Litigation Costs and Attorney Fees

Official fees for a preliminary injunction action or a permanent injunction action would be small rather than significant. Those would be about US$400. A lawsuit to the Patent Court is an administrative lawsuit that seeks to review the decision of the IPT of KIPO. Official fee for such action to the Patent Court would be small, too (about US$400).

As to a lawsuit for damage compensation, official fees are correlated with the amount of claims. For the first instance lawsuit, a plaintiff must pay 0.5% of claimed amount as official fee. Accordingly, it could be considerable amount.

In terms of attorney fees, two options are usually used in Korea; Flat fee in lump sum or hourly charge based on actually spent time. Considering the unpredictable nature and complexity of patent infringement litigation, it is extremely difficult to estimate the total cost of litigation. Just as a rough estimate, it would be approximately US$150,000 ~ 300,000 for a district court action for a straightforward litigation case. In a big case with complex and difficult technology issues, it may cost much more. In addition, translation of court documents into English will increase costs accordingly.

Korean laws allow the prevailing party to claim court costs and legal fees from the losing party. Official fees and legal costs paid to a court are usually reimbursed in full to the prevailing party. As to attorney fees, however, the Supreme Court has a regulation that limits the reimbursement of actual attorney fees. For instance, for a PI case, a prevailing party may recover about US$3000 per instance from a losing party; not more than US$10,000 in total. However, the amount for damage lawsuit is correlated with the amount of claim and ration of winning. That may be quite different. At any way, it is safe to assume that the amount as a reimbursement of legal fees could be substantially less than the actual cost.

Appeal Procedure

Appeal to High Court

The losing party may appeal the district court decision to a high court (a court of appeal). A notice of appeal must be filed within 14 days of the receipt date of the court decision. The appeal period cannot be extended. When a notice of appeal is filed, the district court will send all documents to the court of appeal, which dockets and schedules the case. Then, the court of appeal orders the appellant to submit an appeal brief.

There is no limit on grounds of appeal. The court of appeal will review the case on de novo basis including factual errors and legal errors. An appellee will submit an opposing brief to an appeal brief. Both parties may submit new arguments and new exhibits during the appeal procedure. After exchanging briefs, the court set oral hearings. Usually it takes less than 1 year to a judgment in an appeal court.

Final Appeal to the Supreme Court

The losing party in an appeal proceeding may appeal the decision of the appeal court to the Supreme Court. The notice of re-appeal to the Supreme Court must be filed with the appeal court within 14 days from the receipt date of the high court decision, which is not extendible. Again, the court of appeal will send the documents of the case to the Supreme Court.

The court dockets the case and order the petitioner to submit a final appeal brief within 20 days from the receiving date of the court order. The period cannot be extended and the case will be dismissed if the final brief has not been filed within the period. The opposing party will be served the final brief the Supreme Court, and then can submit a rebuttal brief within 10 days of the date of the service. Exempting extraordinary circumstances, there is no oral hearing in the Supreme Court.

After briefs, the Supreme Court will review the final brief of the petitioner and the opposing brief of the respondent, and will decide whether the case will be fully reviewed by a panel of 3 or 4 justices.

The Supreme Court reviews only matters of law and therefore a matter of fact cannot be appealed to the Supreme Court. In case the appeal is based on factual errors of the low courts, the case will be dismissed within 4 months. Even though the appeal is directed to legal errors of the low courts, due to the excessive number of appeals to the Supreme Court, the Supreme Court can dismiss the appeals if the decision follows the statutes and precedents. It is called a refusal of further consideration in the Supreme Court.

The Supreme Court has given deference to the decisions of the Patent Court, and the Korean patent court plays the final decision maker as a matter of practice like the CAFC in the U.S.

Defenses of Defendant

Invalidity Defense

It is well settled that in case the patented invention lacks novelty over the prior art, the patent is unenforceable. Even before the patent has been invalidated through the separate invalidity proceeding, the patent shall be regarded as being void.

As for non-obviousness challenge within an infringement lawsuit under bifurcated system, the Supreme Court has maintained their firm position for a long time that the patent is enforceable before the invalidity based on the ground of being obvious over the prior art. However, the Supreme Court changed their position through en banc decision in 2012. Therefore, a defendant raise an affirmative defense based on obviousness of the patented invention.

The Korean Supreme Court en banc decision in 2012 is that in principle, (1) an issued patent is presumed to be valid; (2) an infringement court may not decide the validity of a patent; (3) arguing invalidity of a patent in suit shall not be a defense in an infringement action; but, as detour as a practical solution, (4) in case the patent in suit is clearly to be invalid due to lack of inventive step as well as lack of novelty, it is an abuse of patent right to seek the injunction and damages based on the patent. Therefore, in order to determine such abuse of a patent right, the infringement court may examine the validity of a patent due to lack of inventive step as well as lack of novelty.

As for standard of proof, presumption of validity is not strong. The challenger can meet his burden by preponderance of evidence, not by clear and convincing. For example, obviousness arguments will be in favor of invalidity where there is inevitable combination, no synergistic effect from combination, no unexpected result.

Other Affirmative Defense

An accused infringer may assert that his practice falls in the scope of publicly known technology in which he is entitled to freely use it. Under the Korean patent law, it might be a mirror image of obviousness arguments.

Further, prosecution history estoppel, experimental use, pharmaceutical clinical test, prior user right, intervening right can be used as defense. For instance, the patent right does not extend to acts done for experimental purposes relating to the subject matter of the patented invention. Further, clinical tests for the purpose of KFDA approval of generics does not infringe a patent right. Unlike the U.S. patent law, a declaratory judgment or inequitable conduct before the PTO defense is not available.

Defendant’s Motion Practice: Deposit Cost in Advance

When a plaintiff is a foreigner having neither a residence nor a business office in Korea, a defendant can file a motion that the plaintiff has to deposit the cost of suit in advance. In this situation, a defendant is not required to respond to a plaintiff’s complaint until a plaintiff deposits the estimated cost of the lawsuit. If the foreign party does not deposit by the date the court specifies, the court may dismiss the suit. In the case where the plaintiff is a foreigner and the defendant is a Korean, the Korean defendant usually file this motion to obtain enough time for considering defense and counterclaim. The foreign party may deposit a bond.

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.

Patent Marking

A patentee may obtain a preliminary or permanent injunction against infringers without patent marking. Unlike the injunction remedy, however, the patentee must prove the intent or negligence of infringers in order to obtain damage compensation from the infringers. There are several ways to prove intent or negligence of an infringer. Patent Marking is not required but really effective and convenient in proving the intent or negligence of infringers. The Korean Patent Act allows patent marking on a container or packages, and there is no specific format required. For a process-patent marking, the patentee should specifically indicate that the patent is a process patent, e.g., "Korean Process Patent No. xxx."