Steps to Protecting Your Brand, Trademarks and Other Intellectual Property in Korea

I just participated as a panelist for the United States Commercial Service Trade Winds-Asia Seminar for U.S. companies considering investing and/or exporting to Korea, China, the Philippines, Japan and Taiwan. The Seminar brought together over 150 U.S. investors and exporters of products and services. The U.S. Commercial Service did a wonderful job bringing together some of the leading experts on doing business in Korea. I was impressed.

At the event, the most frequent question I was asked was related to protecting companies trademarks and other intellectual property. Additional posts will be written on this topic by Tom Coyner - Senior Commercial Advisor for IPG Legal and head of Soft Landing Korea and myself.

TOP TEN THINGS TO DO TO PROTECT YOUR BRAND IN KOREA

1. Do a Complete Intellectual Property AuditForm a team to audit all your intellectual property including your patents, trademarks, service marks, books, manuals, videos, software, know-how, and trade secrets.
   
   The team should include, at a minimum, a senior manager experienced in the internal workings of the company and an experienced Korean-savvy international consultant (attorney or intellectual property consultant) who is experienced in creating inventories.
   
   The team should send a tailored questionnaire to the heads of all your company's departments. From the questionnaire and other ascertained information, the team should produce a complete intellectual property inventory that details what intellectual property the company possesses and evidences how much the intellectual property is worth to the company. (Protecting Your Intellectual Property in Korea)
   
   
2. Register your Trademarks and other IP in Korea
   Yes, your international filings are not good enough for Korea and much of the rest of the world. As the U.S. Commercial Service notes: ``protection of intellectual property and the laws governing enforcement of these protections exist but are not necessarily extra-territorial. What is understood and practiced in the United States is not always practiced in Korea. . . .U.S. companies wishing to sell their products or services in Korea should first and foremost register their intellectual property rights (copyrights, trademarks and/or patents) in Korea.''
   
3. Educate Korean Customs on What is your Product and What is Not your Product
   A few professionals in Korea, including professionals at IPG, do presentations to Customs informing them of how to spot counterfeit products. Some fakes are very difficult to spot and, also presentations by your professionals will go a long way in getting the positive attention of Customs of your seriousness of enforcing your IP rights.
4. Draft an Intellectual Property Protection Plan
   The plan should include an internal monitoring and worldwide registration and licensing scheme; an action plan to deal with intellectual property violators and trolls; forming of a team that is responsible for maintaining and fostering intellectual property rights and making sure that intellectual property is properly reflected in the company's financials.
   
5. Actively Engage Customs and the Prosecution
   Us all administrative avenues available to protect you products. Companies that are perceived weak are companies that are more likely to be targeted by counterfeiters, patent trolls and the like.
   
6. Actively Engage your Sales Channels
   So much information can be garnered from those that are competing against counterfeiters and pirates.
   
   
7. Track the Importers of Counterfeit Products into Korea
   The Prosecution, generally, does a decent job. However, often it is advisable to employ a professional to obtain the necessary information and present the information to the Prosecution and Customs.
   
   
8. Integrate the home office with the Korean entityAll too often the Korean branch is totally out of the loop and hence unaware of developments at the home office. The Korean branch, in not only intellectual property, but in other company areas should at least be near the loop.
   
9. Don't Forget Trade SecretsI wrote an article on protecting trade secrets in Korea that may be found at: Protecting your Trade Secrets in Korea: Top 5 Things to Know Before Subjecting your Business to the Korean Market.
10. Get Professional Assistance
    Speaks for itself. If you don't have an experienced inhouse team of Korean-based attorneys (and often even if you do), you need assistance from professionals in Korean IP law who have high-level contacts with the Prosecution and Customs.

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SeanHayes@ipglegal.com

IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines, Vietnam and the U.S.

www.ipglegal.com

Corporate Governance of Korea Reported as One of the Worst

What is the cause of the Korean discount? An economist article hits the nail right on the head.

So what is the source of the “Korea discount”, which means that the KOSPI has a forward price-to-earnings ratio of under ten, below most other Asian stockmarkets (see chart)? There are a few possibilities. The national economic model is still built on exports, often in highly cyclical industries such as shipbuilding. The capital structure of South Korean firms has historically been debt-heavy.
In this section

But the prime cause of the discount is more likely to be poor corporate governance at the family-run chaebol conglomerates that dominate the economy. Nefarious schemes to pass on control to sons, avoid taxes and exploit company assets for the benefit of family members are widely discussed in private. They are also lambasted abroad: a 2010 survey by CLSA, a broker, placed the country third-from-bottom in Asia on governance, ahead of only Indonesia and the Philippines.  . .

Other allegations are even more serious. On February 3rd, 2012 Hanwha Group announced in a regulatory filing that its chairman, Kim Seung-yeon, was among several officials being investigated for alleged embezzlement. Chey Tae-won, the chairman of SK Group, was indicted in January over the disappearance of 99 billion won from company coffers, as part of a scheme allegedly planned by his brother to cover futures-trading losses. Mr Chey denies the charges. The Federation of Korean Industries, a chaebol pressure group, has urged prosecutors to go easy on Mr Chey. They say that punishing him would harm “entrepreneurial spirit”.

Mr Chey has had previous scrapes, having been convicted of a billion-dollar accounting fraud in 2003. He eventually received a full pardon from the president and was also chosen to represent the nation during the 2010 G20 summit, leading a meeting of international chief executives. Lee Kun-hee, the chairman of Samsung, received a similar pardon in 2009, having been found guilty of tax evasion, and was picked to front South Korea’s bid for the 2018 Winter Olympics. Yujeon mujwai, mujeon yujwai—an old expression meaning “money = innocence, no money = guilt”—is enjoying a resurgence in popularity. 

What do you think?

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SeanHayes@ipglegal.com

IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines, Vietnam and the U.S.

www.ipglegal.com

Court of Korea May Allow Annulment of Marriage

Annulments have been nearly impossible to obtain in Korea when parties have voluntarily married and the marriage was properly registered.  However,courts have been, recently, willing to entertain colorful arguments in some cases.

Recently, a young married couple obtained an annulment based on some interesting facts.  The couple lived together with the sister of the husband prior to marriage.  They were living, according to the couple, just as friends.  Thus, the couple were not having sexual relations. 

The employer of the male asked about his marital status and he advised the employer that he was single.  The company discovered that he was living with a woman.  Employees of the company were not amused and requested that he clarify the situation.   The man, then, fearing for his job requested the woman to marry him.  They married.  The woman claimed they she, only, married because she felt bad for the man.   

The case is interesting since the case doesn't rest on whether the marriage was voluntary, but focused on the intent of the marriage.  The court opined that : "The marriage was a hoax with the only intention being him not getting fired."  Seemingly, at least one court in Korea will accept that if someone purpose of marriage was not simply to marry, but for other reasons - a marriage may be annulled. 

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SeanHayes@ipglegal.com

IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines, Vietnam and the U.S.

www.ipglegal.com

Intriuging Article from the Korea Herald Regarding the Success of K-Pop Abroad

We have worked with a leading entertainment company in Korea and this article, we feel, does a great job in summing up why Psy has been the, only, K-Pop star, to date, to be able to significantly capitalize on his talent in the States. We wish more of the Korean entertainers would consider fostering the the skills that make the entertainers unique and not, simply, try to make an artist conform to what audiences are perceived to like. Psy has done this and, thus, has been successful.

The article notes, in part, that:

Psy’s unexpected international success not only took Korea by surprise, but the rest of the world as well. On July 15, the Korean rap star, who had enjoyed little international popularity in the past, released his comedic and cleverly choreographed “Gangnam Style” on YouTube.

What followed is history. With more than 1.5 billion global views, “Gangnam Style” has become one of the world’s most successful songs.

“Gentleman,” Psy’s follow-up single to his record-breaking track, was released worldwide on April 12. The music video which was uploaded onto YouTube the following day broke a world record for the most views in 24 hours with an astonishing 38.4 million hits, making it the rapper’s fourth entry in the Guinness World Records. As of Thursday afternoon, “Gentleman” has been viewed more than 267 million times, alleviating Psy’s public worries of becoming a one-hit wonder.

Psy was the underdog that no one thought could make it big overseas. Whereas the previous K-pop acts who premiered in the U.S. before him had tried to conform and blend in with the sounds and trends of the Western music market and had sung in English, it was Psy’s comedy, creativity and pure entertainment that finally caught America’s interest.

As for an explanation for his phenomenal global success, Psy summed it up best when he stated, “I’m simply an entertainer.”

Psy, simply, was successful because he is doing something unique.
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SeanHayes@ipglegal.com

IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines, Vietnam and the U.S.

www.ipglegal.com

Spies of National Intelligence Service of Korea Caught in Australia

Newspapers throughout the world have been reporting that two South Korean spies have been caught trying to procure sensitive information from Australian government officials with access to information related to a proposed Korean-Australian Free Trade Agreement.

This is not the first time that the Korean government has been accused of spying see: Seoul Hotel Break in Has Making of a Spy Novel.

What disappoints me is not that Korea is engaged in spying, but that they do it in such a Keystone cop-type fashion.  Its seems like the training is not coming from one of the CIA spy manuals, but out of one of those old Scooby Doo episodes I loved so much.

The present situation concerned a Korean-Australian official with the Australian Bureau of Agricultural and Resource Economics regular contact with known Korean National Intelligence Service officers. 

I bet Scooby Doo and his friend Scrappy, without the help of Dahne, Velma and Scrappy would have even caught them.  A Korean-Australian government worker meeting with those reported by the Korean government as liaison officers from the Korean National Intelligence Service seems like an easier catch. 

Hey guys, please for the good image of Korea, next time, get a native born Australian on board.  If you can't, don't jeopardize the image of Korea by these boneheaded antics. I bet Australian-Korean will have a very difficult time obtaining top secret clearance clearance in Korea in the future.

What do you think?

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SeanHayes@ipglegal.com

IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines, Vietnam and the U.S.

www.ipglegal.com

Selling Traditional Korean Products to the World by Tom Coyner

Even foreigners living in Korea cannot help but notice how makgeolli has taken on a new air of respectability. As a long-time imbiber of the brew - we are dubbed “makgeoholics” - this is good news!

I once was a Peace Corps volunteer who lived on a monthly stipend of 43,000 won for lodging, food and entertainment. That meant beer and other Western beverages were beyond my budget. So, during most after-hours events, my choices were pretty much limited to soju and makgeolli. But after some forgettable evenings and unforgettable mornings after, I soon realized that the soju of the 1970s was not healthy for living things.

Fortunately, I learned that makgeolli was not only cheap but even good for you. As an Irish-American, I have reverently believed that Guinness stout beer is good for you. In fact, the Irish say that Guinness is a meal in a glass. So, I was overjoyed when I heard from Eumseong townspeople that it is possible to survive a full two weeks on nothing but makgeolli. Having imbibed the stuff for over three decades, there is no doubt the creamy, tangy stuff is full of nutrients - and who knows what else.

And as a rural Peace Corps volunteer, I came to respect Korean farmers and small townspeople. These were real people, doing real work and drinking a real beverage. To me, soju was something akin to poison for a quick drunk, but makgeolli was a real man’s drink with which one can enjoy like a real man while not getting so drunk that the rest of the evening is only a hazy memory.

And, I might add, any woman who tells me she, too, loves makgeolli is immediately regarded by me as a superior sort of female. And that leads to my old friend from our shared Peace Corps days, the former U.S. Ambassador to Korea, Kathleen Stephens.

She has appreciated makgeolli for decades, and often served it at her official residence. While I cannot say her high regard for makgeolli is responsible for her success, I will say a woman who drinks it is likely to be up for any job.

All of which leads us back to the current fad, rediscovery and new ideas for exporting makgeolli. Frankly, I’m pretty excited about all of this. First, it opens the doors for further improvement of makgeolli. Back in the 1970s, under the Park Chung Hee regime, the amount of rice used in makgeolli production was curtailed as part of the nation’s efforts for grain self-sufficiency: a wise move since everyone knew how many Koreans would allocate their limited rice reserves towards the production of makgeolli.

Later on, as Korean agricultural production improved, the controls were removed and pure rice makgeolli became common. That was a major step forward and now makgeolli may be about to take the next important step in upgrading its quality.

When we order makgeolli at a restaurant, usually we really don’t know which type we are drinking. The stuff is served in a generic ceramic pot. In other words, unlike every other beverage on the menu, makgeolli is devoid of branding. As a result, one goes to those restaurants that serve “good makgeolli,” which means a beverage that is made by one of the better brewers and is fresh. Even good makgeolli sours relatively quickly, even when kept at optimum temperatures.

As a marketing professional, I see these negatives as allowing for future positives to be developed. First, by exporting abroad by brand, more competitive pressures will be placed on makgeolli brewers for consistent quality. Tetra Pak Korea, for example, is providing cartons to be used for the export of makgeolli, but so far, there has been no demand for these containers for domestic distribution. Rather, makgeolli is normally distributed only near the brewer’s facility.

But, when exporters fully master the means to deliver makgeolli abroad and as foreign consumers develop a thirst for the beverage, more Koreans will try to make money by exporting. And in so doing, branding will become more important. Furthermore, as brands become stronger, we may see the best brewers doing wider distribution domestically, taking advantage of new packaging - and possibly applying new refinements in brewing.

And that leads me to the second, likely development of makgeolli - new investments in improving the production of makgeolli so that it sours more slowly. In the past, there was regular soju and superior “tourism soju,” and I believe the Korean economy has outgrown that kind of product differentiation.

But I should add a word of warning. Given this upsurge in the creamy stuff’s popularity, I have been sometimes horrified as the unacquainted (usually female) imbibers shake the bottles to stir up the contents prior to uncapping. Frankly speaking, watching that kind of experience is only one level lower in anxiety than watching a sweet young thing pull out the pin from a hand grenade and ask what’s the purpose of the pin.

Should you see a well-meaning dining mate start shaking the bottle, immediately grab away the makgeolli bottle for everyone’s safety. Rather, hold the bottle by the top and slowly swing the bottle in downward arcs, almost as if you were ringing a chime or bell. The beverage deserves respect and your guests deserve to drink it, not wear it.

So next time you are out with your friends, lift your cup of makgeolli and toast what it once was and what it has become. Then dream of what makgeolli may soon be: a real beverage for real people around the world.

by Tom Coyner.  This article appeared in the Korea Joonang Daily. 

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SeanHayes@ipglegal.com

IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines, Vietnam and the U.S.

www.ipglegal.com

Korea: Retirement Age of 60 May be Mandatory for Most Companies

The Korean National Assembly, in a move that leaves many of my U.S. and other Western colleagues and clients bewildered by the lack of understanding of the contributions provided by those in their 60s and 70s, has agreed to mandate that the retirement age in Korea, for most companies, be set at, at least, 60 years old.

The revision is meant to protect older workers. Many companies impose retirement ages of 55 and many even impose lower retirement ages.  

The revision will still need to make its way through two committees and, also, reach a vote on the National Assembly floor.

Other articles that may be of interest:

•  Terminate/Layoff of Employees in Korea
•  Korean Independent Contractor Risks under Korea LSA
•  The Ten Commandments of Labor Relations in Asia
•  Korean Labor Relations by Tom Coyner
•  There Goes the Neighborhood: Samsung "Union" Allowed to Protest in Front Of Samsung

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SeanHayes@ipglegal.com

IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines, Vietnam and the U.S.

www.ipglegal.com

Korea Maritime Liens: The Arrest and Attachment of Vessels at Ports

The arrest of vessels/ships in Korea is a common tool to satisfy judgements against debtors.  Korean courts allow the ex-parte arrest of ships.  The court, normally, does not request from the Korean counsel of the creditor/claimant evidence of how long the ship will remain in Korean waters, as is, sometimes, the case in other neighboring jurisdictions.

We find Korea to be a much easier destination for arresting vehicles than many other Asian nations, because of the efficiency focus of the Korean court system and the less than efficient other Asian jurisdictions.  Typically, the arrest action will take a few days to complete. 

The major ports in Korea that an arrest may be executed at are: Busan ,Jinhae, Incheon, Gunsan, Masan, Mokpo, Pohang, Donghae, Ulsan, Yeosu, and Jeju. 

ARREST OF FOREIGN VESSEL IN KOREAN WATERS
There are two different ways to arrest a vessel in Korean waters. 

1.  Preliminary Attachment
The Korean Civil Enforcement Act allows the arrest of a ship or attachment of an asset through a preliminary attachment.  The attachment, normally, requires the posting of a security.  The amount of the security is, normally 10% to 15% of the claimed amount.  Often the court allows the posting of the majority of the amount in the form of a bond.  Normally, the court will not grant a preliminary attachment if a maritime lien is available to the complainant.  Foreign parties, often, have a difficult time obtaining a bond in expedient fashion.  We have, even, failed to obtain bonds for some foreign creditors. 

2.  Maritime Lien
A creditor or claimant in Korea may exercise the right to arrest a vessel.   The Korean court, under Korea's Conflict of Laws Act, will look to the law of the nation of the vessel's flag.   Normally, the court in Korea will not grant a preliminary attachment if a maritime lien is available to the complainant.

A maritime lien, in Korea, is also available for time-chartered vessels, sister vessels and even when an arbitration clause exists.

ENFORCEMENT OF AN ARREST ORDER
The sheriff of the court, upon the disposition of the court, will arrest the vessel by serving on the ship master the notice of arrest and, also, attaching the order to the vessel.  It is, also, advisable to arrange with the sheriff to advise the port authorities to not allow the vessel to leave the port.

Upon arrest, in most cases in our experience, the owner of the vessel or charter party will provide a letter of undertaking from the the P & I club of the arresting party.  The arresting party is not required, under Korean law, to accept the letter of undertaking and many demand 100% of the claimed amount in cash before granting the release of the vessel.

In order to obtain information of the release of an arrested ship in Korea, please refer to our post entitled:  Release of an Arrested Vessel in Korean Waters.

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SeanHayes@ipglegal.com

IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines, Vietnam and the U.S.

www.ipglegal.com

Foreign SME's will now may be Qualified for Free Economic Zones

In an attempt to spark a resurgence in Foreign Direct Investment in Korea, the Korean government has proposed the development of Mini Free Economic Zones.  These zones are an attempt to attract SMEs that supply parts to Korean companies.

These Mini-FEZs are expected to charge rent far lower than market value in Korea, offer tax incentives, while offering no fee leases for companies that bring into the country technology and invest over USD 1 million in the local economy.

The exact details of the plan are not known.  I will update the readers when more details become known.

I suspect that the plan will, also, be a benefit to companies already in Korea that are looking to modernize facilities.


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SeanHayes@ipglegal.com

IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines, Vietnam and the U.S.

www.ipglegal.com

Korea Legal News for the Week of April 7

This Week's Legal News Reported by Media

• Aid groups to suffer if EU sanctions North Korean bank
• How does North Korea make its money?
• Samsung C&T wins deals worth $892m from Singapore, Morocco
• Korea exports hospitals to Saudi Arabia
• Korean firms pulling out of China
• Korea claims top spot in Chinese import market
• Korea, Hungary sign pact on working holiday agreement.
• Yongsan liquidation to lead to massive lawsuits
• Seoul city retreats from sales restrictions for big retailers
• GM could move production out of Korea
• Korea was crucial for African democracy

Most Recent Posts from The Korean Law Blog

• Should your Company in South Korea be Concerned About the Threats from North Korea
• South Korean's Aiding North Korean Hackers Arrested in South Korea by Seoul Central District Prosecutors' Office
• IPGs New Law Blog the Korean Entertainment Law Blog
• ABA Dispute Resolution Spring Conference with Senator George Mitchell and Judge Richard Posner
• American Bar Association Forum on Franchising 2013: International Franchise Law and Korea
• Korea's New President and the North Korean Issue by Tom Coyner
• Special 20% Consumption Tax for Designer Bags Bought in Korea Suspended until 2014

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SeanHayes@ipglegal.com

IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines, Vietnam and the U.S.

www.ipglegal.com