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December 2018
December 2018Amendments to Patent Act and Unfair Competition Prevention Act in Koera: Introduction of Punitive Damages Provision
The National Assembly of the Republic of Korea held a plenary session on December 7, 2018, and passed partial amendments to the Patent Act, Trademark Act, Design Protection Act, and Trade Secret Protection Act.
The key measures of the current amendments can be summarized as introduction of punitive damages provision to patent and trade secret infringements and establishment of the foundation for a government-appointed counsel in patent (trademark, design) trials. Based on this, starting in June of 2019, compensation for damages can be set within the bounds of three times the amount of actual damages determined in case of intentional infringement of patent right, right to exclusive license, or trade secret. Main points of the amendments are as follows.
1. Amendments to Korea Patent Act
A. Establishment of the foundation for appointment of a counsel by the government (Proposed Article 139(2))
In a patent trial, a foundation for appointment of a counsel by the government and reduction of official fees for cases in which the government appoints a representative have been established.
B. Introduction of punitive damages provision (Proposed Article 128 Sections 8 & 9)
Restoration from damages following an infringement of patent right or exclusive license has been fortified by allowing the amount of compensation to be set up to, but not to exceed, three times the amount of actual damages determined in case an intentional infringement of patent right or exclusive license is found and, in determining whether an act of infringement is intentional, by requiring consideration of dominant position of the infringer, the extent of intentionality, duration and frequency of the infringement, the extent of economic profit to the infringer from the infringement, etc.
C. Revision to standard of computation of royalty compensation (Proposed Article 65(2), etc.)
The standard for compensation for damages corresponding to royalty amount allowed to demand from an infringer of patent rights or rights for an invention for which a patent has been applied has been changed from an amount “customarily” obtainable to “reasonably” obtainable.
D. Requirement to present specific acts (Proposed Article 126(2))
An alleged infringer denying the specific acts of infringement alleged by the patent right holder or exclusive licensee is now required to present one’s own specific acts.
2. Amendments to Unfair Competition Prevention and Trade Secret Protection Act.
A. Relaxation of requirements to qualify as trade secret (Proposed Article 2(2))
The requirement that a method of manufacture, a sales method, or information relating to technology or management useful for business activity satisfying a certain condition be maintained as secret through reasonable efforts to qualify as trade secret has been relaxed to requiring only that it be maintained as secret even in the absence of reasonable efforts.
B. Introduction of punitive damages provision (Proposed Article 14(2)(vi)-(vii))
Restoration from damages following an infringement of trade secret has been fortified by allowing the amount of compensation to be set up to, but not to exceed, three times the amount of actual damages determined in case an intentional infringement of trade secret is found and, in determining whether an act of infringement is intentional, by requiring consideration of dominant position of the infringer, the extent of intentionality, duration and frequency of the infringement, the extent of economic profit to the infringer from the infringement, etc.
C. Increases in the scope of infringing activities and the severity of punishment (Article 18 Section 1&2)
An act, for purpose of earning illicit profit or causing damages to rightful holder of trade secret, of taking trade secret out of the designated area without authorization or continuously holding on to trade secret despite having been asked by the rightful holder of trade secret to delete or return the same has been added to a list of punishable acts of trade secret infringement, and criminal sentences and fines have been adjusted higher from up to 10 years of imprisonment or up to ￦100,000,000 in fine in case of infringement where the trade secret is used abroad or while knowing that the trade secret would be used abroad or, otherwise, up to 5 years of imprisonment or up to ￦50,000,000 in fine to up to 15 years of imprisonment or up to ￦1,500,000,000 in fine and up to 10 years of imprisonment or up to ￦500,000,000 in fine, respectively.
D. Increase in fines against participants in preparation and conspiracy in trade secret infringements (Proposed Article 18(3))
Fines for those who participated in preparing or conspiring to commit a crime of trade secret infringement have been adjusted higher.
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