Analysing key South Korean patent cases in 2017 and 2018
Hyoun Ja Park and Minji Ryan Kim of FirstLaw examine five important patent cases involving scope confirmation trials, price reduction of brand drugs, the prior art use defence, prosecution history estoppel and employer’s liability in the context of non-practised employee inventions
FirstLaw has chosen five key patent decisions rendered by the Korean Supreme Court and the Korean Patent Court that are considered to be the most noteworthy patent cases from 2017 and 2018. What follows is a summary of the cases, prepared with a view to helping patent litigators as well as patent prosecutors gain some insight into Korean patent practice.
Supreme Court recognises legitimacy of independently pursuing scope confirmation trial while patent infringement action is pending (Supreme Court Case No. 2016 Hu 328, rendered on February 8 2018)
The Supreme Court recognised the merits of bringing a scope confirmation trial to determine whether the accused product falls within the scope of a patent even while an infringement action involving the same patent at issue is pending, reversing the decision of the Patent Court.
The patentee brought an infringement action before the district court. After the infringement proceedings were closed but before the court rendered its decision, the defendant filed a scope confirmation trial before the Trial Board, seeking a ruling that the accused product fell outside the scope of the asserted patent.
The Trial Board sided with the defendant and ruled that the accused product fell outside the scope of the patent. On appeal, however, the Patent Court vacated the Trial Board's decision, ruling that there was no legal interest to be served by bringing a separate scope confirmation trial while a patent infringement action involving the same patent was already pending before a district court.
In reversing the Patent Court's decision, the Supreme Court stated that, in light of the statutory purpose and function thereof, a scope confirmation trial has merit in and of itself even though there may exist redundancy as the scope of the asserted patent is also determined in the infringement action. The Court continued that (i) the scope confirmation trial contributes to obviate disputes between the parties by way of a speedy ruling specifically on the scope of the asserted patent, and (ii) Article 164 of the Korean Patent Act recognises that the proceedings of a trial and litigation are independent of each other, providing additional support that a scope confirmation trial has its own function and purpose, independent of an infringement action.
Korean Patent Court recognises damages from price reduction of brand drug caused by generic launch (Patent Court Case No. 2017 Na 2332, dated February 8 2018)
The Korean Patent Court held that a generic company was liable not only for damages resulting from infringement of a patent covering a brand drug, but also for damages suffered by the licensee of the patent caused by the reduction of the price of the brand drug due to a generic company's price listing and launching of its generic drug upon the Patent Court's determination of invalidity, a decision that was subsequently overturned on appeal.
The present decision recognises, for the first time, that the generic company may be held liable for damages suffered by the holder of the original brand drug due to the reduction of the original price in the case that the validity of the subject patent is finally and conclusively upheld
In Korea, a pharmaceutical company that has secured market approval for its drug regularly applies for national health insurance coverage for the drug, upon which the Ministry of Health and Welfare (MOHW) decides and announces the price of the drug and whether the drug qualifies for insurance coverage. According to the MOHW's regulations governing national health insurance reimbursement, once a generic company applies for the price listing of its generic drug, the price of the brand drug is reduced to 80% of the original price.
If a generic company expresses its intention not to launch its generic drug until the relevant patent expires, the price of the brand drug remains unchanged, but if the generic company reverses its original plan and expresses its intention to launch the generic drug prior to the expiration of the patent, the price of the brand drug will be reduced. The original price of the brand drug may be reinstated if the price-listed generic drug is subsequently found to infringe the patent(s) of the brand drug by relevant authorities.
Unlike the previous decision, which denied recovery of damages incurred by the drug company for the price reduction of the brand drug based on a lower court's determination of patent invalidity (Seoul High Court Case No. 2015 Na 2040348), the present decision recognises, for the first time, that the generic company may be held liable for damages suffered by the holder of the original brand drug due to the reduction of the original price in the case that the validity of the subject patent is finally and conclusively upheld.
An appeal is currently pending before the Supreme Court.
Prior art use defence allowed in scope confirmation trial even if accused product/process literally infringes patent (Supreme Court Case No. 2016 Hu 366, decided on November 14 2017)
The Supreme Court reversed the Patent Court's decision and has allowed the prior art use defence in scope confirmation trials, resolving the issue of whether the prior art use defence –i.e. a defence that the practice of an accused product does not constitute patent infringement if the accused product is readily derivable from a publicly known art – can be allowed in a scope confirmation trial even if the accused product literally reads on the patent claim(s).
In the scope confirmation trial of the present case, the Trial Board held that the accused product was easily derivable by a person skilled in the art from a prior art document and thus, the accused product was in the public domain and was deemed to fall outside the scope of the patented invention without the need for comparison between the accused product and the patent at issue.
The Patent Court reversed the Trial Board's decision based on its finding that the accused product comprises all of the elements of claim 1 of the patent. The Court ruled that the prior art use defence should not apply in cases of literal infringement because the purpose thereof is to prevent the expansion of the scope of the patented invention under the doctrine of equivalents to encompass embodiments that are not patentable in the first place.
The Supreme Court overturned the Patent Court's decision, holding that (i) the application of the prior art use defence to compare the accused product with the prior art enables prompt and rational determination of whether the accused product falls within the scope of the patent without having to actually determine the validity of the patent; and (ii) there is no reason not to equally apply the prior art use defence, even when the accused product literally infringes the patent at issue.
Supreme Court clarifies factors for invoking prosecution history estoppel (Supreme Court Case No. 2014 Hu 638, dated April 26 2017)
The Supreme Court, affirming the Patent Court decision, clarified that (i) all technical constituents that might fall within the gap between the claim before the amendment and the claim after the amendment cannot be said to have been intentionally abandoned simply because the claim was amended to narrow down the scope thereof; but (ii) rather, such prosecution history estoppel should be invoked when all circumstances shown during the prosecution collectively evince the applicant's intention to abandon certain technical constituents from the scope of the claim.
The subject patent related to a structure comprising lower bars having the bottom side being wider than the top side, and upper bars having the bottom side being wider than the top side, wherein two bending ends are placed on the top side of the upper bar. The limitations (in bold) were added in response to the examiner's rejection of the patent application for lack of inventive step over two prior art references.
Prosecution history estoppel should be invoked when all circumstances shown during the prosecution collectively evince the applicant’s intention to abandon certain technical constituents from the scope of the claim
Company A lodged a scope confirmation trial, seeking a decision that its product fell outside the patent scope. In Company A's product, each of the lower bars had a trapezoid-shaped hollow with its top side being wider than the bottom side, contrary to those of the claimed invention where the bottom side was wider than the top side, and two bending ends were arranged on the bottom side of the upper bar, unlike the claimed invention where the two bending ends were placed on the top side of the upper bar.
The Trial Board decided that Company A's product fell within the scope of the claimed invention on the ground that one skilled in the art would adopt the shape of each supporting bar among the usual three options: (i) top-wide bottom-narrow shape, (ii) top-narrow bottom-wide shape, and (iii) top-bottom being equal shape.
The decision was reversed by the Patent Court, which determined that Company A's mode of practice was intentionally abandoned or carved out from the scope of the claim in light of the following facts:
i) Regarding the shape of the lower bar, the limitation of "having the bottom side being wider than the top side" was introduced to the claim in response to the examiner's rejection, and the technical effect flowing from such feature cannot be obtained by Company A's product.
ii) The technical effect from the two bending ends arranged on the bottom side of the upper bar was different from the one obtainable from the claimed invention where the corresponding ends were placed on the top side of the upper bar, and the latter effect was also pointed out in the remarks to distinguish the claimed invention from D1.
The Supreme Court further held that the above rationale equally applies even if no claim amendment is made, but the applicant's intention to limit a certain element of his invention is made clear in his remarks submitted in response to the examiner's rejection.
Supreme Court decision on employer's liability to pay compensation for non-practised employee invention (Supreme Court Case No. 2014 Da 220347, decided on January 25 2017)
The plaintiff-employee developed methods for retrieving a phone number from a cell phone by using dial keys. The defendant-employer was assigned the right to file patent applications on such methods and secured two patents (hereinafter `700 patent and `800 patent).
Against the employee's demand for compensation, the defendant argued that it was under no obligation to make any compensatory payment for the employee inventions since (i) the phone number search method implemented in the defendant's actual products was different from the patented employee inventions; (ii) the employee inventions were vulnerable to an invalidity challenge for lack of inventiveness; and (iii) the defendant did not gain any profit or market exclusivity advantage from the patents.
For the `700 patent, the district court accepted the defendant's contention due to its likelihood of invalidation, but for the `800 patent, finding that the patent was valid over the prior art references, the court decided that even though the employee invention was neither worked by the employer nor licensed to a third party, the employer should compensate the employee by taking into consideration the profits that the employer would have lost had a competing company practised the employee invention.
The High Court partially revoked the district court decision and decided that, even if the `700 patent was likely to be invalidated for lack of inventiveness, the employer was not completely excused from liability to pay compensation for the `700 patent. While the precedent (Supreme Court Case No. 2009 Da 91507) held that an employer may be exonerated from compensatory payment for an employee invention in cases where the invention was publicly known and in the public domain at the time of filing, the court determined that the employer was not completely exempted from compensatory payment responsibility since the employer failed to provide sufficient evidence that the employee invention was in the public domain and available for use by competitors.
As for the `800 patent, the High Court affirmed the district court decision that, even when the products manufactured/sold by an employer do not fall within the protection scope of a patent derived from an employee invention, the employer cannot refuse to pay any compensation–albeit not a significant amount.
The appeal lodged by both parties was dismissed by the Supreme Court, and the High Court decision was affirmed.
Hyoun Ja Park
Hyoun Ja Park is a partner and patent attorney at FirstLaw. She joined the firm in 1997. She received her bachelor’s and master’s degrees in control and instrumentation engineering (majoring in robotics and intelligent systems) from Seoul National University in 1995 and 1997, respectively. Ms Park also obtained a J.D. degree (cum laude) from the Ohio State University, Moritz College of Law in 2012.
Having been admitted to the Korean Patent Bar and the Ohio State Bar, Ms Park has been actively involved not only in many important prosecution cases but also high-profile trial/litigation cases on behalf of domestic and multinational corporations. Her practice also encompasses IP due diligence, evaluation, licensing, portfolio development/management.
Ms Park has expertise in various aspects of electrical engineering, including wireless communication, artificial intelligence, electronic transactions, computer software and semiconductors.
Minji Ryan Kim
Ryan Kim is a United States attorney and foreign legal counsel at FirstLaw. He graduated from The Johns Hopkins University and the University of Southern California with a degree in sociology and electrical engineering, respectively, and received his J.D. degree from Georgetown University Law Center.
In his role as international client liaison and head of US marketing operations for FirstLaw, Ryan has been actively involved in advising clients in North America, Europe and Asia on IP matters, while also handling prosecution involving electrical and mechanical technology. Prior to joining FirstLaw, Ryan gained experience in several firms in the United States, including prosecution, litigation, licensing, portfolio analysis/management, and client relations experience.