Korean patent law has undergone numerous revisions in recent years. In particular, the past year has seen a number of developments in pharmaceutical patent law that are likely to have a significant impact on prosecution and enforcement. The scope of IP rights has expanded in certain areas, while further caution will be needed in others. However, in general, these changes indicate a growing harmonisation of Korea’s pharmaceutical patent system with those of other major patent jurisdictions.
Patent approval linkage system
By far the most significant recent change in Korean pharmaceutical patent law was the implementation of a new system linking generic drug approval with patent enforcement, similar in some respects to the system implemented in the United States under the Drug Price Competition and Patent Term Restoration Act 1984 (the Hatch-Waxman Act). As with the system under the Hatch-Waxman Act, the general purpose of the Korean linkage system is to provide sufficient patent protection and marketing exclusivity for brands to recoup their investment in developing new drugs, while simultaneously streamlining the availability of cheaper generic versions of branded drugs for consumers. Before the implementation of this system, any generic drug company in Korea could seek to develop and sell a generic version of a drug at any time after its post-marketing surveillance period had expired, and a patentee had no formal means of knowing whether a generics company was planning to release a version of one of its drugs until it had already received marketing approval.
The patent approval linkage system was implemented pursuant to the Korea-US Free Trade Agreement, which was approved in 2011 and became effective as of 2012. The agreement provided for implementation of the linkage system in two stages, with full implementation from March 15 2015. The initial stage of the linkage system established a ‘Green List’ (analogous to the US ‘Orange Book’), maintained by the Ministry of Food and Drug Safety, in which brands can list patents relating to their original drug products, and requires any prospective generics company to notify the patentee if it intends to challenge its listed patent(s) in connection with seeking generic approval. As of March 15 2015, patentees can apply for a temporary stay of sales of prospective generic drugs, while qualifying generics companies may obtain temporary sales exclusivity (during which other generics companies may not sell similar generic drugs).
The patent approval linkage system differs from the US system in some important respects. For example, the Ministry of Food and Drug Safety is actively involved in reviewing applications to list patents on the Green List – including reviewing whether there is a sufficient explanation of the “direct relationship” between the approved product and the claims sought to be listed – and may change or delist patent information in accordance with whether listing requirements are met. In contrast, under the US system, the US Food and Drug Administration (FDA) – which maintains the Orange Book – serves a purely administrative role and largely does not conduct any substantive review of claims for listing. Further, the US system is limited to patents on small molecule pharmaceuticals, whereas the Korean system includes patents for both small molecule and biologic drugs.
Another difference is in the length of time for which the generic drug may be prevented from selling. Under the Hatch-Waxman Act, once a patentee responds to a generic notice by filing a patent infringement suit against the prospective generics company, the US FDA will automatically withhold regulatory approval of the generic drug for up to 30 months, in order to allow the infringement suit to reach a decision regarding whether the generic drug infringes and whether the patent is valid. In Korea, by contrast, the patentee may seek a stay of sales (but not of regulatory approval) against the generic drug for up to nine months only, by filing or responding to an infringement or scope confirmation action (but not by responding to an invalidation action) – which may be sufficient time to resolve a scope confirmation action, but is usually insufficient time to resolve an infringement action. Of course, a generics company may choose not to enter the market right away if it is concerned that it will eventually be found to infringe a valid patent (and thus potentially owe damages for early market entry).
Further, while both the Korean and US systems grant an initial period of sales exclusivity to one or more generic drugs as an incentive for early challenges to drug patents, determining exclusivity under the Korean system is much more complicated. Under the Hatch-Waxman Act, a 180-day period of generic exclusivity is generally automatically granted to the first generic to file for generic approval while challenging a listed patent. However, under the Korean system, in order to qualify for exclusivity, a generics company must:
- be the first to file for generic approval (or file on the same day as the first filer);
- file an invalidation or scope action against the relevant patent before filing for approval, which is:
- the first such action filed;
- filed within 14 days of the first such action filed; or
- the first action to receive a favourable decision against the brand; and
- receive a favourable decision in the action within nine months of the brand’s receipt of generic notice.
As is evident from the requirements, generic exclusivity under the Korean system may be granted to more than one generics company and it is not practically possible to identify which generics company (or companies) may have exclusivity until at least one generic obtains a favourable court decision against the brand’s patent. Further, under the Korean system, only one generic exclusivity period can generally be granted for all generic versions of one particular original drug. The generic exclusivity period in Korea is nine months and begins to run as soon as any generics company qualifies for exclusivity under the above requirements and is approved to sell its drug by the Ministry of Food and Drug Safety. Once one generics company qualifies for exclusivity and starts the clock on the nine-month exclusivity period, later generic versions of the same drug that also qualify for exclusivity will have such exclusivity only for what remains of the original nine-month period.
It remains to be seen what impact the new system will have on the protection of brand patent rights or the availability of generic drugs in Korea. Early indications are that the new system will encourage earlier litigation of patent issues relating to brand patents. However, it is also likely that the linkage system will lead to greater predictability in terms of how drugs are approved and sold, and that more and earlier information will be provided to patentees about prospective generics companies and their patent challenges.
Dosing regimens now patentable
As in many jurisdictions, uses for medicinal products are patentable in Korea, but methods of treatment are not. However, unlike in some other major jurisdictions, a new dosage regimen for an existing medicinal product and use was previously not patentable in Korea. This was because dosage regimens were considered to concern medical treatment activity, rather than a new technical feature embodied by the drug to which the dosage regimen applies. However, in a recent case the Supreme Court effectively overturned its longstanding precedent by recognising that a new dosage regimen can be a proper basis for the novelty or inventiveness of a pharmaceutical invention, as long as the new dosage regimen is shown to improve the effectiveness of the drug.
The case at issue was an appeal of a scope confirmation decision, but the court decided to take up the preliminary question of whether the new dosage regimens of the patent at issue should properly be seen as additional claim elements potentially conferring novelty or inventiveness. The court reasoned that dosage regimens are generally closely linked to the effectiveness of a particular drug, and thus it would be improper to deny patentability to new dosage regimens if indeed they improved a drug’s effectiveness over the prior art.
While the patent at issue was ultimately found not to cover the accused generic drug because the claimed therapeutic effects of the new dosage regimen were obvious in view of the prior art, the decision clearly affirms that new drug dosage regimens are now potentially patentable in Korea, consistent with other major patent jurisdictions, thus allowing for the protection of additional novel elements for pharmaceutical products in Korea.
Reverse payment settlements subject to scrutiny
Reverse payment or ‘pay for delay’ settlements in the pharmaceutical industry context have been subject to scrutiny by competition authorities in many jurisdictions in recent years, due to the potential impact of such settlements on the availability of generic drugs and the cost of drugs in general. Reverse payment settlements are so called because – unlike a normal infringement situation, in which the accused infringer compensates the patentee for the right to sell the accused product – in a reverse payment settlement, the patentee offers compensation to the prospective generics company as an inducement to drop any patent challenge and stay out of the market for longer than it might otherwise have done.
In a decision issued earlier this year, the Supreme Court confirmed that such settlements, while not per se illegal, may be subject to fair trade scrutiny in Korea. The case at issue involved the settlement of a patent litigation that, although it did not involve direct cash payments to the generics company, granted it valuable distribution rights to several of the patentee’s drug products in exchange for withdrawal of the competing generic product and all outstanding patent challenges.
The court held that the rule of reason would apply to determine whether the anti-competitive effects of any such agreement might be balanced by pro-competitive benefits. In this case, the court judged that the value of the benefits given to the generics company far outweighed the cost of litigation (a red flag), and that the obligations of the agreement extended beyond the duration of the patent term at issue. Therefore, the agreement was determined to be anti-competitive and an illegal exercise of patent rights.
It seems likely that the new pharmaceutical patent approval linkage system will lead to even greater scrutiny of patent litigation settlements because, as part of the new system, any settlement agreement between a brand and a generics company involving generic exclusivity or the manufacture or sales of a product relating to a generic notification must be reported to the Ministry of Food and Drug Safety and the Fair Trade Commission. Brands seeking to settle patent disputes with generics companies in Korea will need to exercise greater care that such settlements do not contain terms that are likely to raise concerns with the competition authorities.
Korean patent law continues to develop in the area of pharmaceuticals, particularly with the implementation of the patent approval linkage system – and numerous new cases have already been filed to take advantage of the new rules. While it is too early to say exactly how these changes will affect the pharmaceutical market in Korea, they clearly indicate greater harmonisation with international standards and should lead to greater predictability for foreign pharmaceutical companies seeking to pursue or enforce IP rights in Korea.
Kim & Chang
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Inchan Andrew Kwon
US patent attorney
Inchan Kwon is a US-licensed attorney in Kim & Chang’s IP group. His practice covers all areas of intellectual property – including patents, trademarks, copyright and trade secrets – with a focus on litigation and dispute resolution. Mr Kwon has litigated numerous cases in US federal and state courts and at the US International Trade Commission (ITC), including as a member of several ITC trial teams.
Mr Kwon is admitted to practise in California and before the US Patent and Trademark Office. He received his BS from Stanford University and his JD from University of California, Hastings College of the Law.
Sang Nam Lee
Korean patent attorney
Sang Nam Lee joined Kim & Chang in January 1999 and is a patent attorney in the firm’s chemical/pharmaceutical practice group. She received her BS in chemistry (1993) and MS in chemistry (1995) from Seoul National University, and obtained an LLM (2010) from George Washington University School of Law. Ms Lee was also a visiting scholar at the University of California, Berkeley School of Law, Boalt Hall from 2002 to 2003. She was admitted to the Korean Patent Bar in 1998.
Her practice encompasses a wide range of chemical, pharmaceutical and biological patent matters, including prosecution, enforcement and litigation. Ms Lee is a member of the Intellectual Property Forum and the Korean Patent Attorneys Association.
Korean patent attorney
Garam Baek joined Kim & Chang in 2006 and is a patent attorney in the firm’s chemical/pharmaceutical practice group. She received her BS in pharmacy (2006) from Seoul National University and was admitted to the Korean Patent Bar in 2005. Ms Baek’s practice focuses on a wide range of IP matters, including patent prosecution, enforcement and litigation. She is also a registered pharmacist in Korea.