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FICPI, The International Federation of Intellectual Property Attorneys

Punitive Damages System in Korea

18th February, 2019

The Korean Intellectual Property Office (KIPO) announced on 18 December 2018 that a few amendments to the “Patent Act” and “Unfair Competition Prevention and Trade Secret Protection Act” were passed at the Assembly plenary session on 7 December 2018. The major amendments are the introduction of “punitive damages system for infringement of patent and trade secrets” which will enhance protection of intellectual property rights in Korea. This amendment will be implemented in June 2019.

The main content is the introduction of the “punitive damages system”, which stipulates up to three times the amount of damages in case of intentionally infringing the patent rights and trade secrets of others. In order to strengthen the protection, the compensation amount can be set to three times the amount recognized as damage if the act of infringement of a patent right (exclusive license) or trade secret is intentional.

  1. The current Korean Patent Law has various provisions for calculating the amount of damages in its Article 128. For example, Article 128 (4) stipulates about the calculation of the infringer's profit, which prescribes the infringer's profit to be 'estimated' by the patentee's damages. In this case, however, there is a problem  the estimation of such damages is easily made useless if the patentee has no or insufficient production capacity. Therefore, the regulations are mostly meaningless for start-ups, individual inventors, and SMEs who do not have enough production facilities. The amendment should be used more realistically to protect their rights, but the issue of low damages for patent infringement calculated by the Korean court before the introduction of the punitive damages system should also be discussed at once.
  2. The KIPO says the amendment will help eradicate SME technology spills, so as to create innovation growth and a fair economy environment. However, the fact that such a system is discussed at this time may be the result of the fact that the Republic of Korea is still behind in protecting the technology of SMEs.
  3. There are still people in the Republic of Korea who think that it is better to take profits by stealing technology from others and then pay damages to the patentee after the patent infringement lawsuits, rather than developing a patent with much effort. This is evidence for the lack of strong penalties for patent infringement in the Republic of Korea. Strong protection of the patent system is an important motive for industrial development. With strong protection, high quality patent applications are encouraged, and the publication of patents develops the industry. However, if the level of protection is low, companies will no longer apply for patents in the Republic of Korea, and Korea's technological competitiveness will be hindered.

Author: Sungpil Hwang

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