The business of Korea is business.



Korea’s Patent Approval Linkage System- A New Age For IP In Korea

In recent years, Korea has been the subject of a number of high profile IP related lawsuits.

by Bryan Hopkins, KBLA

Aug. 2, 2016

Burberry filed a lawsuit in Korea against underwear maker SBW, claiming SBW copied Burberry’s trademarked checker patterns. SanDisk and Toshiba filed separate lawsuits against SK Hynix for stealing flash technology. Kolon was sued by Dupont for trade secret theft as well, which resulted in a $950 million verdict against Kolon in the U.S. The verdict was overturned on appeal with the parties entering into a settlement agreement. And of course, the Apple v Samsung litigation is perhaps the most famous litigation involving trade dress as it has mushroomed out to involve cases in various jurisdictions.

Despite Korea’s IP laws and numerous governmental agencies that can assist in IP infringement actions, such laws were rarely used domestically. In the past, Korean companies have refused to aggressively use IP laws to enforce their patent and trademark rights as they wanted to avoid litigation and the perception they were using the law against domestic counterparts. In essence, they did not want to be viewed domestically as taking advantage of IP rights for political or economic gain. Even today, many Korean companies, except for a few Chaebols, refuse to aggressively exercise IP rights, even though they may have cause to do so.

However, things may be changing- in the Korean pharmaceutical industry at least. On March 15, 2015, Korea amended the Pharmaceutical Affairs Act to implement the Patent Approval Linkage System. Patterned after the US law- “The Hatch-Waxman Act”, the Patent Approval Linkage System (the “Act”) allows a generic manufacturer ( the “Generics”) of certain drugs to obtain an exclusive manufacturing license to manufacture the drugs and/or to invalidate an original manufacturer’s patents provided it complies with the Act. The Act also provides a mechanism for original manufacturers of drugs ( the “Innovators”) to contest a Generic’s application for the exclusive manufacturing license. In essence, the Hatch Waxman Act expanded the process for approving generic versions of drugs and provided for the legitimate extension of existing patents under the process.

Prior to the Act going into effect last year, Korean pharmaceutical companies filed numerous lawsuits to invalidate the patents of the original manufacturers as well as to obtain confirmation of the right to manufacture generic drugs. In fact, the number of pharmaceutical patent related filings increased to over 125 in 2014 from 38 in 2013. That is a four- fold increase. Clearly, Korean pharmaceutical companies are becoming very aggressive when it comes to asserting patents or filing patent invalidation claims.

Though Korean companies are the 5th largest filers of patent applications in the world (number 2 in the US) many Korean companies in the past would rarely take legal action against infringers. But as the tremendous uptick in pharmaceutical patent related filings show, Korean companies are starting to assert IP rights and protections which will hopefully lead to an enforceable IP regime. Much like the Hatch Waxman Act, the amendments to Korea’s Pharmaceutical Affairs Act represents a compromise between the interests of the pioneer drug companies who invested great sums of money into R&D and the Generics that provide drugs at a lower price for the benefit of the consumer.

In essence, Korea’s IP regime is starting to mature with Korean companies starting to take advantage of changes in the patent laws to start filing patent applications as well as asserting IP rights under those laws. At least in Korea’s pharmaceutical industry, companies (whether Generics or Innovators) are beginning to see the benefits of enforcing IP rights which may lead to a more aggressive IP enforcement regime.

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