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April 2010
April 2010The Fair Trade Commission’s Revision of Evaluation Guidelines on Improper Exercise of Intellectual Property Rights
I. Revision Purpose and Applicable Scope
The Fair Trade Commission entirely revises and enforces starting April 7, 2010, the "Evaluation Guidelines on Improper Exercise of Intellectual Property (Fair Trade Commission Reg. 80)" that presents the standard principles and specific categories for application of the Monopoly Regulation and Fair Trade Act to prevent misuses of intellectual property rights.
II. Major Contents of Revision
(1) Ability to Regulate Foreign Businesses’ Misuse of Intellectual Property Rights
Prior evaluation guidelines applied "Standard and Categories of Unfair Trade Actions Arising Out of International Contracts (Fair Trade Commission Notices 1997-23)" to misuses of intellectual property rights arising out of international contracts; however, the above notice is now abolished and the revised evaluation guidelines are prescribed to be applicable to foreign businesses.
(2) Establishment of Regulations to Deal with Various Patent Rights Misuse
(A) Patent Pool Related Patent Right Misuse
(a) Unfair agreement on conditions such as transaction quantity and costs when numerous patent holders combine their patents and jointly allow each other or a third party the use
| Example: When businesses A, B, C and D who respectively hold patents on technologies a, b, c, and d that are necessary to produce a product "A" discuss strategy in reducing expenses from joint utilization of each technology, they unfairly limit sales territory or jointly determine the sale price of the product "A." |
(b) Isolating other competitors not participating in patent pool
| Example: After organizing a Patent Pool by combining the patents essential in producing the product "A," jointly refusing the use to a new business comer who did not participate in the Patent Pool, thereby making the penetration of the market difficult. |
(B) Technology Standard Related Patent Right Misuse
An act of purposely not disclosing the relevant patent information on the technology that is practically used as the standard or is to be selected as the standard by the government, the International Standards Organization, Business Organizations, and Identical Technology Retention Organizations, and after the technology is selected as the standard, imposing markedly high royalty.
An act of purposely not disclosing the relevant patent information on the technology that is practically used as the standard or is to be selected as the standard by the government, the International Standards Organization, Business Organizations, and Identical Technology Retention Organizations, and after the technology is selected as the standard, imposing markedly high royalty.
| Example: When businesses decide to select a standard for producing a product "A," in which the compatibility between technologies are important, the businesses publish patents of relevant technology and determine in advance the royalty to reduce the burden on that royalty in case one of the patented technologies gets selected as the standard. During this process, The business A falsely declares that he does not possess the patent, thereby causing the patent "a" that the business A did obtain to be selected as the technology standard. Consequently, when the technology becomes widely used to make it difficult to change the technology standard to another technology, the business A demands higher royalty based on his patent right. |
(C) Misuse of Patent Litigation
Unfairly misusing a patent litigation to hinder business activity of others
Unfairly misusing a patent litigation to hinder business activity of others
| Example: Hindering business activities of the business competitor A who entered the market for the first time by instigating a patent infringement litigation without clear evidence and purposely delaying the progress of the litigation. |
(D) Unfair Agreement on Patent Disputes
Unfairly agreeing on patent disputes such as agreeing to delay entering a relevant market
Unfairly agreeing on patent disputes such as agreeing to delay entering a relevant market
| Example: B files for an invalidation trial against the patent of A after finding out that A’s patent on the product "a," which A is exclusively manufacturing and selling, is invalid. Then A agrees to pay B for withdrawing the litigation and not entering the relevant market. |
(3) Matters to be Considered to Respect Justified Exercise of Intellectual Property Rights
(A) Consider the effect of technical innovation achieved through an exercise of intellectual property rights when examining for a violation of law.
It is stipulated that if reducing product price, increasing product quality and widening the scope of consumer choice are possible through the technical innovation by exercising intellectual property rights, such technically innovative effect shall be considered when determining the violation of the Monopoly Regulation and Fair Trade Act.
(A) Consider the effect of technical innovation achieved through an exercise of intellectual property rights when examining for a violation of law.
It is stipulated that if reducing product price, increasing product quality and widening the scope of consumer choice are possible through the technical innovation by exercising intellectual property rights, such technically innovative effect shall be considered when determining the violation of the Monopoly Regulation and Fair Trade Act.
(B) Clarify the relationship of the intellectual property right and the Monopoly Regulation and Fair Trade Act so that both can be operated harmoniously under a common purpose.
It is stipulated that the Monopoly Regulation and Fair Trade Act will not be applied to fair exercise of the intellectual property right and even when regulating misuses, the purpose of the system of intellectual property right will be carefully considered.
It is stipulated that the Monopoly Regulation and Fair Trade Act will not be applied to fair exercise of the intellectual property right and even when regulating misuses, the purpose of the system of intellectual property right will be carefully considered.
III. Plans For the Future
These guidelines can be utilized as evidentiary materials to countermeasure large enterprises and multinational corporations’ unfair demands against small to middle domestic companies with particularly weak negotiation leverage who enter into intellectual property right related contracts. Further, The Fair Trade Commission will strengthen the monitoring of misuse of intellectual property rights and will carry out investigations focused on industries such as Information Technology (IT) and medical supplies that are especially vulnerable to misuse of intellectual property rights.
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