I FORMS OF INTELLECTUAL PROPERTY PROTECTION
Korea, a member of the world's five largest intellectual property offices,2 has a well-organised system for intellectual property rights, which include patents, utility models, trademarks, copyrights, etc. Each of these rights is different from one another in terms of the protectable subject matter and the scope of available protection. Further, requirements for obtaining protection are different for each right. These rights, however, are used for protecting different aspects and forms of intellectual property.
Patents provide protection for an invention, which is statutorily defined as the highly advanced creation of a technical idea using the rules of nature. The following are protected by patent rights: for a product invention, acts of making, using, selling, leasing, importing, or offering to sell or lease the product; and for a process invention, acts of using a patented process. A patent expires 20 years after the filing date of a patent application. An invention is granted a patent only where the invention complies with the patentability requirements, such as industrial applicability, novelty and an inventive step.
ii Utility models
Utility models provide protection for a device, which is statutorily defined as the creation of a technical idea using the rules of nature. Unlike patents, only a product is eligible for utility model protection. The term of a utility model right is 10 years from the filing date of a utility model application. Contrary to many other jurisdictions, utility model applications in Korea are subject to examination for substantive requirements, such as novelty and inventive step.
Trademark rights provide protection for a mark for identifying goods or services. Protectable marks include not only traditional marks such as a sign, a letter and a figure, but also non-traditional marks such as smell, three-dimensional shapes, hologram, movement and colour. The term of a trademark right is 10 years from the registration date of the trademark and is renewable every 10 years without limitation. Use of the mark is not required to obtain a right for the mark. If a mark has not been used for three consecutive years after the registration date, however, the mark may be cancelled through a cancellation action.
iv Design rights
Design rights provide protection for a shape, pattern or colour of an article or a combination thereof. The term of a design right is 20 years from the filing date of the application. Design rights can be obtained for designs that have industrial applicability, novelty and creativity. A design is deemed to have creativity where the design is clearly and objectively distinguishable from other designs.
Copyright provides protection for a work, which is statutorily defined as a creative work that expresses the thoughts or emotions of a human being. Copyright arises automatically when a work is created and lasts until 70 years after the death of the author. A work is not required to be fixed in a tangible medium, and registration is not required for copyright protection. Copyright is subject to statutory limitations, such as educational, non-profit and fair use.
vi Trade secrets
Trade secrets are afforded protection under the Unfair Competition Prevention and Trade Secret Protection Act (the Trade Secret Protection Act). The trade secrets under the Trade Secret Protection Act include various kinds of methods or information from a production method to a sale method and useful technical or business information for business activities, which are not protectable by the Patent Act. Methods or information can be acknowledged as protectable trade secrets if they comply with the requirements such as secrecy (non-disclosure), economic value and security measures. According to a recent revision of the Trade Secret Protection Act, the requirements relating to security measures were relaxed from a substantial effort to a reasonable effort to maintain the secrecy of a trade secret.
vii Regulatory exclusivities
The Ministry of Food and Drug Safety requires four-year or six-year post-marketing surveillance (PMS) to monitor the safety of a new drug after an approval for the new drug is granted. During this PMS period, a generic pharmaceutical company is restricted from filing an application for approval referring to the safety and efficacy data of the new drug, even if the patent of the original pharmaceutical company has expired. This has the effect of providing data exclusivity to the original pharmaceutical company.
ii RECENT DEVELOPMENTS
The most significant developments in Korea are presented below.
i Statutory developments
The revised Korean Patent Act, which introduces punitive damages for patent infringement and shifts the burden of proof in a patent infringement litigation to an accused infringer, will be effective as of 9 July 2019. The provision for punitive damages will be applicable to patent infringements occurring after 9 July 2019, and the provision regarding the burden of proof in a patent infringement litigation will be applicable to patent infringement litigations filed after 9 July 2019. The revision can be summarised as follows:
- the courts will be allowed to award punitive damages up to treble the actual damages for a wilful infringement of a patent right or an exclusive licence thereof;
- the amount of damages that may be claimed against an infringer of a patent right in the case where it is difficult to prove the amount of actual damages is changed from the amount equivalent to 'what the patentee would have normally received from working the patented invention' to 'what the patentee would have reasonably received from working the patented invention'; and
- the burden of proof in a patent infringement litigation can be shifted to the accused infringer to require the accused infringer who denies the act of infringement claimed by the patentee or exclusive licensee to produce his or her actual product or process.
According to this revision, it is possible for a patentee to claim punitive damages up to treble the actual damages for a wilful patent infringement and to calculate the amount of damages to an amount equivalent to a reasonable range of the royalties based on the individual and specific circumstances of the patent infringement, thereby strengthening the protection of patent rights. In addition, the shift of the burden of proof in a patent infringement litigation to the accused infringer will facilitate the enforcement of patent rights. It is expected that the protection of patent rights in Korea will be enhanced with the introduction of the new provisions above.
ii Changes to case law
Extension of scope of patent term extension to an alternative salt
The Supreme Court held that the scope of the protection conferred by a patent term extension (PTE) is not restricted to only the specific salt of an API (in this case, solifenacin succinate) that the marketing approval was based on, but can be extended to cover an alternate salt (in this case, solifenacin fumarate) (Supreme Court Case No. 2017 Da 245798 issued on 17 January 2019). The Supreme Court ruled that A-care (solifenacin fumarate), which is a salt modified drug, is substantially identical to Vesicare (solifenacin succinate), in terms of their use, method of administration, and therapeutic effects produced by the pharmacological activity of the API absorbed into the human body, as proven by phase I clinical trials. The Supreme Court also held that A-care could have been easily derived from Vesicare on the basis that a fumarate salt is classified as class 1 of pharmaceutical salts commonly used as a succinate salt; and it is widely known that the solifenacin succinate is administered and absorbed in vivo in the same way as the solifenacin fumarate. On this basis, the Supreme Court concluded that the scope of patent protection conferred by the PTE extends to the salt modified drug in consideration of in vivo activities of the two salts of solifenacin, and easiness of salt modification.
Prior to the issuance of this decision by the Supreme Court, the scope of the protection conferred by a PTE had been narrowly interpreted to affect only the specific salt of an API that the marketing approval is based on. However, it is expected that the strategies of generic companies that had attempted to make an early entry into the market prior to the expiration of the extended patent term of the original patent through salt modification would need to be changed due to this Supreme Court holding.
The licensee is an interested party for the filing of an invalidation trial
The Supreme Court held in an en banc decision that the licensee of a patent is also an interested party that can file an invalidation trial against the patent (see Supreme Court Case No. 2017 Hu 2819 issued on 21 February 2019), which went against the previous decisions ruling that the licensee of a patent is not an interested party for the filing of an invalidation trial.
The Supreme Court provided the following grounds for which the licensee of a patent is an interested party: (1) as the licensee generally pays a licence fee to the patent holder or has the limited scope of carrying out the patent based on the licence, the licensee is able to break away from this limitation by invalidating the patent by filing an invalidation trial, (2) there are cases where the party who intends to carry out the patent is granted a licence for the patent, when the party does not file an invalidation trial due to time or cost restraints or is unable to wait until the patent is conclusively invalidated in the decision of an invalidation trial. Accordingly, it cannot be concluded that the licensee has intended not to argue the invalidation of the patent, solely on the basis that the licensee was granted a licence.
III OBTAINING PROTECTION
Under the Korean Patent Act, the patentable categories of inventions are a product, a method and a method of preparation. Use is not a patentable category of invention. Furthermore, since a method for treatment, prevention and diagnosis on a human being is deemed to lack industrial applicability and, thus, is not allowed, a medical use invention is generally drafted in a product form, such as a pharmaceutical composition or a medicament, and the medical use should be identified by a pharmacological effect with respect to the diagnosis, treatment, alleviation or prevention of a disease. That is, the medical use should be identified with reference to a specific disease. Note if the claim is drafted in the form of a compound, the claim will be deemed to be directed to the compound itself regardless of the medical use defined in the claim.
Other types of subject matter, such as genetic materials and genetically engineered cells, plants and animals (except a human being), are patentable.
Software inventions can be protected by method, apparatus, recording or storage medium claims, or claims for a computer program (or an application) stored in a medium. To qualify as patent-eligible subject matter, the information processing by the software must be concretely realised through the use of hardware. This hardware requirement is also applicable to business methods. Further, claims directed to a program signal, a data signal or a computer program list and claims that involve human acts, economic rules, artificial decisions, mathematical algorithms or human mental processes are not allowable for patent protection.
IV ENFORCEMENT OF RIGHTS
i Possible venues for enforcement
A patent infringement lawsuit for damages or injunction may be filed with one of the following five specialised district courts according to jurisdiction: Seoul Central District Court, Daejeon District Court, Daegu District Court, Busan District Court and Gwangju District Court. A preliminary attachment or a preliminary injunction may be requested from one of the five specialised district courts, or one of the 58 district courts or any of their branches across the nation that has personal jurisdiction over the defendant.
ii Requirements for jurisdiction and venue
The jurisdiction and venue of a patent infringement lawsuit for damages or injunction, and a preliminary attachment or a preliminary injunction, depend on the defendant's address and the place where the infringement occurred. Notwithstanding the foregoing, regardless of jurisdiction, a plaintiff may elect to have the case heard at the Seoul Central District Court.
iii Obtaining relevant evidence of infringement and discovery
According to the Korean Code of Civil Procedure, if a party requests the court to investigate certain evidence, and it is deemed that it would be difficult to use the relevant evidence later, the court may investigate the evidence even prior to the filing of the complaint. The granting of such a request is limited to cases where it would not be possible to investigate the evidence later. To prove a patent infringement, the patentee usually relies on publicly available evidence at the time of filing the complaint, since evidence in the hands of the opponent is difficult to obtain before a lawsuit. Once a party shows a reasonable ground for the court to determine that the opponent or a third party is in possession of relevant information, the court may issue, upon the party's request or ex officio, an order to the person who is in possession of the evidence to submit it.
The Code of Civil Procedure provides a variety of mechanisms for obtaining evidence from adverse parties in a lawsuit. Mechanisms to collect evidence, via filing a motion with the court during the litigation procedures, include live examination of witnesses, requests for production of documents and requests for inspection of premises. To facilitate a party's investigation into the opponent's written evidence, the party may file a motion asking the opponent to submit a list of related documents that are under the opponent's control or are planned to be introduced as evidence by the opponent.
The most common mechanism for obtaining third-party discovery is a material production request ordered by a court upon the motion of a party. However, the motion must specify the material to be produced and the person or entity from whom such production is sought.
iv Trial decision-maker
A panel consisting of three judges examines a patent infringement action with the assistance of technical experts. Technical experts are assigned mainly to the Seoul Central District Court and the five courts dedicated to patent infringement lawsuits for damages or injunction, and not to all courts. There are about 20 technical experts at the Seoul Central District Court who assist in decisions.
v Structure of the trial
A patentee bears the burden of proving the infringement of the patent, whereas a party challenging the patent bears the burden of proving invalidity or unenforceability. Although the Korean Patent Act does not specifically provide a presumption of validity, a patent claim granted after substantive examination by the examiner is presumed valid. As the district court has no power to declare patent invalidity, it may simply refuse to enforce a patent when a serious doubt has been raised as to the validity of the patent. Patent invalidation actions are litigated before the IPTAB, not a district court.
In limited circumstances, a patentee can be relieved of the burden of establishing infringement and the burden of establishing non-infringement be placed on the alleged infringer. This occurs in cases involving a patented process for making a product that has not been known to the public on the filing date of the subject patent application.
The Korean Patent Act was revised to relax the burden of proof in a patent infringement litigation. According to this revision, as from 8 July 2019, the accused infringer who denies the act of infringement that is claimed by a patentee or an exclusive licensee will be required to produce his or her actual products or process.
A patent can be infringed when a person performs activities satisfying all the elements required as defined in a patent claim (all elements rule).
Even if infringement is not established pursuant to the all elements rule, infringement may be found under the doctrine of equivalents (DOE). Specifically, Korean courts apply the DOE rule to determine whether an allegedly infringing product or process that does not literally include exactly the same elements as defined in a patent claim may still be found to infringe if the difference between the elements of the patent claim and the allegedly infringing product or process is not substantial.
In addition, when a person performs activities satisfying some elements defined in a patent claim and the remaining elements of the patent claim are performed by another, and as a result, the patented invention is performed by two (or more) persons, the two performers may be liable for a patent infringement as joint tortfeasors.
The Korean Patent Act prescribes that one is liable for contributory infringement when making, offering for sale, selling or importing a product that may be used solely for manufacturing a patented device. When a patent claim defines a process or method, the same rule is applied to a product that may be used solely for exploiting the patented process or method.
The above provisions of the Korean Patent Act are construed to exclude supplying staple products from contributory infringement by limiting the product as being used solely for manufacturing the patented device. It is not explicitly prescribed whether a direct infringement is a prerequisite to establishing a contributory infringement. This issue matters since the liability of patent infringement requires exploitation of a patent to be 'commercial' activity. When the patented product is employed for a personal use, rather than for a commercial use, supplying the patented device is not deemed a patent infringement. In addition, the Korean Supreme Court has held that in order to establish a contributory infringement, the production act in 'solely for manufacturing the patented device' is required to be performed domestically.
To challenge the validity of a patent, an invalidation action can be filed with the IPTAB of the KIPO. Only an interested party or an examiner can request an invalidation trial. An invalidation trial can be requested for each patent claim.
In addition, during the period from the registration date to six months after the publication of the patent, any person can request the cancellation of a registered patent to the IPTAB by submitting prior art, which have not been cited during the examination.
In Korea, a valid patent will be unenforceable under the good faith principle of the Civil Act if the enforcement of the patent is deemed as an abuse of the patent right. According to court decisions in Korea, when a patent is apparently deemed to lack novelty or an inventive step, the patent is unenforceable even before a decision to invalidate the patent becomes final and conclusive.
If an act of working a patent falls under any of the unfair trade practices (e.g., filing a patent infringement lawsuit while being aware of the invalidity of the patent) prescribed in the Fair Trade Act, the patent enforcement will be restricted so as not to violate the Fair Trade Act, and the patentee will be liable to pay a fine levied by the Fair Trade Commission.
Prior user defence
If an accused infringer has been commercially using the accused method or device prior to the filing of the patent, the accused infringer may assert the 'prior user rights' defence to patent infringement.
Under the Korean Patent Act, a person, who, without knowledge of the content of an invention claimed in a patent application, made an invention identical to the said invention or learned of the invention from a person who made an invention identical to the said invention and has been working the invention or making preparations to work the invention in Korea at the time of the filing of the patent application, is entitled to have a non-exclusive licence (prior user right) on the patent right within the scope of the objective of the invention or the business related to the invention that the person is working or making preparations to work.
Preparations to work the invention mean substantial preparations to conduct business based on the invention, including purchase of a plant site or business facilities.
In the case where a patent based on an application filed by an unlawful person is transferred to the proper person upon a request, if before the transfer, a patentee, an exclusive licensee or a non-exclusive licensee has been practising or preparing to practice the patented invention in Korea without being aware that the application was filed by an unlawful person, he or she may be deemed to have a non-exclusive licence for the patent.
viii Time to first-level decision
The average duration of a patent infringement suit from filing of a complaint to entry of judgment varies depending upon the complexity of the case and the court with which the case is filed. The Seoul Central District Court has heard the largest number of patent cases and has developed institutional expertise in patent cases, and an infringement suit before that court can be resolved within 12 to 18 months.
Monetary damages can be awarded to a patentee (or exclusive licensee) when its patent is found to be valid and infringed and the patentee loses its profits as a result of the infringement. The damages are intended to fairly compensate the patentee for losses suffered as a result of the infringement. A patentee is entitled to its lost profits on all lost sales resulting from the infringement if the patentee can show that, but for the infringement, the patentee would have made the sales that the infringer made. Accordingly, the patentee must show demand for the product in the market and sufficient capacity to make non-infringing products.
When there are losses caused by the infringer's sales of infringing products, but the actual lost profits are not easily proven, the amount of losses may be calculated by multiplying the number of sold products by the profit per unit of the product that the patentee might have sold but for the infringement. In such cases, the damages may not exceed an amount calculated by multiplying the estimated profit per unit by the amount obtained from subtracting the number of products actually sold from the number of products that the patentee could have produced. However, if the patentee was unable to sell his or her product for reasons other than the infringement, a sum calculated according to the number of products subject to the said circumstances shall be deducted.
The profits gained by the infringer as a result of the infringement shall be presumed to be the amount of damage suffered by the patentee.
The pecuniary amount of reasonable royalty to which the patentee would normally be entitled may be claimed as the amount of lost profits of the patentee. Notwithstanding, if the amount of losses exceeds the amount of the reasonable royalty, the amount in excess may also be claimed as damages. In such cases, the court may take into consideration whether or not there has been wilfulness or gross negligence on the infringer when awarding damages.
Nevertheless, if the nature of the facts of the case makes it difficult to provide evidence proving the amount of losses, the court may determine a reasonable amount on the basis of an examination of the whole circumstances.
In addition, according to the revised Korean Patent Act, as from 8 July 2019, the courts will be allowed to award punitive damages up to treble the actual damages for a wilful infringement of a patent right or an exclusive license thereof, thereby strengthening the protection of patent rights.
A patentee (or exclusive licensee) can request a preliminary or permanent injunction against a person who infringes or is likely to infringe on his or her own patent right. A patentee can demand the measures necessary to prevent the infringement. To obtain a preliminary injunction, the patentee must show a likelihood of success on the merits for the validity of the patent and infringement. In deciding whether to grant a preliminary injunction, the court must also take into consideration the balance of hardships between the parties, the prospects of irreparable harm to either party and the public interest. Both preliminary and permanent injunction apply only to the defendant. Thus, an injunction is not effective against the infringer's suppliers or customers.
x Appellate review
The patent court has jurisdiction over appeals of judgments in patent infringement lawsuits. However, appeals of preliminary attachment or preliminary injunction judgments are heard at appellate divisions of the district court or at the High Court in one of the five large cities within which the district court resides. For patent invalidity decisions as well as declaratory judgments made by the IPTAB, all appeals are heard at the Patent Court.
Appeals of decisions issued by the High Court or the Patent Court may be heard at the Supreme Court. The Supreme Court may decide to refuse to deliberate within four months of the date a notice of appeal is lodged to the Supreme Court.
xi Alternatives to litigation
The common forms of alternative dispute resolution for resolving patent disputes in Korea are mediation and arbitration. The KIPO has established and operates the Industrial Property Dispute Mediation Committee for patent, trademark and design rights. For arbitration, the Korean Commercial Arbitration Board was established for various commercial disputes for internal and international trade disputes, including patent infringement disputes, although this institution does not specialise in patent disputes.
As another alternative to litigation, a patentee may request an investigation of unfair trade practices to the Korea Trade Commission (KTC), which is an administrative agency. When potentially infringing goods are being imported into or exported out of Korea, a patentee may alternatively, or additionally, request that the KTC institute an investigation of the potential infringement. Unlike a patent infringement action or preliminary attachment or injunction, a patentee may request an investigation to the KTC without being subject to personal jurisdiction. Based on its investigation and determination as to whether unfair trade practices (e.g., a patent infringement) have taken place, the KTC may impose sanctions, such as penalties or a ban on the import of infringing goods, against the parties that engage in unfair trade practices.
V TRENDS AND OUTLOOK
Pursuant to the revisions of the Korean Patent Act, the courts will be allowed to award punitive damages up to treble the actual damages for a wilful infringement of a patent right or an exclusive licence thereof, and the burden of proof in a patent infringement litigation can be shifted to the accused infringer who, if he or she denies the act of infringement that is claimed by a patentee or an exclusive licensee, can be required to produce his or her actual products or process. It is expected that this revision will strengthen the protection and facilitate the enforcement of patent rights, thereby triggering changes in patent litigation environment, such as an increase in patent disputes in Korea.