The impact of the remarkable development of marine technology surpasses both the science and maritime domains, and – as a political and social national prerogative – allows marine policy to act as a form of economic profit. Accordingly, the competitive advantage among nations conferred by the preemptive development of this high technology is widely accepted.
Since the industrial revolution in the nineteenth century, maritime power can be defined in the context of its role in war and imperialism. In the 20th century, maritime power has developed into a concept of so-called comprehensive maritime capacity. In addition, Korea’s shipbuilding industry has structural characteristics that due to the sophistication of the industry as well as the lengthy requisite education cannot be quickly developed. In consideration of the current state of Korea’s industry overall, its maritime industry holds a place of significant value.
In order to develop the ship building capacity of the navy, the government – which is the sole customer for such development - is obliged to expand its defense expenditure and must deal with future issues that arise related to intellectual property.
Recently, as the 4th Industrial Revolution has widened the technology gap across all industrial fields, dependency on advanced foreign technology is intensifying, and thus a comprehensive government policy is required that maps out a middle and long-term strategy for the purchase and procurement of the necessary critical technology for the construction of naval power. Korea still pays astronomical amounts each year for the introduction of this technology. The royalties(patent or trademark fees) that must be paid for the introduction of technology signifies the importance of intellectual property.
The domestic shipbuilders, such as Daewoo Shipbuilding & Marine Engineering, Samsung Heavy Industries and Hyundai Heavy Industries, which occupy more than 70% of the global LNG carrier market are estimated to have paid more than KRW 1 trillion in royalties to GTT since 2010. A malicious act employed by patent specialist companies is to put economic pressure on companies by controlling the technology through intellectual property rights. In the field of defense, the Korean Defense Minister signed a bilateral Memorandum of Understanding(MOU) with his U.S. counterpart regarding the technical fees for the internal production of defense equipment on July 18, 1989. Rooted in this agreement, from that time until 2017 there were 121 cases of the transfer of defense technology from the U.S. to Korea. Yet, the licensing fees for the use of the intellectual property associated with these transfers has challenged Korea’s traditionally favorable view of the U.S.
In particular, the application of this MOU involving the transfer of technology that is in excess of 20 years old – which is the effective protection period for the patent of intellectual property rights applied internationally – is complicated which makes compliance with the agreement for the import and export of this technology challenging. Additionally, the royalties as high as 8% that must be paid are seen as excessive.
In response to the allegation that South Korea is expanding its defense industry by copying U.S. weapons technology, the U.S. as a counter-measure has begun to monitor Korean use of this technology in order to prevent the disclosure of secret weapons technology to perceived Korean reverse-engineering. An article titled “South Korea Has Stolen U.S. Military Secrets” published in a U.S. diplomatic journal, Foreign Policy, says Korea is imitating U.S. weapons in various fields including anti-ship missiles, electronic warfare equipment, torpedoes, and Aegis system components.
In this way, the economic loss related to the mismanagement of core technology is large, however the U.S. domination of this technology has a significant impact to Korean national security. In other words, core technology in industry and defense technology tends to affect not only the national economy, but also national security while concurrently deepening dependency and state involvement. Therefore, for the management of this technology legislation must be expedited that protects the intellectual property rights of the naval defense industry.
The naval defense industry has a very complex industrial structure in which shipbuilding and weapon system technologies are incorporated. Since it is closely correlated to other industries an event that impacted one industry would create a large ripple effect across the industrial base. The naval defense industry is labor and capital intensive, which makes the concept of ‘incremental learning’ very important. It takes a tremendous amount of time and money to restore a broken industry; especially one that is vital in leading the nation’s core industries and technologies development. The consequence of this will be more resource intensive and will result in the inability to compete with existing competitors in this field.
Therefore, we should not distinguish between the civilian and defense domains the intellectual property rights of the navy. Instead while selecting and concentrating on core technologies and shipbuilding as part of an integrated military policy, this paper researched the evolution of the pertinent legislation and professional organizations necessary for the systematic management of core technology intellectual property rights.