Foreign Parties May Submit Briefs in English and Argue in English for Patent Cases before the Patent Court and the IP Special Court in Korea

From May 2018, new International Panels for patent lawsuits will be established and foreign parties may submit documents in English and argue their case in English before the courts. That means that briefs in English may be submitted and oral hearings may be conducted in English. The specialised panels will be in the Patent Court and the lower court for the 1^st instance lawsuit.

The Korean Patent Court had a trial on June 28 2017 for an oral hearing in English. The case was an appeal to the IPTAB decision on a patent application of 3M Innovative Properties Company.

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Patent Exhaustion of Method Claims in Korea

On November 10, 2017, the Korean Patent Court affirmed the lower court decision that the patent right of method claims might be exhausted. (Case No. 2017Na1001 decision)

 

The courts pointed out that a patentee may not seek double compensation through product claims and method claims. Patentees may be allowed to avoid patent exhaustion through simply drafting patent claims to describe a method together with a product or an apparatus.

 

The courts held that the sale of an item that substantially embodies the method exhausts the method patent. The product “substantially embodies” a patent where (1) it has “no reasonable non-infringing use” other than to practice a patent and (2) it embodies “essential features of the patented invention”.

 

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Licensee May Challenge Patent Validity in Korea

On October 27, 2017, the Korean Patent Court affirmed the IPTAB’ decision that a Licensee may challenge patent validity in Korea. The licensee filed a petition for patent Invalidity and the case was tried before the Patent Court. (Case No. 2017Heo27272 decision)

Typically, a licensee has been estoppel by the clause of licensee agreement that “the licensee under a patent license agreement could not challenge the validity of the licensed patent in a suit for royalties due under the contract.”

However, the Korean Fair Trade Commission (KFTC) made it clear that “Prohibiting licensees from challenging the validity of any patents and using transacting terms that permit termination of the licensing agreement if licensees challenge the validity of a patent” violated the Korean Faire Trade Law and ordered a patentee to correct such illegal licensee term.

Like Medimmune decision, it is possible for a licensee to challenge the validity of a licensed patent while still fulfilling its contractual duty under a license agreement by paying contractually required royalty fees.

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KFTC reviews Patent License Contracts related to Patent MA Linkage

Recently the Korean Fair Trade Commission (KFTC) requested pharmaceutical companies to submit information including patent license contracts and patent litigations or disputes. It was to scrutinise fair trade practices in pharmaceutical industry.

Korea has implemented the Patent Marketing Approval Linkage system over 2 years since March 15, 2015. There was a dramatic increase in the number of patent disputes filed between original drug manufacturers and generics.

KFTC will look into any changes in pharmaceutical companies' IP practices after the patent MA linkage system. Particularly KFTC will review any settlement agreements or other business arrangements that may have been entered into as a result of such IP disputes.

KFTC may further investigate specific companies based on the information and materials that have been submitted. On the other hand, if KFTC may conduct an ex parte raid on the responding company, in case KFTC decide it is necessary to investigate a particular suspicious case.

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Trade secret Infringement Lawsuit on Botulinum Toxin between Medytox and Daewoong Pharmaceuticals

Two Korean companies have disputed over trade secret theft about Botulinum Toxin for years. Medytox, in cooperation with its U.S. partner Allergan, has been conducting clinical trials in USA to get approval for its BTX product, Meditoxin.

Last year, Daewoong and its U.S. partner Alphaeon filed for FDA approval for its BTX product, Nabota in USA. Medytox will face competitions of Daewoong in the US market. 

Accordingly, Medytox filed a lawsuit in USA alleging Daewoong of stealing its strain of the Botulinum toxin. But the plaintiff could not succeed to block the competitor’s business in USA through the lawsuit because the lawsuit case was not successful.

On Oct. 12, 2017, the Superior Court of California in Orange County dismissed the case with ruling that the case should be settled in Korea. The court stated that "the court finds that Korea is an alternative suitable forum in which an action can be brought against all defendants."

Furthermore, the US court decided that "if it turns out that the alternative forum is not suitable after all, this court has the power to lift the stay and proceed with the action in the original forum, the court sets a status conference on a stayed matter for April 13, 2018."

According to their press release, Medytox will file a lawsuit against Daewoong in Korea soon.

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