Enforcement of Amended Patent Act to Realize the Amount of Compensation for Damages

-Anticipated to maximize the effect of a triple compensation system by improving the method for calculating the amount of damages-

-Expected to strengthen the protection of innovative ideas for small and medium-sized ventures and startups-

- Among the 5 leading countries in intellectual property, establishes on its own a patent infringement damages compensation system-


The Korean Intellectual Property Office (KIPO) announced that a partially amended Patent Act, which requires compensation for damages even for the sale of products by patent infringers exceeding the production capacity of the patent holder, will come into force as of December 10, 2020 (Thursday).


Previously, if a patent holder's production capacity was 100, even if an infringer sold 10,000 infringing products on the market, the patent holder could not receive proper damage compensation for the 9,900 products exceeding his production capacity (100).


In other words, as the amount of damages was calculated based on the range of the right holder's production capacity, an unreasonable situation has continued in which infringing a right is more profitable than signing a normal licensing agreement.


If the amended patent act enters into force, the remaining 9,900 items in this example can be recognized as the amount of damages of the patent holder that have not been subject to be compensated, calculated as reasonable royalties for the patented invention.

* (Current) Range of production capacity of patent holder × profit per unit

** (Amended) (Range of production capacity of patent holder × profit per unit) + (excess amount × reasonable royalty rate)


The same calculation method as the amended patent act is recognized in major advanced countries such as the United States, the United Kingdom, France and Japan. However, among the five advanced countries (Korea, the United States, Europe, China, and Japan) leading intellectual property around the world, Korea is the only country that stipulates both the amended damage calculation method and triple compensation in its patent act.


It is worth noting that it is now possible to calculate the amount of damages for all infringing products sold by an infringer, and in the case of intentional infringement, liability will be imposed for up to three times the damages. Accordingly, it is expected that patent rights will be able to be strongly protected from malicious and deliberate large-scale infringement. For reference, some amendments to the Trademark Act, Design Protection Act and Unfair Competition Prevention Law with the same contents passed the plenary session of the National Assembly on December 1, 2020.


The Chief of the Intellectual Property Protection & International Cooperation Bureau of KIPO said, “Enforcement of the partially amendment patent act is meaningful in that civil sanctions are strengthened in earnest along with the triple compensation system that has been enforced since last year. In order to improve the effectiveness of calculation of intellectual property infringement damages during a litigation process, we will promote the introduction of Korean-style evidence collection procedures, and we will do our best so that it becomes a system which is suitable for our situation by providing supplementary measures and broadly communicating with related industries regarding concerns of some semiconductor manufacturers.


[Source: KIPO]



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