S. Korean Talks Must Include Strict IP Curbs, USTR Hears

S. Korea has made progress, but almost all sectors of the copyright industry there contend with rampant piracy, International Intellectual Property Alliance Senior (IIPA) Vp Steven Metalitz told the Office of the U.S. Trade Representative (USTR) at a public hearing. Problems in S. Korea include rising Internet piracy, massive illegal photocopying and printing of published materials, and persistent outlaw CD-R burning, he said. End-user piracy of business software and import of counterfeit cartridge-based gaming software also need attention, Metalitz said.

The copyright sector could benefit significantly from a “sound and comprehensive” trade deal with s. Korea -- but only if it includes high standards for copyright law reform, a way to bolster IP enforcement and commitments to lower market access barriers, he said. The changes would include principles in the World Intellectual Property Organization (WIPO) copyright treaty and performances and phonograms treaty.

Trade deals with Asia-Pacific nations like Singapore and Australia provide models for the text the U.S. should offer S. Korea, Metalitz said. Those deals should be tweaked for the specifics of S. Korean piracy, he said.

In 2004, the USTR put S. Korea on its priority watch list after a “Special 301” out-of-cycle review (OCR) found online music piracy hurt domestic and foreign labels. S. Korean piracy of U.S. films cost U.S. and s. Korean copyright holders millions in revenue, the USTR said.

At that time, the U.S. said it was encouraged by S. Korea’s positive steps, particularly in granting police authority to teams investigating software piracy and more broadly in greater efforts to report infringement to U.S. rights holders. But the USTR found S. Korean officials hadn’t acted on 2 issues given high OCR priority: (1) An April 2002 commitment to legislate full right of transmission for sound recordings. (2) A vow to resolve the film piracy issue as it pertains to the S. Korea Media Rating Board.

Little has changed, the IIPA said. In a recent paper, the group urged USTR review of whether S. Korea has done what’s needed regarding the music industry and book publishing, or if a higher designation is warranted. The group called for S. Korea’s Copyright Protection Center (CPC), ordered in 2005 to tackle Web piracy, to move against pirates this year. “To the extent CPC cannot act, the cybercrime units within the Korean police and prosecutors must do so,” he IIPA said.

Copyright efforts considered in 2005 didn’t address copyright owners’ needs, IIPA said. Specific proposals: (1) Extending copyright term for works and sound recordings to reflect global trends. (2) Giving sound recording producers control over digital dissemination of recordings. (3) Complying fully with WIPO standards on technological protection measures. (4) Clarifying ISPs’ liability and providing effective notice and takedown. (5) Recognizing protection for temporary copies and narrowing the private copying exception in the digital realm. (6) Substantially tightening library exceptions. (7) Making clearer and strengthening laws barring use of camcorders in movie theaters.

Meanwhile, P2P networks are on the rise in S. Korea, with 100-120 sites offering illegal file-sharing, the IIPA said. That figure is expected to be 150-180 in 2006. From only 20-30 file sharing services monitored in 2005, the Motion Picture Assn. flagged 9,500-plus S. Korean uploaders engaged in audiovisual piracy, up 20% over 2004. Cease & desist letters went to the file sharing services and all complied, but the files invariably resurfaced on the same, or different, P2P services within weeks or even days, the IIPA said.

Unauthorized use of entertainment software and other copyrighted materials by some of 20,000 plus Internet cafes must be addressed, the IIPA said. In 2004 some Entertainment Software Assn. members succeeded in licensing many cafes, and about 40% have been licensed by game publishers, the group said. But entertainment software publishers face a new threat -- mobile phone game piracy, the IIPA said. Content can be downloaded directly from the Web onto mobile devices, whose pervasiveness in S. Korea makes this a serious concern, the group said.

The National Electrical Manufacturers Assn. (NEMA) aired concerns at the hearing. NEMA international trade mgr. John Meakem lauded the govt. for “picking a market with proven potential for U.S. electroindustry exporters.” But while NEMA backs mutual recognition agreements (MRAs) between govts. for federally regulated products like medical devices, it opposes MRAs for unregulated electrical products.

Meakem urged that trade talks incorporate endorsement of NEMA priorities including: (1) Bilateral and worldwide WTO elimination of tariffs on electrical products as soon as possible. (2) Elimination of nontariff barriers relating to investment, distribution, customs, rules-of-origin and other areas. (3) Energy services liberalization -- bilaterally and as a part of WTO “built-in agenda” talks on services. (4) Openness in govt. procurement. (5) Compliance with all WTO Technical Barriers to Trade (TBT) requirements such as the open, transparent development of standards and regulations. (6) Accepting the definition of “international standards” in the WTO TBT treaty as extending beyond IEC, ISO and ITU standards. (7) Accepting voluntary, market-driven standards and conformity assessment as preferable to govt. mandates. (8) Full adherence to TRIPS (trade-related aspects of intellectual property rights) commitments, including better legal and administrative means for pursuing cases of trademark infringement.

S. Korea is an attractive trading partner for the U.S. The nation’s exports of electronic devices rose 14.2% year-on-year to $8.4 billion in Feb. 2006, while imports hit $4.67 billion, up 22.9% from a year ago, the Commerce Ministry said. In all, S. Korean digital products recorded a trade surplus of $3.77 billion last month.

Digital product export growth was mostly in electronic parts such as semiconductors and flat display panels. Foreign sales of semiconductors and DTVs rose 14.9% to $2.59 billion and 5.2% to $0.16 billion year-over-year, the ministry said. By contrast, mobile phone sales fell by 4.7% to $1.37 billion, the govt. reported.

By country, outbound shipments to China grew 13% to $1.68 billion, and to the EU 1.9% to $1.48 billion. But sales to the U.S. fell 16.3% to $1.05 billion in Feb., underscoring the need for a formal trade agreement.

Digital product imports rose 22.9% to $4.67 billion last month, the ministry said. The increase in imports was seen in computers (34%), semiconductors (28.1%) and domestic electric appliances (14.4%). In all, s. Korea’s digital industry recorded a trade surplus of $3.7 billion in Feb., up 5% from the a year ago. Trade in electrical appliances posted a surplus of $610 million with China and $280 million with the U.S., the ministry reported.