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May 2020
May 2020 Amendment of Patent Act Expanding the Scope of Damages for Infringement of Patent
An amendment of Patent Act was passed by the National Assembly on May 20, 2020 to go into effect from December, 2020.
The key point of the amendment includes a change in the provision regarding compensation of damages for infringement of patent which would be advantageous to patent rightholders.
Under the Patent Act currently in effect, the amount of damages is computed by multiplying the amount of profit per unit of the patent rightholder by the number of infringing goods sold by the infringer. However, the maximum production capability of the patent rightholder operates as its ceiling.
For example, if the production capability of the patent rightholder is 100 units, even if the infringer sells 10,000 products in the market, the patent rightholder may not receive compensation for 9,900 units of infringing products exceeding the patent rightholder’s production capability (100 units).
Once the amended Patent Act goes into effect, the patent rightholder will be able to receive as compensation the amount of royalty in accordance with licensing of the patented invention regarding the 9,900 units for which no compensation was available in the past.
The summary of comparison of available compensation is as follows:
* (Current Patent Act) Production Capability of the Patent Rightholder X Per Unit Profit
** (Amended Patent Act) (Production Capability of the Patent Rightholder X Per Unit Profit) + (Number of Units Exceeding Production Capability of the Patent Rightholder X Reasonable Royalty)
The amount of compensation of damages for infringement of patent is expected to greatly increase by this amendment of Patent Act expanding the scope of the amount of damages along with the treble damages regime for intentional infringement of patent which has been in effect since July of last year.
Meanwhile, the Korea Intellectual Property Office is seeking to introduce a Korean style discovery system into the litigation process against infringement of patent to enable patent rightholders to more easily secure evidence to prove infringement of patent and damages.
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