2024.07.14. The Fair Economy — The Commercialization Promotion Agency for R&D Outcomes (Director Bongsoo KIM), whose primary duty is collecting and managing royalties, was found to have neglected this responsibility.
The Ministry of Science and ICT recently released the 'Comprehensive Audit Results on the Commercialization Promotion Agency for R&D Outcomes,' which detailed these findings.
Technology fees refer to the amount paid by a licensee to the state, specialized agencies, or institutions that own the research and development outcomes, in cash or equivalent securities, as consideration for obtaining the right to practice (license) the outcomes of a research and development project that has been evaluated as successful in the final assessment.
According to the Enforcement Decree of the National Research and Development Innovation Act, organizations obligated to pay royalties must submit sales-related documents to the head of a central administrative agency by June 30 of the year following the year in which revenue was generated from directly implementing R&D outcomes.
Furthermore, these organizations must pay the calculated amount for each year in which revenue was generated to the head of a central administrative agency. This payment obligation continues until the earlier of two dates: five years after the first day revenue was generated, or seven years after the R&D project ended.
The Minister of Science and ICT entrusts the collection and management of technology fees to CPARDO in accordance with the 'Regulations on the Handling of R&D Projects in the Science and Technology Field under the Ministry of Science and ICT'.
Consequently, the Agency is required to periodically monitor whether government-paid royalties are generated over a period of five years from the first occurrence of sales or seven years from project completion, in accordance with the Innovation Act Enforcement Decree.
However, an audit by MSIT revealed that the Agency had been neglecting periodic inspections regarding the collection and management of royalties.
For Project A, which ended in 2021, the Agency took no measures to collect royalties in 2023.
In Project B, the Agency did take measures to collect royalties until 2022. However, after the staff member responsible for royalty collection went on parental leave, the person in charge in 2023 failed to carry out the necessary collection measures.
Similarly, for Project C, Agency staff took measures to collect royalties until 2022 but failed to do so in 2023. The Agency was found to have neglected royalty management efforts for various reasons.
Additionally, the Agency failed to review applications for royalty payment deferrals from companies that newly hired young workers and maintained their employment for at least two years, as required by R&D project handling rules. It also did not conduct reviews regarding the application of royalty reductions or the management of unpaid royalties.
The Agency also failed to properly manage its overall royalty oversight duties.
Because the Agency's staff handle royalty tasks individually without common standards, it should have established a system to efficiently collect and manage royalties regardless of changes in staff status or project completion.
Yet, although 'overall royalty management' is listed as a key duty for Team D in the Agency's 'Guidelines for Division of Duties,' Team D was found to be handling the matter passively. Its current work is limited to roles such as compiling royalties collected by project and returning them to the National Research Foundation of Korea (Science and Technology Promotion Fund).
As a result, MSIT pointed out that the Agency does not even grasp the overall status of projects subject to royalty collection or unpaid royalty amounts at the institutional level. It also noted that there is no procedure to verify whether individual staff members are performing their duties in accordance with regulations.
MSIT criticized the Agency's flawed approach to managing and collecting royalties, stating, 'The Agency was established from its inception to integrate and track-manage research outcomes. Therefore, efficient management of research outcomes is a core function of the institution, and royalty management, which is central to this, holds a value that cannot be compared to any other function.'
MSIT notified the Director of the Commercialization Promotion Agency for R&D Outcomes to 'establish unified standards and inspection systems for royalty processing, such as forming and operating an institutional-level royalty adjustment committee or designating dedicated staff, to ensure systematic royalty management.' It also ordered that 'relevant personnel who handled duties passively, failing to establish unified institutional standards despite being assigned overall royalty management duties, be given a formal warning.'
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