3.1. Comparison of Company Data in Major Industrial Fields
In the report, four areas have been selected, namely the pharmaceutical, automobile, machinery and IT fields (see Graphs 7 and 8). Two companies in each industry were chosen, and certain features in each industry will be shown.
Fig.7.Number of Patent Applications in each industry (1) Source: KIPO
Fig. 8. Number of Patent Applications in each industry (2) Source: KIPO
[Impact of the Intellectual Property System on Economic Growth ]
The two companies selected in the pharmaceutical field were Dong-A and Yuhan corporations. This field 81 points up the following features: First, the number of patent applications is much lower than that of other industries such as automobiles and IT (see Graph 9). Second, the number of patent applications in the area was not influenced by external factors such as the IMF crisis. Third, the two pharmaceutical companies have been consistently spending in R&D irrespective of external factors (see Graph 10).
Fig. 9.Dong-A and Yuhan Patent Applications
Fig. 10.Dong-A and Yuhan R&D
[Impact of the Intellectual Property System on Economic Growth ]
82 The automobile industry gives the following results. First, although the selected companies, KIA and Hyundai, are representative of this field, they appeared to file very few patent applications in the early 1990s. Second, the number of patent applications vastly increased just before and after TRIPS. Third, the KIA Motor Company was faced with dishonor in 1997 when the IMF crisis occurred, and since then the number of its patent applications has been very low: however, its R&D investment ratio has slowly increased since 1998. Fourth, the Hyundai Motor Co. also experienced management difficulties around 1997, but its patent applications increased in 1999. Since then its growth rate has been almost static. In the meantime the R&D investment ratio of Hyundai rapidly decreased from 1998 to 1999 and continued a slow decline until 2002: it has however increased since then. During the IMF crisis the number of patent applications from Hyundai largely decreased, but that number has started recovering, and since then its IP strategy has been aimed at strengthening intellectual property, as the number of patent applications as well as R&D have slowly been increasing.
The machinery industry shows first that the number of patent applications by the companies selected, Doosan Infracore and Hyundai Heavy Industries seemed to be greatly influenced by the domestic economy. Second, the number of patent applications by Doosan Infracore increased from 1992 to 1996, falling heavily at the time of the IMF crisis. The R&D investment ratio of Doosan Infracore dropped from 2000 to 2004 but has since been slowly rising. Third, the number of patent applications which Hyundai Heavy Industries has filed showed a steadily increase up to 1997, but then the number declined. On the other hand, its R&D investment ratio increased only from 1998 to 1999 and then stayed static.
In the area of IT, two companies, Samsung Electronics and LG Electronics, were selected. First, the number of patent applications filed by Samsung Electronics declined heavily from 1997 to 2000, as it was badly affected by the IMF crisis, although the number has since greatly increased. Its R&D investment ratio also declined from 2000 to 2002, but then rose slowly up to 2006. Second, the number of patent applications by LG Electronics slowly increased from 1992 to 1997 and markedly increased from 1998 to 2004 although this has since decreased. Its R&D investment ratio was between 4.0 and 5.40 per cent from 2002 to 2006.
3.2. Results of the Analysis
Research on the number of patent applications in the industries showed a vast difference in those in which external factors such as the IMF crisis had an influence on patent policies. For example, the number of patent applications in the pharmaceutical field consistently increased even during that period. In other words, the industry did not seem much affected by the crisis.
On the other hand, the automobile and machinery industries are somewhat different. The number of patent applications in these fields has been positively influenced by TRIPS and negatively by the IMF crisis.
In particular, the number of patent applications in the automobile industry largely declined in 1997 and 1998, but has very slowly increased since 1999. The number of patent application in the machinery industry also dropped in 1997 and 1998. However, it consistently increased from 1999, and has been increasing rapidly since 2004. From these results we deduced that patent applications for both the automobile and machinery industries seemed to be closely related to the domestic economic situation.
[Impact of the Intellectual Property System on Economic Growth ]
The IT industry has recently seen rapid development, playing a huge role in developing Korea’s economy. 83 According to the results of our research, it has also been affected by external factors such as the IMF crisis with the number of patent applications decreasing slightly in 1998 and 1999. They slowly increased from 1999 to 2003 and have been growing strongly since. In terms of biotechnology inventions, it is noteworthy that since 2002 domestic patent applications have been almost twice those of foreign companies.
We assume that a great deal of money and labor have been invested in R&D in biotechnology since the beginning of the 21stcentury.
Meanwhile, the data on R&D and sales since 2000 are only given as averages. Although they have continuously increased in all areas studied during this period, the analysis shows that R&D and sales in the IT field have increased more sharply since 2004, followed by the automobile, machinery and pharmaceutical industries. This research shows that the IT industry has been the most important sector in Korea since 2000 with respect to the number of patent applications as well as to R&D and sales (Fig. 11).
On the other hand, R&D investment ratios are so different over industries and companies that we cannot dismiss them in a word. For example, the R&D ratio of the Dong-A pharmaceutical company greatly increased from 2001 to 2003, while the R&D ratio of Doosan Infracore decreased during the same period.
It is also noticeable that since 2002 investment by Samsung Electronics in R&D has been the highest of all eight companies and the number of its patent applications has been increasing since then (Fig. 12 and 13). We also noted that the R&D investment ratio of the KIA Motor Co. has continuously increased. Such results demonstrate that each company has its own R&D and patent policy which seems to be affected by the domestic economic situation. It would be helpful to obtain more time-series data on the R&D
investment ratio over companies.
Fig.11.R&D and Sales Trends in IT field Source: The Bank of Korea
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84
Fig. 12.Number of Patent Applications for Samsung Electronics & Hyundai Motor Co.
Source: Korean Institute of Patent Information
Fig. 13.R&D ratio for Samsung Electronics & Hyundai Motor Co.
Source: Korea Institute of Patent Information
[Impact of the Intellectual Property System on Economic Growth ]