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Passage of the Intellectual Property Protection Act by the National Assembly

Passage of the Intellectual Property Protection Act by the National Assembly, including the introduction of triple compensation for trademark and design infringement and the exploitation of ideas

- Revision of the Trademark Act, Design Protection Act, and the Unfair Competition Prevention Act (to be implemented in April 2021)

The Korean Intellectual Property Office announced that intellectual property protection laws such as the Trademark Act, the Design Protection Act, the Unfair Competition Prevention and Trade Secret Protection Act (hereinafter collectively referred to as the Unfair Competition Prevention Act), which introduces "triple compensation" for trademark and design infringements and the stealing of ideas, passed a plenary session of the National Assembly on September 24 (Thursday). First, partial revisions to the Trademark Act and the Design Protection Act call for introduction of a punitive compensation system that requires compensation of up to three times the amount recognized as damages if a trademark or design right is intentionally infringed. The plan is to expand the punitive damages system for patent and trade secrets infringement introduced in the Patent Act and the Unfair Competition Prevention Act in 2018 to include the trademark and design sectors.

In addition, the criteria for calculating the amount of damages based on royalties in the event of infringement of a trademark or design right was amended from 'the amount normally receivable' to 'the amount reasonably receivable'. In previous precedents, there were indications that the actual amount of damage was insufficient because "the amount that can be normally receivable" was judged as a generally accepted royalty in the trading industry. For reference, due to the same reason, the royalty rate rose* in Japan after deleting the phrase 'normally'. * 'Royalty rate according to the 1998 revision of the Japanese Patent Act: (prior to revision) 3 to 4.2% → (after) 7 to 10%

Also, the maximum damages of the statutory compensation system introduced in the Trademark Act of 2011 was raised from 50 million won to 100 million won (300 million won in the case that a violation is intentional). This is aimed at taking into account the expansion of the domestic commercial trading market and inflation factors since the introduction of the system, and enhancing the effectiveness of trademark protection along with the three-fold compensation system.

Statutory damage compensation system (Concept) A claim for general damages shall be evidenced by the trademark holder, but the burden of proof in statutory damages shall be mitigated by a system under which the court can calculate the amount of damages within a legal limit if only infringement is proven. (Necessity) In addition to the introduction of punitive compensation, the limit of the amount of compensation for damages is simultaneously raised to promote the rationalization of damages for infringement of trademark rights.

A partial revision to the Unfair Competition Prevention Act was also passed, the main points of which are the introduction of a punitive compensation system that requires compensation of up to three times the amount recognized as damages due to an act of stealing an idea and the publication of recommendations for correction of unfair competition practices. As the damage to small and medium-sized business and others has become serious due to acts of stealing ideas, punitive compensation previously introduced in relation to the act of infringing business secrets has also been applied to the act of stealing ideas. Also, if the infringer fails to comply with the recommendations for correction of unfair competition activities, publicizing the violation is allowed, thereby enhancing the effectiveness of administrative investigations and recommendations for correction. In addition, if a party applies to the Industrial Property Right Dispute Mediation Committee for dispute mediation under the Invention Promotion Act during an administrative investigation into unfair competition activities, the administrative investigation will be suspended, and if a dispute settlement is established, the administrative investigation will be closed so that the dispute can be resolved early. In addition, legal bases of research on the actual conditions of unfair competition prevention and confidential business information, the establishing of basic plans and the implementation of plans were newly prepared.

A partial revision of the Patent Act was also passed to allow punishment of patent infringement acts without a victim's complaint. The government has strengthened the protection of patent rights by revising the "crime subject to victim’s complaint" provision, which has allowed investigation of a patent right infringement only when a patent holder filed a complaint, to "the crime not prosecuted against objection", which that provides investigative authority even without a patent holder's complaint. Also, in the future, patent holders will be able to file criminal charges without being tied to a six-month period. * Crime not prosecuted against objection: No prosecution if the right holder does not want to punish the violator.

There are many indications that the reason why infringement of intellectual property has not been eradicated is because the profit from infringement is greater than paying the proper price for intellectual property. Thus, if the "punishment compensation" system that was first introduced in patent infringement is applied to trademark and design infringement as well as other idea-stealing activities, the level of protection for Korea's overall intellectual property is expected to rise further, thereby strengthening the effectiveness of intellectual property protection.

The head of the Korean Intellectual Property Office said, "As this revision allows strict enforcement of the law regarding intellectual property infringement, a foundation has been laid for fair trading of intellectual property in the market going forward" adding, "We will not only improve the calculation method for amount of damages that was first introduced in patent law but also introduce as soon as possible a system for collecting evidence for patent protection for small and medium-sized companies to support the revision."

[Source: KIPO]


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