South Korea: Recent Legislative Reforms and Judicial Efforts Expected to Improve Patent Enforcement Environment

In summary

Recent patent law developments have substantially improved the patent enforcement environment in Korea. Patent litigation in Korea often involves simultaneously handling an infringement action before the district court and an invalidation action before the IPTAB, and a number of changes have been made to streamline those parallel proceedings. With little or no ‘home-court advantage’ in Korean courts and the establishment of international panels, Korea is becoming a more attractive venue for foreign parties.

Discussion points

• Key aspects of the Korean patent litigation system
• Benefits of recent patent law developments to patentees
• Impact of recent court decisions on the pharmaceutical industry
• Korea as an attractive patent litigation venue for foreign parties

Referenced in this article

• Patent Act and the 2016, 2019, 2020 and 2021 amendments to the Act
• Supreme Court, Case No. 2019Hu10609, 8 April 2021
• Supreme Court, Case No. 2022Hu10210, 2 February 2023
• IP High Court Case No. 2020Huh5832, 17 February 2022

Injunctions at a glance

Introduction

In recent years, numerous changes in the patent law (eg, expanded discovery and higher damages) have substantially improved the patent enforcement environment in Korea. The Korean Intellectual Property Office (KIPO) has been taking steps to improve the quality of examinations and reduce the invalidation rates of issued patents^[1]. The judiciary has also been making efforts to make Korea a more attractive venue for foreign companies to litigate. This article will first discuss a few key aspects of patent litigation in Korea that practitioners in other jurisdictions may not be familiar with and then highlight some of these recent changes in the Korean patent litigation landscape.

Key aspects of patent litigation in Korea

Bifurcated system

Korea has a bifurcated system in which patent infringement and validity are decided in separate proceedings in different forums: infringement actions are initially handled at first instance by the district courts, and invalidation actions are initially handled by the Intellectual Property Trial and Appeal Board (IPTAB) within KIPO. Although patent validity can be challenged as a defence in an infringement action in court (a court may review validity and dismiss the infringement case if it finds that the patent is clearly invalid), a patent can only be formally invalidated through an invalidation action before the IPTAB.

Parallel proceedings in district courts and the IPTAB

Patent litigation in Korea often involves parallel proceedings in the relevant district court and the IPTAB. A court may stay an infringement action pending the conclusion of an invalidation action, and whether the court stays the case depends on a number of factors, such as the tendencies of the judges in the court panel, the docket load and the number of patents asserted. Accused infringers often file an invalidation action after a patent infringement suit is filed, and courts often stay the infringement action pending the outcome of the invalidation action.

While an infringement action generally takes 10 to 20 months to be resolved in a district court (assuming that one patent is asserted), an invalidation action may take four to 14 months to be resolved at the IPTAB. An invalidation action may be expedited by the IPTAB (taking as little as four to six months) if there is a pending infringement action involving the same patent, but an invalidation action may take longer if the patentee files a correction petition to amend the claims during the invalidation action.

Invalidation actions and infringement actions can be appealed to the IP High Court,^[2] which is a specialised court that hears IP matters with nationwide jurisdiction, and final appeals are handled by the Supreme Court. Inter partes cases are heard de novo by the IP High Court; the IP High Court can consider new evidence (eg, a new prior art reference) and arguments in the appeal even if they were not asserted at the lower level.

The system for patentees to file corrections is flexible albeit complicated at times. In response to an invalidation action, a patentee may file a correction petition to narrow the claims, correct typos or clarify ambiguous language. Corrections can be made multiple times as the patentee can file a correction petition whenever the petitioner submits a new argument or new evidence. The IPTAB reviews the petition to decide whether to accept it, and if it is accepted, it will render a decision on the invalidation action based on the corrected claims.

Since the correction petition is submitted during the invalidation action, the petition (and, therefore, the corrected claims) becomes final only when the IPTAB’s invalidation action decision validating the patent becomes final after the appeal proceedings, if any. Further, even if the IPTAB’s invalidation action decision is unfavourable to the patentee, the patentee may file a separate correction action at the IPTAB for further or different corrections of the claims in view of the IPTAB’s decision in the invalidation action.

Corrections can significantly complicate and prolong the litigation process, and recent Supreme Court decisions have placed limits on the correction practice to streamline litigation proceedings.^[3]

In connection with streamlining litigation proceedings, the Patent Act was amended in 2021 to include a new provision requiring timely submission of arguments and evidence in IPTAB proceedings. In practice, parties can submit new arguments or evidence virtually at any point in an IPTAB proceeding (eg, an invalidation action) as long as the proceeding is not closed. IPTAB trial examiners may set a deadline for the submission of arguments or evidence, but parties can submit a brief with little substantive content to meet the deadline and then later submit additional briefs or evidence to supplement the earlier brief. This practice often leads to delays and prolongs litigation.

It remains to be seen how this new ‘timely submission’ requirement is being implemented to change this practice; nevertheless, it may help streamline litigation in the future.

Permanent and preliminary injunctions

A patentee has a choice of filing an infringement action at the district court to obtain a permanent injunction and damages, or filing a preliminary injunction action at the district court to obtain a preliminary injunction only.

A patentee who prevails in an infringement action is entitled to a permanent injunction as a matter of right; however, a permanent injunction order is not enforceable until the decision issuing the order becomes final and conclusive. If a court issues a provisional enforcement order (which is commonly granted) together with the permanent injunction order, the patentee can enforce the order immediately. The alleged infringer is likely to appeal the decision and request a stay of the provisional enforcement, which is often granted by the court, provided that the defendant pays a security deposit. Since an infringement action generally takes 10 to 20 months to be resolved at the district court, and the appeal process could take up to a few years, an enforceable permanent injunction is not quickly obtainable.

On the other hand, while a preliminary injunction action may take only four to eight months at the district court, and a preliminary injunction is immediately enforceable, a preliminary injunction is generally more difficult to obtain. A patentee can seek one if there is an imminent risk of irreparable harm to the it. The patentee must show prima facie infringement and the need for provisional relief.

In determining whether there is a need for provisional relief, the irreparable harm to the patentee owing to infringement is generally balanced against the economic harm to the alleged infringer if an injunction is granted. Courts may issue a preliminary injunction order with or without requesting a security deposit, but they generally require the plaintiff to post a security bond before proceeding to enforce the preliminary injunction in case the order is later reversed or revoked on appeal. A preliminary injunction is enforceable while the appeal is pending.

Recent patent law developments favour patentees

Significant changes in the patent law in the past few years have improved the patent enforcement environment for patentees in Korea.

Expanded discovery

While discovery is limited in Korea,^[4] amendments to the Patent Act in 2016 have made it easier for patentees to obtain documents from defendants to prove infringement and damages. The scope of document production orders has been expanded to allow evidence of infringement to be subject to production. Further, accused infringers may no longer refuse to respond to a document production order by claiming that the requested materials contain trade secrets, as had often been the case in the past, if those materials are necessary to prove infringement or damages. The courts also have the discretion to presume that ‘the facts that the requesting party intended to prove based on the requested materials’ are true if the requested materials are not produced and it would clearly be difficult for the requesting party to prove those facts without the requested materials.

On the other hand, accused infringers may request the court to limit the scope of access to information, such as by limiting access to certain portions of the materials or limiting who may have access to the materials. The courts can also review documents in camera to determine whether the materials contain trade secrets and can implement protective orders to restrict access.

These changes to discovery have been particularly helpful for patentees that need to obtain evidence to prove infringement of method patents but that have no access to the accused infringer’s premises.

Actual product or process must be described to deny infringement

An amendment to the Patent Act in 2019 has made it more difficult for an accused infringer to deny infringement when the patentee has made a prima facie showing of infringement: an accused infringer must now provide details about the product or process that it is actually using. If the accused infringer refuses to provide those details without reasonable justification, the court may assume that the accused infringer has actually committed the infringing activity as claimed by the patentee.

Treble damages for wilful infringement

A new provision was added in the 2019 amendments to the Patent Act to provide courts with the discretion to award damages of up to three times the amount of actual damages as a punitive measure in cases of wilful infringement. Courts take into consideration the following factors to determine the amount of punitive damages:

• whether the infringer is in a dominant position;
• the infringer’s wilfulness or the degree to which the infringer perceived a risk of harm to the patentee;
• the scale of the harm suffered by the patentee because of the infringement;
• the economic benefits to the infringer from the infringement;
• how frequently and how long the infringing activity was committed;
• the criminal penalty for the infringing activity;
• the infringer’s financial status; and
• the efforts that have been made by the infringer to remedy or reduce the harm to the patentee.

Reasonable royalties for excess infringing sales

In addition to lost profits for infringing sales up to the patentee’s production capacity, an amendment to the Patent Act in 2020 now allows patentees to claim a reasonable royalty for the infringer’s sales in excess of the patentee’s production capacity. The amendment aims to protect patentees that are small or medium-sized companies with smaller production capacities.

Software patents

An amendment was made to the Patent Act in 2020 that broadened the scope of method patents. Patentees are now more incentivised to enforce their software patents against online transmissions of a program. Software inventions are patentable subject matter if the claims concern certain statutory categories (eg, methods, apparatuses, computer-readable mediums (having a computer program or data recorded thereon) and computer programs stored on storage mediums). Before the amendment, online transmission of a program did not constitute practising a method.

The amendment expanded the meaning of ‘practising’ a patented invention to include the act of offering a process for use; in other words, practising a process invention means ‘an act of using the process or an act of offering the process for use’.

Another amendment to the Patent Act added a subjective ‘knowledge’ requirement to an act of offering a process for use; therefore, to enforce a patent against online transmission of a program, the patentee must show that the alleged infringer knew that the use of the process would infringe the patent. To do so, patentees should consider sending cease-and-desist letters to potential infringers.

Significant court decisions involving pharmaceutical patents

In recent years, there have been a number of Korean court decisions that have had a positive impact on the patentability of pharmaceutical inventions. Two key cases are highlighted as examples.

Supreme Court relaxes patentability standard of selection inventions

The Supreme Court issued a landmark decision in 2021 that redefined the patentability standard of selection inventions.^[5] A selection invention is an invention where all or part of the constitutional elements of the invention are species of a genus in the prior art.

Before this decision, the inventiveness of a selection invention was based on its remarkable effects over the prior art, while the difficulty of deriving the features of the selection invention was ignored. The criteria of selection inventions was, therefore, criticised as being unduly strict.

In this decision, the Supreme Court upheld the validity of a selection invention patent and held that selection inventions should be reviewed under the same general inventiveness criteria as all other inventions by first taking into consideration the difficulty of deriving the features of the invention; therefore, the difficulty of deriving the features of the invention and remarkable effects should be considered.

The Supreme Court upheld the validity of a patent covering apixaban by:

• determining that the prior art disclosed a very broad general formula covering apixaban but did not disclose or suggest a motivation to develop its core structure or substituents, and that a person skilled in the art would have had to experiment with numerous combinations of selections to arrive at the subject invention; and
• finding that subject invention exhibited remarkable effects over the prior art.

Pharmaceutical compound patent covers generic prodrugs

In a significant decision^[6] that substantially enhances the protection of innovative drug patents in Korea, the IP High Court and the Supreme Court confirmed that AstraZeneca’s patent on the active ingredient in Forxiga (dapagliflozin) covered a generic product using a prodrug ester form of the active ingredient under the doctrine of equivalents during its patent term extension (PTE), even though the patent did not expressly claim the prodrug ester form because the term ‘prodrug ester’ was deleted from the patent claims during prosecution. The IP High Court determined that the deletion addressed a formality issue in response to the rejection from the KIPO rather than a substantive issue and that it would not have been difficult to conceive or develop the generic’s prodrug over the claimed compound. The Supreme Court upheld the IP High Court’s decision.

A PTE in Korea is limited to covering the original drug approval on which the PTE is based, and, in the past, generic pharmaceutical companies have tried to avoid or design around originator patents using different salt forms of the original approved active ingredient. These efforts of generic pharmaceutical companies were rejected by the Korean courts, which clarified that other salt forms are still within the scope of the patent as long as they involve the same pharmacological mechanism of action and would not have been difficult to conceive from the original approved salt form.

Dong-A ST tried a different strategy by developing a drug using a prodrug ester form of dapagliflozin with an added ester moiety. After the patient ingests the drug, that moiety would detach from dapagliflozin in the body instead of developing a different salt form. Although the prodrug did not provide a real advantage compared to Forxiga, Dong-A ST argued that the prodrug compound had a different chemical structure outside the literal scope of the dapagliflozin patent, and that the prodrug was not equivalent because AstraZeneca had deleted the term ‘prodrug ester’ from the claims during prosecution. The IPTAB agreed with Dong-A ST, and AstraZeneca appealed to the IP High Court.

The IP High Court overturned the IPTAB’s decision, finding that the prodrug was an equivalent because it used essentially the same compound (dapagliflozin) to achieve its effect, and that it would not have been difficult to conceive nor was it unexpectedly advantageous. Further, the court ruled that the deletion of ‘prodrug ester’ during prosecution did not clearly indicate AstraZeneca’s intention to exclude prodrug esters from the patent scope, because the KIPO’s general practice at the time was to reject any use of the term ‘prodrug’ in patent claims on formality grounds; deleting the term was, therefore, intended to quickly resolve the rejection, not to reduce the scope of the patent. The Supreme Court upheld the IP High Court’s decision.

A more attractive venue for foreign parties

There is little or no ‘home-court advantage’ in Korean courts, so there is no need for foreign parties to be concerned about bias against foreign companies. For example, one study found that foreign patentees’ success rates in patent cases with respect to damages claims were higher than Korean patentees’ success rates.^[7]

The Korean judiciary has also been aiming to make Korea a global hub for patent litigation by making a number of changes, including allowing international panels in courts. International panels are panels of judges that allow the parties to submit evidence and present arguments in a foreign language, such as English, and issue a decision in the foreign language. If both parties in a patent litigation case agree, the case can proceed as an international case, to be heard by an international panel; therefore, for example, counsels may argue in English, or Korean with simultaneous English translation, and evidence can be submitted in English without a translation. International panels should make litigation more convenient and efficient for foreign parties.

Conclusion

This article has highlighted a number of recent changes that have substantially improved the patent enforcement environment in Korea, and it will be interesting to see their continuing impact in the coming years. With semiconductor, display and battery industries continuing to grow as key industries in Korea, and an increasing number of patent applications being filed in Korea for artificial intelligence, blockchain and metaverse-related inventions, there may be an increase in patent litigation in these technological fields in the future.

Footnotes