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S. Korea Patent Violation Case Settled by U.S.

July 22, 1986|KAREN TUMULTY | Times Staff Writer

WASHINGTON — In an effort to stem violations that cost U.S. industry up to $20 billion a year, the Reagan Administration announced Monday that it has settled the first case in a drive to crack down on other countries' infringement of U.S. patents, copyrights and trademarks.

South Korea, settling an unfair trade case initiated last fall by the White House, agreed to introduce legislation calling for stiff penalties on Korean firms that produce unauthorized copies of such copyrighted properties as books, movies and computer software.

Threatened with U.S. trade sanctions, the Seoul government also agreed to broaden the coverage that its patent laws give chemicals and pharmaceuticals and to make it easier for foreign businesses to obtain trademark protection. The new regulations are expected to be enacted by mid-1987.

In a case that represents "major progress," the settlement "established the idea that these countries are going to adhere to the copyright laws," said James Burger, outside counsel for Cupertino-based Apple Computer Inc. U.S. computer firms have estimated that they are losing $20 million a year to Korean producers who counterfeit their software.

One drug-industry official said that South Korea was "very strategically chosen" as the target of the Administration's first trade case against international counterfeiting because it has allowed and even encouraged its own manufacturers to duplicate a variety of U.S. products, worth several hundred million dollars a year.

Opens Insurance Market

Concluding a separate trade case, South Korea also agreed to allow U.S. firms access to its insurance market, which White House spokesman Larry Speakes estimated is worth $5 billion a year.

Speakes said that the actions were the fruit of an Administration plan, announced last September, to "move vigorously to improve conditions for U.S. firms in individual foreign markets."

However, Sen. Pete Wilson (R-Calif.) said that success in reaching agreement with a single nation does not diminish the need for comprehensive legislation mandating penalties against all countries that do not adequately protect the so-called "intellectual property" rights of U.S. firms. Wilson has introduced a bill, now before the Senate Finance Committee, that would impose such sanctions.

"Korea is not the only offender," Wilson said in an interview. "It is much better to state a uniform requirement," he added, than going through the time-consuming process of seeking agreement with every nation that allows widespread counterfeiting of U.S. products.

The new regulations were sought by a number of U.S. industries. The South Korean domestic videocassette market, for example, is "100% pirated, virtually," costing U.S. producers $16 million annually in lost sales, said Fritz Attaway, vice president and counsel for the Motion Picture Assn. of America.

Loss Put at $40 Million

The problem of counterfeit records and tapes is even worse, costing U.S. producers sales worth an estimated $40 million a year, because Korean companies export the duplicates as well as selling them domestically, Attaway said.

Attaway said the settlement means that "the other pirate countries of the world are on notice" that they could be subject to similar actions by the U.S. government.

U.S. Trade Representative Clayton K. Yeutter has been pressuring several other countries to stem their trade in counterfeit U.S. goods, but has not gone so far as to initiate against them formal cases carrying the potential for official trade sanctions.

Industry representatives also speculated that it could reduce pressure in Congress for wide-ranging trade legislation that has been opposed by President Reagan.

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