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A licensee also corresponds to an interested party who may file an invalidation trial

2019/09/30

A licensee also corresponds to an interested party who may file an invalidation trial

 

1. Introduction

 

Article 133 (1) of the former Patent Act stipulates that interested parties or examiners can request patent invalidation trials. Here, the key issue is whether a licensee who is granted a patent right from a patentee is an interested party who can file such an invalidation trial.

In this regard, prior Supreme Court precedents are divided into two cases; one case being that the interest of a licensee cannot be regarded as being extinguished only by the granting of the license (Supreme Court Decision 82HU30 judged on May 29, 1984) and the other case being that a licensee does not correspond to an interested party since the person granted a license does not receive the damages in business or has no possibility of receiving the damages in business since there is no possibility of receiving an opposition of a patent right within the period (Supreme Court Decision 82HU58 judged on December 27, 1983)

In recent years, however, the Supreme Court has judged that in the case of a invalidation trial filed against a patentee by a licensee against a patent registered in a Standard patent pool related to video compression technology, a licensee of a patent right has an interest and is one who can file a request for invalidation trial even though the licensee does not receive an opposition of a patent right or have the possibility of receiving such opposition unless there are special circumstances, and thus a Supreme Court decision was made which changes the prior Supreme Court decisions regarding opposition decisions. The following are the details of the decision and the significance thereof.

 

2. Supreme Court Decision

 

The Supreme Court concluded, that "Article 133 (1) of the former Patent Act (before being amended by Law No. 11654 of March 22, 2013) states that ‘an interested party or an examiner shall file a request for invalidation trial in the cases of the following subparagraphs’. The term "interest" as used herein refers to a person who has a direct and realistic interest in the termination of a patent right who receives any disadvantage or has a possibility of receiving any disadvantage due to the existence of the patent right, and it includes people who are manufacturing or selling the same kind of products as the corresponding patent invention or who will manufacture or sell such products. According to this principle of law, it cannot be said that the interest of a licensee is extinguished because there is no possibility for the licensee to receive an opposition of a patent right or have such possibility from the patentee unless there are special circumstances”. 

The reason for this is that "a licensee is subject to receive various restrictions such as making royalty payments or the scope of implementation, and thus the licensee can escape from such restrictions by receiving an invalidation decision through an invalidation trial against the patent right. And even if there is a reason for invalidation of a patent, the patent right remains valid and cannot be denied until the invalidation decision is confirmed, and it takes considerable time and expense until an invalidation decision is confirmed even if requesting for an invalidation trial. For this reason, even a person who wants to implement a patent right without getting a license for the patent right from the patentee can get a license from the patentee first and postpone the dispute over invalidation, and accordingly, it cannot be concluded that the licensee has indicated his/her intention of not arguing against invalidation of the patent right”. (Supreme Court Decision 2017HU2819 judged on February 21, 2019)

 

3. Significance of the judgment

 

The corresponding decision has significance in that, regarding whether a licensee who is granted a patent right from a patentee is an interested party who can file an invalidation trial, the Supreme Court has summarized the existing controversy by making clear the Supreme Court's view that the interest of the licensee cannot be regarded as being extinguished only due to being a licensee.

In accordance with the corresponding decision, it is expected that requests for patent invalidation trials by licensees who are paying royalties to patentees will increase. In addition, patentees are likely to actively insert a "stipulation clause" in license agreements. However, the validity of such a "stipulation clause" in these license agreements is controversial, and the Supreme Court's judgment regarding this matter is expected in the future.
 

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