The Republic of Korea is at a crossroad in recognizing the intellectual property rights of software manufacturers. Once a rampant software pirate, Korea is beginning to alter its approach to intellectual property protection.
Korea's transition from software piracy to protector began in 1985 when the United States used the threat of trade sanctions under "Section 301"(1) to force Korea to amend its intellectual property laws.(2) The Korean National Assembly responded to U.S. trade pressure by overhauling its intellectual property laws.(3) On December 31, 1986, the Korean National Assembly passed amendments to its Patent Act,(4) Trademark Act(5) and Copyright Act.(6) On the same day, the Korean Assembly also passed the Computer Program Protection Act(7) ("CPPA"), which recognizes the need for computer program software protection.
U.S. trade pressures and threats resulting from Special 301 were the catalysts that forced Korea to reform its laws and improve enforcement of intellectual property rights.(8) However, as demonstrated by continuing acts of software piracy, enforcement has been a persistent problem.(9) According to one author, who is a critic of current U.S. policy, formal changes in a country's laws that are brought about by external pressure, will not transform traditional attitudes or practices of intellectual property violations.(10) Passing legislation is only the first step toward protecting intellectual property rights, and without widespread understanding, enforcement cannot be achieved.(11)
First, domestic economic factors must be considered to understand the continued problem of enforcement in Korea. Korea's economic policy of rapid development through establishing a close government-business relationship, has worked to inhibit enforcement of the CPPA.(12) This economic policy, that has allowed piracy to persist, has been working in opposition to U.S. pressure to improve intellectual property rights in Korea. Recently, however, through the development of a domestic software industry, Korea has begun to appreciate the negative effects of piracy. Moreover, the structural economic reforms, resulting from the 1997 financial crisis, will sever the past economic policy that promoted economic development over everything else, including property rights. Although external pressure may lead to some improvement in protecting intellectual property rights, significant long-term change will occur only when the Korean government understands the impact of piracy on its own economy.
Part II of this Note will examine the impact of software piracy on the U.S. software industry. Part III will scrutinize the role of international pressure, particularly U.S. Special 301 policy plays on compelling Korea to improve its protection of intellectual property rights. Part IV will explore Korea's economic policy as a means of understanding the underlying problems of enforcement. Lastly, Part V will explain how the development of Korea's software industry and its current financial crisis may produce significant long term changes in software protection.
II. IMPACT OF PIRACY ON THE U.S. SOFTWARE INDUSTRY
Software piracy is generally considered "the unauthorized use or illegal copying of a software product."(13) Although software piracy occurs throughout the world, including the United States, it is rampant in certain countries, such as Korea.(14)
According to the president of Business Software Alliance, Robert Holleyman, "software piracy is the greatest single threat to the advancement of the software industry."(15) The U.S. software industry lost approximately $2.8 billion in 1997 as a result of piracy.(16) Because the U.S. software industry employs more than 2 million people annually, large revenue losses translated into approximately 130,000 lost jobs and $1 billion in lost tax revenue in 1996.(17) Piracy in Asian countries constitutes 29% of the worldwide losses. …