[Patent Infringement Litigation in Korea - 2] Claim Interpretation under Korean Patent Law

1. All Elements Rule

The scope of a patent is defined by the elements of a claim. It is well settled that each element in a claim is deemed material to defining the scope of the patented invention. Therefore, only when every element defined in a claim is found in an accused product or process, the accused product or process literally infringes the patent right.

2. Doctrine of Equivalents

 

It has been long time for the Patent Court and the Supreme Court to adopt the doctrine of equivalents as a part of Korean patent law for interpreting claims.

 

The rationales of the doctrine of equivalents in Korea are similar to those of the U.S. Thus, it is true that if the accused product or process performs substantially the same function in substantially the same way to obtain the substantially same result of the patented invention, the accused infringes the patent in Korea.

 

In particular, the Supreme Court held that the accused product or process infringes a patent where an element of the patented invention is substituted with another element and, if (i) the technical concepts or principle to solve the objective of the patented invention and the accused invention are the same or common; (ii) the substituted element in the accused invention performs substantially the same function in substantially the same way to obtain the substantially same result of the patented invention; (iii) such substitution is obvious to an ordinarily skilled person in the art. However, the doctrine of equivalents shall not be applicable to the circumstances that (iv) the accused substitution was already known to skilled persons in the art at the time of filing an application and (v) the accused element was excluded from the claimed invention during prosecution.

 3. Prosecution History Estoppel

Based on the doctrine of equivalents, a patentee cannot regain his rights to any elements that were abandoned through an amendment or a response during prosecution. For example, when an element is excluded through an amendment in order to secure novelty and non-obviousness in response to the examiner’s rejection, an invention with an equivalent element is outside the scope of the patent.

The Supreme Court held that prosecution history estoppel should be applied in view of specification, opinions of an examiner from filing of the application to issuance of a patent and the intent of an applicant as indicated in the amendments and arguments during prosecution. Furthermore, in a patent containing more than one claim, the prosecution history of each claim should be independently reviewed to decide whether certain subject matter was intentionally excluded from the scope of the claim.

 

[Patent Infringement Litigation in Korea - 1] Cease and Desist Letter – Warning Letter

When a patentee finds his patent right being infringed by a third party, he may send an alleged infringer a cease and desist letter. It is to warn the infringer of legal responsibilities and demand the cessation of infringement activities. Furthermore, the accused infringer, at least from the day of receiving the warning letter, will not be able to deny his intent or negligence in the infringement activities.

 

This warning letter plays an important role in proving the claim of damage compensation as well as the criminal liability for infringement. For criminal action, it is required to prove the intent of an infringer regarding infringing acts of a patent without doubt. In particularly, infringer’s intent in the infringement shall not be presumed even if a patent marking is present on the patented product. With a warning letter, it is easy and convenient to prove the infringer’s intent beyond reasonable doubt. Therefore, a patentee has often sent warning letters to infringers to point out the ownership of the patent and their infringing activities.

The Doctrine of Equivalents (DOE) in Korea

The rationales of the doctrine of equivalents in Korea are basically similar to those of the U.S. Namely, when an accused product or process performs substantially the same function in substantially the same way to obtain the substantially same result of the patented invention, the accused product or process infringes the patent right. 

In particular, the Korean Supreme Court held that the accused product or process infringes a patent where an element of the patented invention is substituted with another element and, if (i) the technical concepts or principle to solve the objective of the patented invention and the accused invention are the same or common; (ii) the substituted element in the accused invention performs substantially the same function in substantially the same way to obtain the substantially same result of the patented invention; (iii) such substitution is obvious to an ordinarily skilled person in the art. However, the doctrine of equivalents shall not be applicable to the circumstances that (iv) the accused substitution was already known to skilled persons in the art at the time of filing an application and (v) the accused element was excluded from the claimed invention during prosecution. 

On July 24, 2014, the Supreme Court further clarified the scope and meaning of the above (1) requirement of DOE; the technical concepts or principle to solve the objective of the patented invention and the accused invention must be the same or common. 

The patent claimed a cutter for dry seaweed. The seaweed cutter has cutting blades laid out in a grid pattern. Seaweed is placed on top of the cutting blades and pressed from top to down and then sliding down into a container through a grid-patterned box attached to the bottom of the cutting blades. The patented invention can achieve a cutting and storing of seaweed in a single process.

The accused cutter is different from the patented cutter in which the accused cutter has moving blades that move from top to down and cut seaweed. Instead, the patented invention does not have moving blades. Except the position of blades, other technical features of the two devices are the same. Two cutters perform the same function in the substantially same way and achieve the same result. 

However, the Seoul High Court denied patent infringement under DOE because the accused cutter did not meet the (1) requirement of DOE. The accused cutter cut seaweed in a different way from the patent technology; there is no the same technical principle of resolving the technical problem. 

The Supreme Court vacated the lower court decision. The Court held that the "essence or core of the technical idea" must be determined between two cutters in order to apply DOE and then found that two cutters used the same technical idea because it should be the incline of the grid patterned box that allowed seaweed to be automatically stored after being cut and it is found in two cutters although two cutters employed different embodiments. The Court found that the change to position of the cutting blades was obvious. The Supreme Court decision clarified (1) requirements of DOE under the Korean patent law. In practice, patentees may have higher chance to apply DOE under the recent decision.

Practical Points Under Korean Patent law on Joint Ownership of Patent in Korea

Under the Korean patent law, when there are joint inventors of a single invention, each inventor is entitled to be a joint owner in the right to obtain a patent of the invention. Or anyone may obtain the joint ownership through buying a portion of a patent ownership.

The joint owners of an invention before a registered patent must file an application for a patent together. Otherwise, the application shall be rejected or the granted patent shall be invalid.

In the absence of an agreement to the contrary, each joint owner has an equal partial interest in the invention as a whole. When a company is an employer of an employee inventor and the employee is a co-inventor, the company shall be a joint owner of the invention through assignment.

The Korean patent law provides that joint owners of a patent may freely make, use and practice the patented invention without consent to the other joint owners. In this regard, each co-owner does not have the duty to account profits to the others.

However, each co-owner may not assign his right of the patent in part to a 3rd party without consent of the other co-owners. Namely a joint owner may sell his own interest in the paten only when the other joint owners consent such an assignment.

Furthermore, under Korean patent law, a joint owner may not license the patented technology to a third party based on his co-ownership of the patented invention unless he has obtained consent of the other joint owners about the license.

The Korean Patent Act has specific provisions for such restrictions of joint ownership. This principle of the Korean patent law is to protect each co-owner from an unreasonable change of co-ownership.

For example, in case a joint owner may freely assign or license the jointly owned patent, other co-owners may be at the mercy of the co-owner. For example, in case a co-owner assigned his co-ownership to a large company and the other co-owner is a very small company and then a new co-owner large company may use and practice the patented technology as a whole independently without any duty of account profits to the other co-owners, the new joint may have the whole value of the patent and the small company does not have any profit.

 

However, joint owners may determine and vary their rights by contract. The statutory default rule under the Korean patent law controls unless there is an agreement to the contrary.

 

Reverse Payment Agreement between patentee and generic company violates Korean Antitrust Law

Recently KFTC announced to watch license agreements between patentees and generic companies under the patent and drug MA linkage system. That is a Korean version of the Hatch-Waxman Act system from March 15, 2015.

Under the new system, the first generic company may obtain 9-month market exclusivity. Such exclusivity may cause motives or incentives for reverse payments between the patent owner and the first generic.

In order to avoid antitrust violation issue, it is recommendable to closely review the first decision of the Supreme Court on the reverse payment case in Korea that was rendered on February 27, 2015 by the Korean Supreme Court. For information, the GSK vs. KFTC case is summarized in the below.

1. Background

GSK owned a Korean patent for Ondansetron, antiemetic drug and sold with a tradename as Zofran. Dong-A Pharmaceutical Co. developed a generic version of ondansetron and received a cease and demand letter from GSK. Both parties started lawsuits but soon signed a settlement agreement and withdrew lawsuits.

2. Settlement of Patent Infringement Litigations

By a Sale & Supply Agreement for Ondansetron between both parties, GSK granted Dong-A to sell the product to large sized hospitals. Instead, Dong-A shall neither make nor sell any competing medications including ondansetron to Zofran. GSK agreed to pay large amount of money to Dong-A by cash every year for 5 years. Further GSK promised to offer additional significant amount as incentive for high sales performance.

3. KFTC investigation and lawsuits

KFTC investigated GSK/Dong-A patent settlement case and decided that the settlement was a reverse payment agreement that violated the Antitrust Act of Korea. In particular, KFTC found them violating Art. 19 of the Monopoly Regulation and Fair Trade Act (MRFTA) and fined GSK about US$2 million and Dong-A US$1.5 million.

4. The Supreme Court Decision

GSK raised an appeal to KFTC's decision to the Seoul High Court but the court confirmed the KFTC decision. And GSK further appealed the case to the Supreme Court.

GSK argued that the settlement was within the scope of his patent right. As they pointed out, Art.59 of MRFTA (Korean version of antitrust law) has provision that “This Act shall not apply to any act which is deemed as a justifiable exercise of the right under the Copyright Act, the Patent Act, the Utility Model Act, the Design Protection Act or the Trademark Act.”

However, the Supreme Court rejected GSK's argument. The court opined that a settlement with reverse payment violates antitrust law if a patentee may maintain his monopoly by the reverse payment and thus affects adverse effect on fair and free competition in the related market. In the decision, the court suggested several factors in finding any violation or liability. Those can include the amounts of reverse payment to the opposing party and anticipated profit of the patent owner, patent litigation cost, time span and period for non-compete, etc.

On the other hand, the Seoul High Court stated in their decision that when the subject patent is obviously invalid or the competing party has not infringed the patent, any settlement with reverse payment shall be regarded as being anticompetitive and shall be violation of antitrust law.