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With a name like “Hackers Education Group” – what did you expect?

Hackers Education Group – a cram school franchise - has been very successful over the past couple of years – in fact, it is believed that it “raked in 100 billion won ($89.1 million) in revenue in 2010 alone, and 36 billion won in net profit.” But this powerful company is in trouble for alleged copyright infringement. 

Never heard of Hackers Education Group?  Here’s its home page (English) and here is the Korean home page.  According to this ad (name removed):

Hackers Language Research Institute (HLRI) is a reputable and successful English language research institute that specializes in publishing preparatory books for standardized tests such as TOEFL, TOEIC, TEPS and IELTS. Located in the heart of Gangnam-gu, near Gangnam Station, it also boasts one of the most popular language academies for university-aged students. The founder, Dr. XXXX XXXX, is one of South Korea’s top professors of linguistics. He put all of his knowledge into the development of a system of English language learning for Korean students. The team at HLRI works diligently to maintain his standards and push forward the company’s goal of providing the highest quality of up-to-date research to the Korean population.

 What kind of “up-to-date research” you ask?  Korea Herald (February 7, 2012) has the answer:

According to the investigators,  Cho ordered 50 of his staff workers to apply for and take the two most popular English proficiency tests here from 2007 to early this year. The two tests are Test of English for International Communication (TOEIC), administered by the U.S.-based Educational Testing Service (ETS), and Test of English Proficiency (TEPS) developed by Seoul National University.

The employees, assigned to cover different sections of the tests, were given tiny video and audio recorders to capture and record the questions on TOEIC 49 times and on TEPS 57 times. Questions of the recently adopted National English Ability Test were also copied in the same way using specially designed recorders, the prosecutors said.

The stolen questions were forwarded to the company, which were solved by native English speakers there, and then uploaded on Hackers subsidiaries’ website to share with students.

It probably doesn’t need to be said….but

Media reports said Hackers had earned a reputation for accurately predicting test questions.

Guess you would if you already had them.

In order to evade being caught for copyright violation, the questions were deleted the following day. Instead, similar questions were released in its textbooks. Hackers instructors at classes used the actual questions.

 Of course this has led to some questioning of Korean students’ true English ability.  According to AFP (February 7, 2012) :

Such a practice has prompted the ETS to raise questions over South Korean students’ genuine English-speaking ability… and sparked a negative international image of South Korea,” the Seoul Central District Prosecutors’ Office said in the statement.

Shocking! And, ever so contritely, Hackers Education Group explained that:

…documenting the test questions was only part of legitimate research.

The group’s founder has more than just copyright laws to worry about.  (JoongAng Daily, February 7, 2012)

“The group’s shares are owned 100 percent by Cho, who since 2001 has worked as a linguistics professor in a national university but has managed the group secretly,” prosecutors said, “further infringing on the ban on civil officials holding more than one office.”

  • CactusMcHarris

    Cho’s Cheater College – I like it. And it has ‘official’ sanction, right, because a national university’s professor would never do anything like get students passed in a disliked-but-necessary subject in an underhanded manner?

  • gbnhj

    I wonder Cho’s take on students in his classes doing the same thing.

  • gbnhj

    It should also probably be noted that Cho’s company ought to consider the ‘legitimacy’ of their ‘research’, as the unauthorized electronic recording of such material is, in any case, expressly forbidden by its owners.

  • Yu Bum Suk

    This is another reason why communicative tests with speaking and writing components are so important. It’s a lot harder for a student to memorise 500 300-word essays for 500 possible questions, and if he did he’d at least learn a lot more than if he memorised the answers to 500 multiple-choice questions.

  • Benjamin Wagner

    I remember a well known U.S. bar prep company getting busted for the same thing. They were sued by the National Conference of Bar Examiners in 2006 for copyright infringement and ordered to pay $11.9 million. Wonder if ETS will take a similar approach with Hackers.
    http://homepages.law.asu.edu/~dkarjala/Copyright/NCBEvMultistateLegalStudiesEDPa8-22-06.pdf
    http://devel-drupal.law.csuohio.edu/currentstudents/gavel/documents/Vol55Issue1.pdf

  • Arghaeri

    Interesting, how would you calculate the economic damage.

  • http://bcarr.com Brendon Carr

    Wonder if ETS will take a similar approach with Hackers.

    I would be standing by for another KFTC investigation in that case, if I were ETS.

  • http://www.joeseoulman.blogspot.com joeseoulman

    This is an interesting read, especially as I read it during a break from editing the next round of questions for the new National English Ability Test.

  • SomeguyinKorea

    The books they publish are amongst the most popular in Korea. I’ve read one of their books and it was actually quite good. It showed how to analyze the questions and formulate the appropriate answers.

    In any case, just wait…The poop might hit the fan very soon: They also taught SAT, LSAT, and GRE courses.

  • Benjamin Wagner

    Interesting, how would you calculate the economic damage.

    The KH article says “the Seoul Central District Prosecutors’ Office . . . indicted six management members of the company including [the] chairman . . . on charges of copyright violation.” One assumes this is under the Korean Copyright Act, though perhaps there are additional charges under the Criminal Act. The article also says “investigators believe that such copying of questions has helped the private education company to rake in 100 billion won ($89.1 million) in revenue in 2010 alone, and 36 billion won in net profit.” Approx. US$32 million.

    That’s a lot of cheddar. Revenue for PMBR, the U.S. bar prep company that got caught, was only about $7 million a year with the copying occurring over a 5 year period. The U.S. court discusses damages on pp. 18-23 of the judgment I cited above.

    As for how a Korean court would approach damages in a case that was similar to the PMBR case, I have no idea. Art. 125 (Claim for Damages) of the Korean Copyright Act says “the amount of profit shall be presumed to be the amount of damages that the owner of author’s property rights, etc. sustained, if the infringer has made a profit by his act of infringement.” Art. 126 (Setting of Amount of Damages) says “where incurrence of damages is recognized, but it is difficult to estimate the amount of damages as provided in the foregoing Article 125, the court may set a reasonable amount of damages by taking into consideration the gist of arguments and the results of evidentiary investigations.”
    http://www.wipo.int/wipolex/en/text.jsp?file_id=190144

  • CactusMcHarris

    I’ve been watching reruns of ‘The Mentalist’ on Bravo here in Kamloops, and Tim Kang (plays a cop whose surname is Cho) is part of the cast. One of the lines last night (after Lt. Cho went undercover and did a good job), the main character (I think it’s Simon Baker) says

    ‘There’s no business like Cho business’

    …just simple and beautiful Urimal humour.

  • Arghaeri

    Benjamin, note you say “presumed” which therefore could be rebutted.

    Where I am coming from is they’re teaching to pass the test, the actual tests appear to use genuine test papers, therefore there is no damage in terms of test papers sold. Indeed arguably the success if Hacker’s mightbe argued to improve the sales if the tests and therefore the test papers.

    On that basis, any damage would arguably have to be subsidiary sales, test revision guides or the like sold by the test bodies (are they in this market) and even then presumably they would not put the same copied questions in their own revision guides so no direct comparison.

    As to the 100 billion revenue that us likely mostly tuition fees based on their reputation for bringing people up to a high test standard, so if the testing body is not in the tuition market how have ther suffered loss if tuition revenue?

  • gbnhj

    I wonder if ETS can request a list of all current and former HRG students, compare that against its own rosters of test-takers, and suspend the validity of tests they may have taken. Retesting – at either the students’ or HRG’s expense – would of course be a necessary next step.

  • Benjamin Wagner

    Benjamin, note you say “presumed” which therefore could be rebutted.

    For sure, who knows what approach a Korean court would take and what arguments they’d find persuasive.

    In 1993 when ETS sued a Korean test prep company for copyright infringement for using TOEFL questions (see Educational Testing Service v. Seiyang Planning Inc., Seoul District Court) the court awarded damages to ETS by pricing the value of each question. The defendant corp. had illegally used 3,940 questions priced at $10 a pop. Not much of recovery for ETS, but it shows their willingness to litigate. ETS tried to get compensation for the creation of a make-up test but the court wouldn’t allow it. For whatever reason, ETS did not argue that it should receive damages from profits that were attributable to the infringement of its copyright. That’s what I’d expect to see if a lawsuit is brought against Hackers, I think the most recent version of the Copyright Act would be amenable to such an approach.

    In 2003, again showing its willingness to defend its copyright abroad, ETS sued the Chinese “New Oriental School” for copyright infringement over stolen TOEFL, GRE, and GMAT questions. Remarkably it came up with a huge win and recovered a USD$ 1.2 million verdict against the offender in a Chinese court.

  • Arghaeri

    Thx, will be interesting to see how this ends up.

  • http://www.sperwerslog.com Sperwer

    Arghaeri makes an interesting point: Hackers may have made a profit through the illicit use of ETS materials, but that profit did not come at the expense of ETS, sales of whose tests are unlikely ( to say the least) to have been diminished/ diverted by Hacker’s theft. Hence, conceptually, there is no basis for compensatory damages as a remedy.

    I suggest simple criminal prosecution for grand theft and a sizeable prison sentence plus forfeiture of all gains to the state treasury.

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