Protecting IP rights in the DPRK

Tran Manh Hung and Binh Vong from law firm Baker McKenzie

The summit between Donald Trump and Kim Jong Un in Hanoi just behind us, along with recent developments, indicate a potential shift in US-DPRK relations. Though what will be the ultimate result of these summits remains unclear, many are starting to reassess commercial relations between the DPRK and the rest of the world and to entertain the possibility of the DPRK opening its market and joining the global economy.

When that happens, what will an open DPRK look like? How will the world react when the DPRK is opened for business? And, in particular, how should international companies prepare for doing business with the DPRK? One of the areas that would not be premature for businesses to think about is the protection of their intellectual property (IP) in the DPRK.

If the DPRK entered the global economy, its market would have access to patented devices, copyrighted works, and trademarked goods. Like in many developing countries, the IP owner of such goods will face challenges in protecting their rights when entering the DPRK. China and Vietnam, both of which have joined the global economy for decades, continue to face challenges regarding the enforcement of IP rights. In both of these jurisdictions, piracy and counterfeit products continue to be areas that the authorities are working on.

This means that it is even more important for businesses to secure their IP rights because, generally, in many developing jurisdictions, IP rights are only enforceable when they are properly registered. Of course, while registering IP rights does not generally guarantee that it will be 100 per cent protected, it still gives right owners a basis to contest infringements of their IP.

IP regime in the DPRK

Very little is known about the IP regime and its enforcement in the DPRK, which begs the question of whether it is worth the time, money, and effort for businesses to take steps to protect their IP rights in the DPRK. However, what we do know seems to indicate that the DPRK recognises the importance of IP rights and its companies are already taking steps to protect their IP rights outside of the DPRK.

What is known is that the DPRK does have an IP regime. According to the World Intellectual Property Organization’s (WIPO) website, the DPRK currently has in place a number of laws related to intellectual property. While the legal landscape in the DPRK remains largely a mystery and there are little to no statistics on IP enforcement, there are active IP law firms and agents based in the DPRK.

Furthermore, the DPRK’s participation in international treaties relating to IP is another indication that it recognises the importance of IP rights to its development. As of 2019, DPRK is member of the WIPO and other WIPO-administered treaties, including the Berne Convention for the Protection of Literary and Artistic Works and the Madrid Agreement Concerning the International Registration of Marks.

Companies in the DPRK also pay attention to their IP rights, and some have registered trademarks with the WIPO. According to the WIPO’s database, there have been 75 trademark filings originating from the DPRK, with most of these registrations currently active.

IP exceptions for sanctions

Businesses may choose to file for IP protection in the DPRK even if they currently have no business operations there. With the number of sanctions imposed on the DPRK, many businesses may wonder whether it is feasible to apply for IP protection in the DPRK. Under US sanctions, economic activities with targeted individuals and businesses in the DPRK are quite restrictive. In 2017, Executive Order 13810 imposed additional sanctions that block from US financial systems foreign businesses and individuals who have facilitated trade with the DPRK. This is a broad-reaching measure which effectively blocked any individual or company trading with the DPRK from conducting business in the United States.

Prior to 2016, due to US sanctions targeting individuals and businesses facilitating trade with the DPRK, it was not possible for US nationals to register IP rights in the DPRK without violating US sanctions. However, in 2016, the Office of Foreign Assets Control (OFAC), which is a financial intelligence and enforcement agency of the US, created IP exceptions to sanctions targeting individuals and companies conducting business with the DPRK.

As codified under 31 CFR § 510.517 (IP Exception), certain transactions in connection with patent, trademark, copyright or other forms of IP protection in the United States or the DPRK are authorised. These transactions include the filing and prosecution of a patent, trademark, copyright or other forms of IP protection, the receipt of such IP protection, and the renewal or maintenance of such IP protection.

Under the IP Exception, individuals and businesses are authorised to pay fees related to applications for IP protection to the US government or the government of the DPRK without violating US sanctions. Any customary fees, as well as attorney or representative fees within the United States or the DPRK in connection with a transaction for IP rights protection are also authorised. The IP Exception makes it possible for businesses to register a patent, trademark, copyright or other form of IP protection in the DPRK and pay for the fees associated with such registration.

What does this mean for businesses?

What do all of the above mean for businesses? For one, it means that businesses may consider whether it is worth it to apply for IP protection in the DPRK. Any businesses with interest in the DPRK would also need to have in place a long-term strategy because it is very unlikely that things will change overnight or even in a few years. As we have seen with China, Vietnam, and other jurisdictions, changes take time to implement. Despite that, it is never too early to start considering IP strategies.

IP is the cornerstone of development because a strong and balanced IP regime is essential to innovation. This is especially true in the modern economy where capital is becoming exceedingly intangible and, for many businesses, intellectual properties are their most valuable assets. It remains to be seen where the DPRK will stand in terms of IP protection – our hope is that it will continue to recognise the importance of IP and develop its IP regime in a way that will encourage stable growth and, eventually, innovation.