New amendments to the Patent Act and the Unfair Competition Prevention and Trade Secret Protection Act (the “Trade Secret Act”) were announced last winter, which were designed to enhance enforcement of patent rights and protection of trade secrets in Korea.  As of July 9, 2019, these amendments have now become effective.

The amendments add the following provisions to the above Acts: (i) newly available “punitive damages” for intentional or willful patent infringement/trade secret misappropriation, up to treble damages (Patent Act, Article 128, Paragraphs 8 and 9; Trade Secret Act, Article 14-2, Paragraphs 6 and 7); (ii) expansion of available royalty damages for infringement through use of “reasonably expected royalties” rather than “ordinarily expected royalties” as one of bases for damages calculation (Patent Act, Article 65, Paragraph 2 and Article 128, Paragraph 5); (iii) obligation to disclose the actual product/process used by an accused patent infringer denying patent infringement (Patent Act, Article 126-2); (iv) relaxed requirement for valid trade secrets by eliminating “reasonable efforts” requirement (Trade Secret Act, Article 2, Item 2); and (v) significantly increased criminal penalties for trade secret misappropriation, including additional acts subject to criminal punishment such as the unauthorized release of trade secrets out of a designated place, and continuing to possess another’s trade secret even after a request to delete or return (Trade Secret Act, Article 18, Paragraphs 1 and 2).  

Details:

1.   Introduction of punitive damages

This is the most significant change under the new amendments, since enhanced damages have not been previously available for any kind of IP rights infringement in Korea, and this applies to acts of infringement/misappropriation committed on or after July 9 (the effective date).  The amendment reflects a recognition by the Korean legal system that increased penalties are needed to effectively discourage acts of infringement and to better protect IP right holders in Korea.  Damage awards for intentional or willful patent infringement/trade secret misappropriation are expected to significantly increase in size.
 

2.   Intentional or willful acts of infringement/misappropriation

Going forward, the issue of proving “willfulness” will likely become hotly disputed in litigation.  For patentees/trade secret holders, the following may be helpful to prove “willfulness”: (i) proof that a warning letter was sent to the accused defendant; or (ii) a favorable decision in an affirmative confirmation-of-scope trial (in patent cases).  Accused defendants may want to present the following to prove the opposite: (i) an expert opinion of non-infringement; and/or (ii) a favorable decision in an invalidation trial or negative confirmation of scope trial (in patent cases).
 

3.   Accused patent infringer denying infringement must disclose the actual product/process used

Under the amendments, an accused infringer who denies infringement despite a prima facie showing by the plaintiff that the accused infringer is using a claimed product/process must provide details regarding the product or process it is actually using.  If the accused infringer refuses to provide such details without adequate justification, the court may presume that the accused infringer actually committed the infringing activity as claimed by the plaintiff.  This is likely to make it easier to prove meritorious infringement claims, and also to speed up infringement litigation proceedings in general.
 

4.   Relaxed maintenance requirement for trade secrets

The amendment removes the requirement to show that “reasonable effort” was taken to protect the secrecy of asserted trade secrets, and now simply requires that the trade secrets were maintained as secret.  As the prior requirement often resulted in the dismissal of misappropriation claims based on lack of “reasonable effort” to protect otherwise legitimate trade secrets, the amendment is expected to make it substantially easier to pursue legitimate claims against parties who misappropriate trade secrets, and to broaden the scope of information, which can be protected as a trade secret in Korea.