The National Assembly passes a patent law revision bill to rationalize amount of damages - Improves the method of calculating damages and maximizes effectiveness of the triple compensation system –
The Korean Intellectual Property Office (KIPO) announced that a partial revision to the Patent Act was passed at a plenary session of the National Assembly on May 20 (Wednesday) to compensate for the sale of products by patent infringers who exceed a patent holder's production capacity, and the revision will come into effect in December of this year. Under the current patent law, in the case that a patent holder has a production capacity of, for example, 100 units, even if an infringer sells 10,000 infringing products to the market, the patent holder cannot receive proper damages for the 9,900 products exceeding his or her own production capacity. Unlike with real estate, intellectual property rights are characterized by the fact that the owner of a right personally produces patented products and/or licenses third parties to practice the patent and receives royalties from them. However, current patent law does not properly reflect the unique characteristics of intellectual property rights, and such issues have been raised mainly by small and medium-sized companies and venture companies. Once the revised law takes effect, the patent owner of the above case will be able to receive additional compensation from the infringer for the license fees associated with the exploitation of the remaining 9,900 units that have not been covered by damages. Initially, the partial revision of the Patent Act was proposed to allow the entire interest of the infringement as damages to the patent owner. However, in the course of discussions at the National Assembly, the amount of sales within the scope of the patent owner's production capacity shall remain unchanged and the amount of excess sales shall be calculated as a reasonable license fee for the patented invention and added up.
* (Current) Patent owner's production capacity range x profit per unit ** (Revision) (Patent owner's production capacity range x profit per unit) + (amount of excess sales x reasonable royalty) The United States has already approved such a method of calculation as per a judicial precedent set in the 1940s, and Japan has similarly revised and approved its Patent Law since April. In accordance with the revised law, Korea is the second country following the United States to operate a triple compensation for patent infringement. In particular, out of the five developed countries (Korea, the United States, Europe, China, and Japan) that lead the world in intellectual property, Korea is the only country that has clarified both the revised damage calculation method and the triple compensation. It is noteworthy that the new system, which expands the scope of damages, is linked to the triple compensation system for patent infringement which took effect in July of last year. If an amount of compensation for damages is rationalized through this revision, the amount of triple compensation is expected to increase automatically. This is expected to promote a revitalization in patent technology transactions and intellectual property finance, both of which have been cut off due to existing limitations in patent protection. Meanwhile, KIPO is also promoting the introduction of a "K-discovery system" in which, in the course of litigation, patent owners can easily secure documents to prove infringements and amount of damages, which are maldistributed to infringers. The Commissioner of KIPO said, "It is meaningful that the basic work of the compensation system has been completed by passing the revised law at the last plenary session of the 20th National Assembly. Above all, it is meaningful to have the most powerful patent protection system in the world. We hope that the revision will establish a fair culture in which intellectual property is traded at a fair price and that this system will serve as a foundation for the steady growth of startups and small and medium-sized and venture companies."