Seoul court orders US$300,000 fine for patent infringement

On 12th November 2010 the Seoul Central District Court (11th Civil Panel) ruled in favour of a pharmaceutical company in a patent infringement case against a generic drug company, awarding approximately US$300,000 in damages.

The pharmaceutical company (P) and the generic drug company (G) have been engaged in a legal dispute since early 2010, when P filed a patent infringement suit against G claiming that G had infringed its patent for a pharmaceutical composition to treat a gastrointestinal disorder.

In its decision the Seoul Central District Court held that the subject patent was valid and that G’s generic product fell within the scope of the claimed invention. The pharmaceutical composition claimed in the subject patent contained three active ingredients in specific amounts and in a specific composition ratio. Although G argued that mixing two active ingredients used in the subject invention may cause toxicity, the court stated that the subject invention was directed to a combination of three active ingredients whose disease recovery rate was shown to be at least 9.1% higher and thus was inventive.

After finding that G sold its generic product from 2004 to 2008, the court awarded monetary damages based on the following:

• The monetary damage to the patentee could be assumed from the monetary benefit to the patent infringer.
• The monetary benefit to the patent infringer could be derived from the total sales of the infringing product (eg, for pharmaceutical products, the drug price reimbursement payment filed with the Health Insurance Review and Assessment Service), multiplied by the standard income rate of the pharmaceutical industry (ie, 14.2% for the years 2004 to 2008).

This decision is remarkable in that the courts rarely award monetary damages for infringement of a pharmaceutical patent, despite the aggressive challenges that were made to the validity of the patent before the patent infringement suit. Earlier in 2008 two other generic companies had filed invalidation actions against the subject patent, claiming lack of pharmacological data and lack of inventiveness. However, the IP Tribunal held that there was sufficient pharmacological data in the specification and that the subject invention was inventive, upholding the validity of the subject patent. The tribunal's decision was later appealed to the Patent Court and the Supreme Court, but eventually became finally conclusive.

The decision is also notable in that it clearly described the method and standards used by the court to calculate the monetary damages for patent infringement in the pharmaceutical field, which may also serve as a reference for other courts in future decisions. This decision is currently on appeal to the Seoul High Court.