September 13, 2007 Dr. Taemin EOM Korean Intellectual Property Office (KIPO)

1. KIPO’s Policy for Supporting the Use of Intellectual Property Assets - Focus on Government-owned Inventions - September 13, 2007 Dr. Taemin EOM Korean Intellectual Property Office (KIPO)

2. Contents Current Status of Government-owned Inventions in Korea Ⅰ Application and Registration Process Ⅱ Utilization of Government-owned Inventions Ⅲ Services for Boosting Commercialization Ⅳ Further Plans V

3. 1-1. Definition I. Current Status of Government-owned Inventions (GOIs) in Korea Where a public official applies to register an employee invention under the name of the State or a local government, the right belongs to the State or the local government. • Invention of a public official ※ A public official is any government employee who falls within the definition of Article 2 of the Public Officials Act. (Under the article 9(1) of the Technology Transfer Promotion Actteachers and staff of a State or public school must file an application under the name of the technology licensing organization of the school) • The activity that led to the invention falls within the scope of the employee’spresent or past duties.

4. 1-2. Legal grounds for GOIs • Legal grounds • Invention Promotion Act, Articles 10 and 15 • Regulation on the disposal, management and remuneration of a GOI • Patent Act, Article 83(1) • Invention Promotion Act, Article 10(4) • Notwithstanding Article6 of the National Property Act, the disposal and management of an invention that has reverted to the State under paragraph(2) is governed by the Commissioner of the Korean Intellectual Property Office. ※ National Property Act, Article 6 The Minister of Finance and Economy presides over the management of the national property that is governed by each ministry to which the property pertains.

5. Exemption of fees • Application fees • Examination request fees • Registration fees • Other official fees ※ Patent Act, Article 83(1) The Commissioner of KIPO shall grant an exemption from the payment of patent fees or official fees in the following cases: (i) official fees or patent fees that correspond to patent applications or patent rights belonging to the State.

6. 1-3. Remuneration Classification • Remuneration for registration: patents US$500, utility models US$300, industrial designs US$200 • Remuneration for a transfer or licensing: 50% of the revenue (since January 1, 2005) • Remuneration for organization: for transfers or licensing arrangements that generate revenue in excess of US$10,000 (remuneration in the range of $1000 to $10,000) Formalities • Time: one year after the registration, transfer or licensing • Joint invention (of two or more inventors): remuneration based on the individual share of each inventor • Retirement or death of an inventor: remuneration is required if an invention was made when the inventor was a public official; remuneration is required for a successor in title if the inventor dies.

7. ※ Calculation of royalties = expected sales × cost × portion of production cost attributed to GOIs × 3% • expected gross sales of products per year • net cost of producing a product per year • portion of the production cost attributed to GOIs per product • 3% : may varies between 2% and 4% on the basis of the value and industrial applicability of GOIs

8. 1-4. Ownership (as of May 2007) Number of GOIs ※ Transferred or expired rights omitted

9. Rights Total Rural Dev. Admin. Fisheries Research & Dev. Institute Forest Research Institute Agency for Technology & Standards Veterinary Research & Quarantine Service Other Total 1,654 900 119 111 80 67 377 Patents 1,208 617 96 79 68 64 284 Utility models 297 205 22 18 - 3 49 Industrial designs 111 58 1 7 1 - 44 Int’l patents 38 20 - 7 11 - - Number of GOIs for each type of right and invention-related organizations

10. 2-1. Applications and registrations in Korea II. Application and Registration Process Inventions owned exclusively by the govt ③ Applications under the name of the govt ① Employee inventions KIPO Application & Exam. Team Invention-related organization Inventor ② Govt decision to be a successor of an invention ④ Decision of registration ⑧ Notification of the results of the request and the remuneration process ⑤ Request for registration of GOIs • Documents • Request for registration: Check inventors • A photocopy of decision of registration • Verification of the employee invention • Request for management and remuneration: • Check individual share among inventors • Bank account of inventors KIPO Registration Team KIPO Invention Promotion Team ⑥ Request for registration under the name of the govt ⑦ Notification of the results of the request

11. Joint ownership with the private sector (with right to succeed only to the govt share) ③ Joint application under the name of the govt and the private sector ① Employee invention KIPO Application & Exam. Team Inventor public official Invention-related organization ④ Decision of registration ② Govt decision to be a successor to an invention Inventor private sector ⑥ Request for management and remuneration for GOIs ⑦ Request for registration of GOIs ⑤ Registered after payment of registration fees KIPO Registration Team KIPO Invention Promotion Team

12. Documents for GOIs jointly owned with the private sector Check inventors Request for registration Decision of registration or certificate of registration Check joint owners Invention-related organizations’ opinion on employee inventions Verify employee inventions Contract on joint applications and utilization of GOIs Check condition on individual share and use Conditions for remuneration Check individual share of each inventors ※ Draw up a contract on joint applications and utilization of inventions

13. Examples of right holders and inventors ※ Rights of inventors (Patent Act, Article 33): An inventor is entitled to obtain a patent and to be described as an inventor in the patent registration certificate. ※ The addition or deletion of inventors can be made before the final decision on the grant of a patent registration (Regulation on Patent Implementation, Article 27)

14. Patent Act, Article 99 (Assignment and joint ownership of a patent right ) (1) A patent right may be assigned. (2) Where a patent right is jointly owned, the owners may not assign or pledge their individual share without the consent of the other owners. (3) Where a patent right is jointly owned, and unless otherwise agreed in a contract of the owners, an owner may individually work the patented invention without the consent of the other owners. (4) Where a patent right is jointly owned, an owner may not grant an exclusive license or a nonexclusive license of the patent right without the consent of the other owners.

15. ★ Points to be considered for joint research • Verification of individual share (e.g. State: 70%; private sector: 30%) ※ Regulation on Patent Implementation, Article 27 • Inclusion of conditions on the individual work of invention • prior consent of other inventors (esp. the work of a third party as requested by the State) • payment of royalties based on each inventor’s share • e.g. royalties = individual share ×expected sales × net cost × portion of production • cost attributed to GOIs × 3% • Inclusion of conditions and requirements on the payment of fees based on the • individual share • e.g. if fees are not paid in accordance with the requirements, the right is deemed to be • abandoned (for inventions exclusively owned by the govt) • Inclusion of conditions on each inventor’s burden of costs for a lawsuit • Inclusion of the reversion of rights due to subsequent research and inventions • verification of the individual share of rights due to the contribution of subsequent research to the primary invention

16. 2-2. Applications and registrations overseas Foreign IP offices Invention-related organizations Inventor ④ Decision of registration ② Govt decision to be a successor to an invention ⑥ Request for management and remuneration for GOIs KIPO Invention Promotion Team

17. Process of requesting payment of fees overseas ① Notification of deadline for payment of fees ② Inquiry opinion whether maintain rights Invention-related organization Attorney (Non-Korean) Attorney (Korean) ⑤ Order of payment and remittance expenses ⑧ Remuneration of fees ⑦ Request for remuneration of the payment ④ Order for the payment of fees ⑥ Payment of fees Foreign IP office ③ Request for payment of fees (attachment of an appraisal of invention) KIPO Invention Promotion Team

18. 3-1. Overview III. Utilization of GOIs • ※ The licensing period (of three years) can be extended in the following cases: • where the preparatory work for the use of the invention takes more than one year • where the term of the right expires within four years of the date the license takes effect

19. 3-2. Utilization after registration Inventions owned exclusively by the govt ① Request for a license ② Request for an opinion on the license KIPO Invention Promotion Team Invention-related organization Licensee ③ Notification of the opinion on the terms of the license ⑤ The signing of a contract ④ Notification of the opinion of invention-related organizations ⑥ Notification of the date the license and remuneration process take effect ※ Documents to be filed when requesting a license: - Request for a limited tender contract - Calculation of royalties`` - Plan of operation: yearly production levels, sales volume and price, etc. - A registered certificate of an entity - A registered certificate of a seal

20. Joint ownership with the private sector ②-1 Request for consent ① Request for a license Joint inventor Licensee KIPO Invention Promotion Team No ② Request for an opinion on a license Yes Fail License Invention-related organization

21. 3-3. Utilization during the application phase ③ Notify amount of royalties to KIPO and request for remuneration KIPO Invention Promotion Team ① Request for license Licensee Invention-related organization ② Sign a contract ④ Notification of payment of royalties ③ Documents - A photocopy of the contract - Description of the invention filed with the application to KIPO - Amount of royalties, etc. - Request for remuneration

22. 4-1. KIPO’s policy on commercialization IV. Services for Boosting Commercialization Direction Provide customized support programs based on the commercialization capability and intent of patentees For patentees who are incapable of independent commercialization: • Facilitation of the transfer of patented technology • E.g. Universities and research institutes For patentees who want to independently commercialize an invention: • Provision of financial aid • Support of expanding market places: exhibitions, cyber shopping malls • For fair and transparent support: • Establishment of an objective appraisal system

23. 4-2. Organization Chart of the Commercialization Council * 18 organizations (8 governmental authorities & 10 related agencies) Small Business Admin. Rural Development Admin. KIPO Forest Service Maritime & Fisheries Science & Tech. Industry & Energy Agriculture & Forestry Small Business Corporation KIPA Commercialization Council Korea Development Bank Technology Credit Guarantee Fund • Inst. of Industrial Tech Evaluation Univ. of Science & Technology Agency for Tech & Standards Korea Technology Transfer Center Korea Inst. of Design Promotion Inst. of Science & Technology

24. Financial Support Collateral Support Consultations & Notifications • Funds for R&D and acquisition of IP • Funds for IP valuation and transactions • Funds for launching new products • Funds for establishing enterprises • Funds for facilities and mass production Main services of the Commercialization Council Council • Provision of IP information • Discounted application fees • Nurturing of IP experts • Authentication and guaranteeing of new technologies • Evaluation and marketing of new technologies • Guidance on managerial or technical problems • Advertising and marketing of new products 명세서 기재 • Consultations on general aspects of commercialization • Notification of the council’s support programs • www.kipa.org

25. Operation of the Commercialization Council Commercialization Council (working group) Supervision of collateral support Entrustment of management Reporting of performance Monitoring Management Authority (KIPA) Support Organizations (financial aid) Support status Application Support & management Applicant for commercialization Satisfaction survey

26. 4-3. Status and measures on commercialization of GOIs Income and expenses of managing GOIs

27. Overall utilization of GOIs lags behind the utilization of private sector inventions • Portion of GOIs utilized: (2003) 9.0%, (2004) 9.3%, (2005) 10.6%, (2006) 12.2%, Jan. to May 2007: 13.0% • Portion of private sector inventions utilized: (2004)38.9%, (2005) 33.2%, (2006) 37.0% ※ Public research institutes: (2006) 15.7%; Universities: (2005) 12.8% Reason for non-use of GOIs • Many inventions are academic and require additional research to be commercialized (e.g. the method of extracting certain components from marine products) ※ The majority of GOIs pertain to the agricultural and fishery fields: Rural Development Administration: 900 rights, 54% National Fisheries Research and Development Institute: 119 rights, 7% Forest Research Institute: 111 rights, 6.3% • Rights tend to be maintained until they expire even if GOIs are unused for a long time ※ GOIs are exempt from fees such as registration fees.

28. ★ Measures to boost commercialization • Infrastructural improvements such as royalty-free usage • Remunerations for GOIs have increased from 30% to 50% of the revenue (since 2005). • A system of royalty-free use of GOIs was set up (in April 2006)for rights that have been unused for more than three years. • ※ Contracts were signed for six patents, including a wave-resisting apparatus • for the cultivation of fish in a closed net and a virus strain for preventing • respiratory diseases in pigs. • Computerized management and contract systems were set up for GOIs • A computerized management system was set up in November 2005. • An on-line contract system for GOIs was set up in October 2006.

29. Information services on the use of GOIs have been established. • Information about the database and contracts of GOIs has been made available on the KIPO Web site and on the IP Mart (www.ipmart.or.kr). • Training programs have been conducted for officials who work in invention-related organizations. • Counselors at the IP Mart provide consultations and support with regard to GOI transactions. • From June to August 2007, the KIBO Technology Fund appraised 100 GOIs that had not been used for a long time. • On the basis of the appraisal, low value GOIs will be terminated. • ※ More than 21% of the appraised inventions were regarded as excellent inventions • and received recommendations to be licensed ASAP.

30. V. Further plans Decide whether to change the current GOI management system. • Option 1: Transfer the responsibility of managing and commercializing GOIs to an invention-related organization. • Option 2: Assign the responsibility to commercialize GOIs to a professional agency. * E.g. private technology licensing organizations (TLOs) • Option 3: Abolish or lower the fee exemption for GOIs Promote information services on the use of GOIs through Naver (www.naver.com) and the database of the National Technology Bank (www.ntb.com) * Naver: A Korean Web portal similar to Google Adopt a periodic appraisal system for GOIs • Terminate low value inventions long before they expire.

31. Thank You Taemin EOM, PhD. in Law tmeom@kipo.go.kr