Litigation Agent Lacks the Standing to Sue for Infringement Lawsuit in Korea

Like SPH decision in USA, the same or similar rule is applicable in Korea too. Under Korean law, a licensee lacks the standing to bring an infringement lawsuit in case the licensee is just a litigation agent rather than a real licensee. Because the SPH decision of an American court is interesting to license practitioners, the points are summarized as follows:

1.      Facts

The patentee is a national research institute, Electronics and Telecommunications Research Institute (“ETRI”) and granted an exclusive patent license to SPH, a Korean-based entity. SPH then transferred to SPH America, LLC (“SPH America”) rights under the license to use the licensed patents, grant sublicenses to third parties, and to bring infringement actions.

SPH America sued Huawei in USA but the American court dismissed the case, finding that SPH America does not have standing to sue for infringement of the patents.

Under the agreements, the title to the patents remained with ETRI, and SPH America was required to receive the consent of ETRI before transferring any of its rights or obligations. The license agreement also required SPH America to use its best efforts to make licensing and litigation decisions that were in the best interest of ETRI, though SPH was responsible for all litigation costs. Large guaranteed minimum payments were required yearly if the proceeds from royalties and litigation proceeds did not meet the minimums. And all the license rights were to revert to ETRI if SPH America breached the contract.

2.      Court Decision in USA

The American court found that the license agreement create was a relationship where SPH America was an agent of ETRI for licensing and litigation in USA. The agreement did not transfer substantial ownership of the patents to SPH America.

Furth ETRI’s management of the negotiation without any direction or input from SPH America with Samsung also showed that SPH America did not actually have substantial rights in the patents.

The court found that despite the labels used in the agreement, SPH America was not an exclusive licensee, but merely ETRI’s agent to enter into licenses and litigate on its behalf. This “hunting license,” did not grant SPH America a proprietary interest or exclusive license in the patents.

3.      Comments on Practical Point

The same or similar rule explained in the SPH decision of an American court shall be applicable in Korea, too. Despite of a license agreement, in case the licensee is regarded as a litigation agent rather than a real licensee, the licensee lacks the standing to bring an infringement lawsuit in Korea.