Canon v. Baiksan OPC – Patent Owner Canon Awarded US$14 million Damage for Patent Infringement in Korea

The patentee Canon filed many lawsuits against Korean companies. Canon alleged that local companies’ manufacturing and marketing of several printer cartridges for use in Canon and other branded printers infringed Canon’s patents. While local companies challenged validities of Canon’s patents, Canon saved their patented claims from invalidity challenges finally.

On June 7, 2013, the district court of Seoul Central District held that Canon’s patents were infringed and ordered that the defendant, Baiksan OPC must stop manufacturing and selling cartridges and further destroy infringing finished or half finished products. Further, the court awarded Canon about US$14 million as damage compensation.

There are 3 ways to compute damage amount under Article 128 of the Korean Patent Act. Among 3 ways of lost profit of the patent owner, infringer’s unjust profit and a reasonable royalty, the court applied the second method based on infringer’s unjust profit for Canon’s damage compensation.

According to Article 128, paragraph 2, it is possible for a patentee to seek damages based on the profit of infringer. The profit of infringer in the provision should be the actual profit that is the amount of money in which all costs are subtracted from the total sales. The cartridges were exported to foreign markets and the customs had records of sales. The patentee may obtain such data or real records through a court order. Accordingly, the only issue for computing damages in canon case is profit ratio of infringing goods.

In principle, a plaintiff can proves the profit with account data of an infringer. However, it is not easy to figure out accurate data because the infringer does not have a single item and thus can reduce the profit by allocating costs to the subject item. Sometimes the data produced by an infringer are not reliable, too.

Usually the patentee has used the balance sheets of infringers. However, the profit computed by such balance sheets cannot be accurate because the balance sheet of a company reflects final outcome of total business activities rather than a single subject product. As an alternative option, a patentee may use an official statistic number of the government. The tax department of the Korean government noticed an official data regarding an average profit ratio per each business area every year.

According to the official notices, average profits for periods of infringements were 10% for computer printer fields. Under the Korean patent law, courts have discretion to determine a moderate amount of damage to prevent non-compensation to a patentee even though the infringement is found but no sufficient evidence to prove an amount of damage exists. It eases the patentee’s burden of proof. Based on the provision, the district court computed damage of Canon’s patent infringement through the total sales of infringement x 10%. The total amount of US$14 million is a quite big number in the history of patent infringement litigation in Korea.