Calculation of Damages in Korean Patent Litigation 27th IAKL Conference l September 20, 2019 Junghwan (Justin) Maeng Partner l Ph.D. in Law

Ordinary Damages Overview of Article 128 The Patentee may claim monetary damages under a tort law (Article 750, 763, and 393 of the Korean Civil Act). The Patentee can choose any of the following measures to calculate damages Per-unit Profit X Quantity of Infringing Products Sold Quantity of infringing products sold in marketplace X Patentee’s per-unit profit (Article 128(2),(3) of the Korean Patent Act) Infringer’s Profits Profit gained by Infringer due to Infringement (Article 128(4) of the Korean Patent Act) Reasonable Royalty (Article 128(5),(6) of the Korean Patent Act) Discretion of the Court In the view of totality of circumstances (Article 128(7) of the Korean Patent Act)

Ordinary Damages Statistics on Damages Awarded Seoul Central District Court Cases 2012~2017 Percentage of Cases <0.1M <0.3M <1M <2M <10M >10M Damages Awarded (USD)

Treble Damages Introduction of Treble Damages Bills including New Treble Damages Provisions were first introduced at the Korean National Assembly in July 2017. Existing damage provisions under the Korean Patent Act were insufficient against willful infringers. Infringing party deliberately launched products that they knew would infringe patents or trade secrets. Patentee had not practical and sufficient recourse against the infringers. Aggrieved parties, especially SMEs, were hesitant in bringing patent infringement lawsuits because the costs of such lawsuits were often substantially higher than the amount of damages that could be recovered.

Treble Damages Treble Damages Provision The Korean National Assembly passed the New Treble Damages provision which took effect starting on July 9, 2019. Now, the Korean courts can award in an amount up to three times the ordinary damages if an alleged infringer was found to intentionally infringe the patent-in- suit. (Article 128(8) of the Korean Patent Act) This provision will apply to the matters where an intentional infringement first occurs after the effective date of July 9, 2019. (Article 3 of the Addenda of Korean Patent Act Amended on January 8, 2019)

Treble Damages Application of Treble Damages Provision The Courts should consider the following, non-exclusive factors in assessing the amount of treble damages (Article 128(9) of the Korean Patent Act). Superior bargaining power of the infringer Intention or degree of awareness by the infringer regarding the risk of harm Extent of damages arising from patent infringement Economic gains derived by the infringer through an act of infringement Duration of patent infringement, and also, the number of each act of infringement Criminal monetary penalty, if any, imposed on the infringer in connection with an act of infringement Financial standing of the infringer Efforts of the infringer to mitigate the damages accruing to the patentee

Treble Damages Willful or Intentional Conduct Adoption of “willful” as used in the US law was discussed, but “intentional” was chosen in the statute as the term is widely used in the Korean legal jurisprudence. It is likely that “intentional” will be given the meaning that is typically ascribed to in the other contexts of Korean law such as in the criminal penalty under the Korean Patent Act. Case Precedent on Intentional Infringement The Supreme Court did NOT find that the alleged infringer’s conduct constituted intentional infringement because of following factors (Supreme Court Case No. 2008-Do-639). Filed the utility patent application while recognizing that the patent-in-suit was relevant prior art Difficult for a lay person to discern whether the Defendant’s invention was equivalent to the Patent Owner’s invention Received a non-infringement opinion from a patent agent

Ordinary Damages Overview of Article 128 There exist discussions between practitioners on various issues regarding application of the treble damages provision including: Intentional Infringement in Article 128(8) Consideration of Factors in Article 128(9) Superior bargaining power of the infringer Criminal monetary penalty Financial standing of infringer Scope of Application (Addenda) Intentional Infringement first occurs after the effective date

Junghwan (Justin) Maeng Confidential Thank you Junghwan (Justin) Maeng Partner / Ph.D in Law l jhm@leeko.com l +82.2.772.4986 l +82.10.6860.2105