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Newsletter | December 2013
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INTELLECTUAL PROPERTY |
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No Infringement Found for Licensee that Exceeded the Scope of its Exclusive License When Limitations on the Scope Was Not Recorded |
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Due to a Korean Supreme Court decision issued earlier this year, patent owners must exercise greater caution when recording an exclusive license with the Korean Intellectual Property Office (“KIPO”).
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According to Article 101(1)(ii) of the Korean Patent Act, an exclusive license is effective only when recorded with KIPO. This also includes the transfer, modification, expiration and disposal restrictions of the exclusive license, which must be recorded to be legally effective.
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In the above Supreme Court case, the licensor had identified certain limitations on the scope of the exclusive license in an executed license agreement. However, these limitations were omitted from the recordation of the exclusive license with KIPO. The exclusive licensee then worked the patented invention beyond the scope that was agreed upon by the parties within the contract, and as a result, criminal sanctions were imposed.
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The Supreme Court referred to Article 101(1) and held that restrictions on an exclusive license had no legal effect if they are not recorded. As such, setting aside the patent owner’s ability to seek contractual claims for the licensee’s breach of the license agreement, the Court found that there was no patent infringement in this instance because the limitation on the scope of the exclusive license was not recorded with KIPO, and thus should not be given any legal effect. |
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This decision is meaningful because it has solidified the importance of recording an exclusive license in Korea. Furthermore, this decision serves as a warning to all patentees that any limitations on the scope of exclusive license must also be recorded. Otherwise, the patentee may not be able to exercise infringement claims despite a licensee’s use of the patented invention beyond the scope of the agreement, and therefore, would have to solely rely on the contractual claims.
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