author and 50 years after death.
Each party may allow copyright owners to freely transfer that right by contract. The FTA provides strict and elaborate regulations to prevent against copyright infringement, by requiring each party to set up civil and criminal penalties against infringers. To further promote copyright protection and prevent piracy and infringement, the FTA requires both parties’ governments to refrain from using infringing computer software or other materials protected by copyright or other related rights. The FTA also prohibits the retransmission of television signals on the internet without the authorization of the right holder. This measure seeks to protect against piracy of satellite television programming.
Under the FTA, authors, performers, and producers of phonograms have the exclusive right to authorize or prevent the fixation of their unfixed performances, and the broadcasting and communication of their unfixed performances. Although the verbiage in TRIPS is identical to the FTA with regard to the authors, performers, and producers of phonograms’ right to prevent the fixation of unfixed performances, the TRIPS only allows for the possibility of preventing broadcasting and communication of unfixed performances.
Unlike the other articles in this chapter that come into force on the date of ratification, Korea has two years to fully implement all the provisions of the copyright section.
The enabling language for patents under the FTA is very similar to the TRIPS – it allows for patentability of any invention, product or process, in all fields of technology, provided that the invention is new, has an inventive step, and is capable of industrial application.
Both the FTA and TRIPS allows member nations to exclude from patentability, inventions, the protection of which are necessary to protect the morality and ordre public, including to protect human, animal or plant life; diagnostic and surgical procedures for the treatment of humans and animals. The FTA is however silent on whether or not either party may exclude from patentability, plants and animals other than microorganisms, and essentially biological processes for the production of plants and animals. Under the TRIPS, member nations may exclude patentability for such subject matter.
The FTA allows each party to provide limited exceptions to the exclusive rights conferred by the patents; and provides that a patent may be revoked only on grounds that would have justified a refusal to grant a patent or if there is fraud, deceit or inequitable conduct.
Under the FTA, if a party allows a third person to use information in a subsisting patent to provide support for an application for marketing approval of a pharmaceutical product, then the party must ensure that any product produced under such authority is not made, used or sold except for generating information to support the marketing approval application.
The term of protection of a patent under TRIPS is twenty years from the date of filing. Under the FTA, the parties may, if so requested by the patent owner, adjust the patent term to provide for delays in granting of a patent application so long as the delay exceeds four years. The FTA also allows for a similar adjustment of term for new pharmaceutical product patents, where the marketing approval process was fraught with unreasonable delays.
Measures related to regulated products
Pharmaceutical products and are heavily regulated under the FTA and the agreement states that in circumstances where a party requires submission of information concerning safety or efficacy of a product as a pre-requirement for market approval applications; the party not allow another product to benefit from using the same information concerning safety and efficacy of product for at least five years. The same rules also apply to agricultural chemical products.
The FTA also prescribes similar rules for pharmaceutical and agricultural chemical products where a new chemical component, pre-approved for production in one drug is used to manufacture a new drug.
Enforcement of Intellectual Property Rights
The FTA provides elaborate guidelines to both parties on how to enforce IP rights. The FTA requires each party to provide judicial decisions and administrative rulings pertaining to IPR in writing and to be later published. Each party is to provide right holders with civil and criminal remedies. Under the civil remedies available to holders of IP rights, the judiciary has the right to order the infringer to pay the right holder compensation damages or profits attributable to the infringement. In addition, each party is required to establish “pre-established remedies” for works, phonograms, performances etc, which may be elected by the right holder. For copyrights or related rights infringement, judicial authorities have the authority to order a seizure of infringing goods. Each party is also required to set up alternate dispute resolution procedures to resolve IPR disputes.
Parties are required to set up a criminal penalty system for punishment of willful infringement and piracy of protected rights. Such penalty is to apply even in cases of known trafficking in counterfeit goods and labels. Criminal penalties are to include sentences of imprisonment, monetary fines, seizure of goods, and forfeiture of assets traceable to infringement. The FTA also requires parties to provide legal incentives to service providers to ensure cooperation with copyright owners in deterring unauthorized storage and transmission of copyrighted materials.
Confirmation letter 1
This letter lays out the rules of written communication that Korea must follow to comply with chapter 18. Korea must adopt requirements for effective written notice to service providers with respect to materials that are claimed to be infringing; and effective written counter notification by those whose material is removed or disabled. The letter actually lays out for the Korean authorities the elements that must be included in the written communications – identity, address, telephone number, email address of the complaining party; sufficient information to enable the service provider to identify the copyrighted work; statement of good faith belief that use of copyrighted material is unauthorized; signature of complaining party, etc.
Confirmation letter 2
In this confirmation letter, Korea, understanding the need to prevent piracy and illegal copying of copyrighted work on university campuses, agrees to improve awareness of copyright infringement and book piracy on campus and reduce illegal reproduction and distribution of copyrighted works. To seal this agreement further, Korea specifically promises to enforce stricter piracy and infringement prevention measures on campuses and bookstores within six months of ratification of the FTA.
Confirmation letter 3
This letter carries the most controversial IPR provisions in the chapter. The letter states that the parties agree “to shut down internet sites that permit the unauthorized reproduction, distribution, or transmission, of copyright works..” This seemingly benign provision is extremely poisonous, especially because it does not allow for any exceptions based on literary, or artistic, or religious, or other critical thinking basis. The absence of exceptions and fair use provisions will have a chilling effect on democracy and individual liberties.
The letter also allows the government to “regularly assess and actively seek to reduce the impact of new technological means of online copyright piracy..” The provision thus allows the government to act as a vigilante – to monitor and censor information transfer on the web without any definite search criteria or any checks and balances.
“Korea also agrees on shutting down internet sites that permit the unauthorized downloading (and other forms of piracy) of copyrighted works, including so called webhard services and providing for more effective enforcement of Intellectual Property rights on the internet, including in particular with regard to peer to peer services (P2P).” The provision is sufficiently broad to allow shutting down of p2p (Peer to Peer) based websites, webhard sites, blogs, and most other websites with user input or user communication. To ensure such drastic protectionary measures the Korean government also agrees to work with the private sector, foreign authorities and the United States. Korea proposes to issue a policy directive within the next six months, establishing jurisdiction for effective IPR enforcement and setting up an administrative division that will investigate and take criminal action against online piracy.
If the FTA is ratified and if the above mentioned poisonous details are allowed to go into force, they may set a dangerous precedent. The United States can now ask for similar provisions when dealing with other countries, especially developing countries that are not in a position to negotiate because of the threat of trade sanctions.