Ambassador Speeches

Ambassador Christopher R. Hill Keynote Speech at U.S.-Korea IPR Roundtable

November 12, 2004

First of all, I would like to thank you all for participating in today's daylong discussion of intellectual property rights protection, a topic which is of keen interest to us all. I especially want to thank the Ministry of Foreign Affairs and Trade, and particularly Trade Minister Kim, for their support and encouragement in organizing this forum. I would also like to thank all of our distinguished speakers from other government ministries, from private sector organizations and from the National Assembly.

There is no doubt we live at a time of great challenges in IPR protection, as the implications of the digital age become more and more pervasive. These challenges are particularly tough for Korea. Korea has become a world leader in sophisticated digital technology from cell phones to LCD screens to digital cameras and is now a forerunner in generating patents and trademarks in these fields. As a global pacesetter in state-of-the art technology, Korea excels in information technology and telecommunications sectors that enable the rapid, seamless -- and enjoyable -- dissemination of digital content. Korea is also well known for having one of the highest rates of Internet broadband penetration in the world, with over 70 percent of Korean households connected 24/7 to broadband Internet with access to information, music, e-mails and on-line shopping.

In other words, Korea certainly has a right to be proud of the technological developments that have propelled this nation to the front ranks of digital data transmission. It should also be proud of the content industries that can potentially be propelled by digital technology. Korea is now one of the top film-making nations of the world, producing recognized blockbusters and regularly bringing home awards from international film festivals. In the field of music, Korean pop and rock music artists have gained popularity in Japan, China and throughout South East Asia with singers such as Boa, Rain and Lee Soo-young becoming household names.

But, with the high "digitization" of the Korean economy comes a serious problem, which is the main focus and motivation of this meeting today. Put simply, digital technology makes things easier for pirates.

In the recent hit movie "Spiderman", the hero Peter Parker learns the lesson that "with great power comes great responsibility." Well, in the matter of IPR protection, the lesson is that "with great digitization comes great need for protection of intellectual property content." In other words, precisely because it is such a leader in digital technology, it is in Korea's best interest for it to be a leader in protection of digital content as well.

Let's think for a moment about the situation in the Korean music industry. Despite their popularity and wide name recognition, during the past few years many famous Korean performers and musicians have actually seen less financial benefit from the music they perform and produce than in the past. We see a stark example of this in the Korean domestic music industry's compact disc sales, which have slumped alarmingly -- shrinking almost in half -- over the past three years. This slump very closely tracks, in reverse, the growth of broadband Internet connections. Pirated film DVD's are also a major threat, both inside Korea and overseas. A recent market survey in China found pirated copies of 34 different Korean movies being sold.

In the United States and throughout the rest of the world as well, we see similar changes -- both positive and negative -- occurring, as the Internet becomes our primary source of news, knowledge, sports and entertainment. The key is that the easy access to digital content that we all enjoy must be balanced by IPR protection regimes that allow the creators, performers and producers of music and films to be justly rewarded for their creativity. The wellspring of creativity in the world of music and film is the writers and composers, performers and actors, and the producers who closely collaborate to discover new talent and to bring hits and blockbusters to the public. Each leg of this tripod -- creator, performer and producer -- is indispensable to the success of films and music. Each should be rewarded accordingly.

Another critical problem area is the protection of software, which is the core driver of the explosion in digital technology and global communications. Software is embedded within all of our computers, cell phones, automobiles, and appliances and continually opens doors to the generation of new ideas, to collaboration and to the fostering of creativity.

Indeed, software is the key to the informational technology field, which in turn is one of the key sources of economic growth worldwide. A recent survey by the International Data Corporation, a major IT research firm, showed clearly that growth in the IT sector is boosting economies around the world. The IDC report indicates that between 1996 and 2002, the IT sector grew 26 percent and created 2.6 million new jobs. In 2003, world-wide IT sector employees totaled more than 9 million people in high-wage, skilled jobs, raised more than 700 million dollars in taxes annually and contributed nearly one trillion dollars per year to global economic growth.

However, the information technology sector has yet to reach its full economic potential. IT development is held back in many regions of the world by high levels of software content piracy.

The Business Software Alliance and other groups annually track the level of software piracy, by country and by region. BSA estimated in 2003 that the global piracy rate of software was nearly 39 percent. This means, in effect, that more than one out of every three packages of software sold is a bogus or "bootlegged" copy. Unfortunately, Korea's calculated software piracy rate -- although improving -- is still above the global average, not on the lower side.

Piracy doesn't just result in lost corporate revenues. In non-monetary terms as well, the effect of piracy can be enormous. Society benefits from new technological innovations, consumers from more choices, and Internet users from expanded creative content that becomes available on-line. In short, all of our economies benefit from the protection of IP through enhanced productivity, leading to higher standards of living.

The United States Government recognizes that Korea is making considerable progress in many areas of IPR protection. The Korean government published an IPR Protection Plan in the spring of 2004 with benchmarks and clear goals to be reached over the next two to five years. One year ago, the National Assembly gave judicial authority to the Standing Inspection Teams that are based in every province and major city of Korea, to conduct effective raids against unauthorized users of software. Recently, the National Assembly passed an amendment to the Copyright Act that is an initial step toward the long-awaited protection of the exclusive transmission rights of performers and sound recording producers. We hope that this law, together with follow-on measures, will increase awareness among the public of the importance of financially rewarding music performers and producers. We also hope the Korean government will work to reduce piracy in textbooks, to fully protect temporary copies, to increase the liability of Internet service providers and to allow adequate technical protection measures, in order to thwart intellectual property pirates.

There is a lot of work ahead for all of us in the area of IPR protection. It's a complicated task -- and involves not only new laws, but also stronger enforcement measures, public education efforts and technical protection measures. The United States is grappling with these tasks, just like Korea.

In the global arena, I am happy to report that the United States and Korean governments have agreed to cooperate to halt the growing worldwide trade in pirated and counterfeit goods. In early October this year, the U.S. government announced a new "Strategy Targeting Organized Piracy" or "STOP!," an initiative to identify and begin to dismantle the organized criminal networks throughout the world that use fraud and every available legal or enforcement loophole to move bogus goods through the channels of legitimate trade.

While Interpol estimates the trade is counterfeit items is at least 7 percent of the total global trade, the ripple effect for governments and small and medium businesses is much larger. During the first panel today, Andrew Quinn from USTR will explain the objectives and strategy of "STOP!" in more detail. The fact that top like-minded trading partners such as Korea, Japan, the EU, Australia and others have said that they want to work with the United States in this effort epitomizes the increasing cooperation that all governments who are key players in global trade know we must build and maintain.

During today's round table discussions, I encourage all of you to explore together practical ways and means to realize the goals of enhanced IPR protection and increased enforcement. Though open and honest discussions and the sharing of real-world examples, I trust you will search for new solutions and learn from one another.

I look forward to hearing about successful discussions at today's event.

Thank you very much for your attention.