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IP Newsletter | Fall 2017
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PATENT
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Pharmaceutical Industry IP Practices in Korea Under Scrutiny Again by the KFTC
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The Korean Fair Trade Commission ("KFTC") recently conducted another intellectual property (IP) survey towards approximately 70 pharmaceutical companies (approximately 40 foreign and 30 domestic), seeking detailed information regarding their major products, patents, and litigation disputes involving IP in Korea.
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This follows a similar earlier survey conducted by the KFTC in 2010, which also sought similar information from 48 pharmaceutical companies (30 multinational and 18 domestic).
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Background
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The new KFTC survey seems to have been driven by two major factors.
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First, in December 2016, a new Knowledge Industry Anti-Monopoly Division was established within the KFTC with a specific remit to investigate abuses and increase competition enforcement in knowledge-based industries (such as pharma, biotech, and IT). Moreover, the new governing administration in Korea has indicated a greater desire in general to scrutinize companies' fair trade practices in general.
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Second, there was a dramatic increase in the number of patent disputes filed between original drug manufacturers and generics after the implementation of the pharmaceutical product approval-patent linkage system in Korea in 2015. Thus, the KFTC appears interested in investigating any changes in pharmaceutical companies' IP practices since the patent linkage system was implemented, particularly regarding any settlement agreements or other business arrangements that may have been entered into as a result of such IP disputes.
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Subject of the Survey
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The KFTC appears to have selected the companies targeted by the new survey based mostly on recent sales information, while also taking into account media reports regarding various patent disputes. The questionnaire focused on 202 active pharmaceutical ingredients ("API") selected from a list of prescription drugs with sales exceeding KRW 8 billion (approximately USD 7 million) in 2015. The questionnaire sought details regarding prescription drugs containing the above APIs which were released in Korea or for which drug approval was sought between 2010 to 2016. These details included information regarding (i) the status of launch and sale of original drugs, incrementally modified drugs ("IMDs") and generic drugs, (ii) the status of related patent license agreements, (iii) related patent filing strategies, (iv) the status of related potential disputes, (v) related litigations filed, (vi) any other contracts/agreements/cooperation agreements/arrangements with other pharmaceutical companies (not necessarily limited to the designated 202 APIs), and (vii) utilization of the Korean patent-approval linkage system.
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The questionnaire was issued around the end of May and the responses were due in the late June-mid July timeframe.
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Anticipated Course of Action
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The KFTC will now review the information it has received, and will likely decide in the next few months whether further investigation is needed against specific companies based on the information and materials that have been submitted. If the KFTC finds that a company's response was inadequate or raises additional questions, it may issue a follow-up request for information ("RFI"), or if the KFTC believes a response is particularly suspicious, it may conduct an ex parte raid on the responding company. In 2010, the KFTC issued follow-up RFIs to several companies and conducted dawn raids. We believe that the KFTC may be more aggressive in conducting follow-up investigations this year since this is the first industry survey to be conducted by the new Knowledge Industry Anti-Monopoly Division.
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Other Industries Should Stay Alert
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While the current survey is limited to pharmaceutical companies, the KFTC may decide to investigate and issue surveys in other industries to determine if IP abuse is occurring in other areas as well. For instance, in 2010-2011, after conducting its pharmaceutical industry survey, the KFTC issued similar surveys to the IT, chemical and mechanical industries.
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Back to Main Page
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If you have any questions regarding this article, please contact:
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For more information, please visit our website: www.ip.kimchang.com
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