The Patent Act recently underwent two significant amendments (Legislation No.14035, passed on February 29, 2016 and effective from March 1, 2017, and Legislation No.14112, passed on March 29, 2016 and effective from June 30, 2016), and the Trademark Act was also fully amended (Legislation No. 14033, passed on February 29, 2016 and effective from September 1, 2016). The following sections discuss the most noteworthy changes from the amendments.
I. Major Updates to the Patent Act and Their Implications
A. Expanded scope of orders to submit evidence, in camera review of alleged trade secrets, and increased sanctions for non-compliance in patent infringement lawsuits
In patent infringement lawsuits, the amended Patent Act significantly strengthens discovery by (1) expanding the scope of orders to submit evidence and (2) increasing the sanctions for non-compliance, pursuant to Article 132 of the amended Patent Act. The provision applies to lawsuits first filed on or after June 30, 2016.
Prior to the amendment, orders to submit evidence applied to "documents necessary for assessing damages caused by the infringement" under Article 132 of the Patent Act and "any documents relevant to an issue of fact" under Article 344(2) of the Civil Procedure Act. Article 132 of the Patent Act before the amendment and Articles 349 and 350 of the Civil Procedure Act allowed the Court to sanction a non-complying party by presuming the moving party's statements as true if a party failed to comply. However, these provisions were ineffective, because the movant typically could not prove the existence and control of a document, the exception for trade secrets swallowed up the rule, and most judges were reluctant to impose the sanctions, especially when there was a claim of trade secrets.
Scope of discovery orders. Under Article 132(1) of the amended Patent Act, the Court can now order the submission of "materials necessary for proving infringement and/or assessing damages caused by the infringement" in a patent infringement case asserted by the patent owner or an exclusive licensee, while the Article before the amendment provided "documents" instead of "materials." Based on this amendment, the Court hearing a patent infringement case may order submission of "materials," which can take any form, such as a video, photograph, or any digitized materials. In addition, please reference the paragraph titled "sanctions" below, as it also impliedly increases the scope of the requested material. Accordingly, the scope of potential evidence subject to an order to submit evidence has been significantly expanded.
In camera review. As before, Article 132(1) allows a party controlling the materials to refuse compliance, if the party has "justifiable grounds," e.g., the materials are trade secrets of the party. However, Article 132(2) now allows the Court to use its discretion to order a party asserting justifiable grounds to submit the materials to the Court for in camera review. Furthermore, Article 132(3) specifically addresses assertions of trade secrets, and removes from "justifiable grounds" any alleged trade secrets that are needed to prove infringement or damages resulting from the infringement. Similar to a protective order in the United States, if the materials prove infringement or damages, Article 132(2) also requires the Court to limit the amount of disclosure of trade secrets deemed necessary to meet the objectives of the order to submit materials and also limits the disclosure to specified persons, such as outside counsel only. We note that these provisions are yet to be tested, but it is our hope that the Courts will use its discretion and use these provisions to effectuate sufficient discovery in Korea for patent owners.
Sanctions. Furthermore, under Articles 132(4) and (5) of the amended Patent Act, the Court may now specifically apply the following sanctions, the second of which is quite controversial: (1) presume as true the counterparty's asserted statements as the contents of requested materials when a party fails to submit the requested material without justifiable grounds; (2) presume as proved a party's allegations of fact which would have been established through the content of the requested material when (a) it is difficult for a party requesting the material to make specific statements as to the content of the requested material and (b) there is no other available evidence. The second category of sanctions significantly broadens the types of materials that can be requested (i.e., documents for which the movant does not have to identify particular statements) and significantly increases the penalties for non-compliance of an order to submit materials. In fact, we note that these sanctions available in patent infringement litigation are significantly harsher than sanctions available in non-patent civil lawsuits.
B. Implementation of petition for cancellation of a registered patent ("Cancellation Petitions")
Cancellation Petitions will allow anyone to file a request for cancellation of a registered patent by simply submitting the prior art and arguments to the Korean Intellectual Property and Trial Appeal Board ("KIPTAB"), pursuant to Article 132-2(1) of the amended Patent Act. This new procedure is similar to ex parte reexaminations in the US Patent and Trademark Office. The provision applies to patents registered on or after March 1, 2017.
When the amended Patent Act comes into effect, a person seeking to invalidate a registered patent may file a Cancellation Petition instead of an invalidation proceeding. A Cancellation Petition is quicker and simpler compared to an invalidation proceeding, because it is an ex parte procedure where the petitioner only has to submit the grounds for cancellation and the KIPTAB will conduct the rest of the proceedings. In other words, the petitioner is not allowed to be involved even after the Cancellation Petition is accepted by the KIPTAB. However, please note that (i) the deadline to file a Cancellation Petition is six months from the publication date of a patent, and (ii) the grounds for cancellation is limited to those related to published prior art to challenge novelty or inventive step, or the first-to-file principle.
C. Implementation of a legal cause of action for transfer of a patent right ("Ownership Transfer Cause of Action")
When a patent is applied for and registered by a person or entity misappropriating someone else's invention ("Unentitled Owner"), the lawful patent owner can file an Ownership Transfer Petition against the Unentitled Owner, pursuant to Article 99-2(1) of the amended Patent Act. The provision applies to patents registered on or after March 1, 2017 by Unentitled Owners.
Prior to the amendment, a lawful patent holder was required to perform the following steps in order to recover his patent right from the Unentitled Owner: (i) file an invalidation proceeding in the KIPTAB against the Unentitled Owner's registered patent; (ii) receive a favorable invalidation decision; and (iii) then re-file a patent application covering the invention. Under the amended Patent Act, a lawful patent holder may now also file a lawsuit before the Civil Courts asserting an Ownership Transfer cause of action.
D. Shortened period for filing a requests for examination of patent applications
The period of filing a request for examination has been shortened from five years to three years from the filing date of the patent application, pursuant to Article 59(2) of the amended Patent Act. The provision applies to patent applications filed on or after March 1, 2017.
A patent application for which the petition for examination is not filed within the relevant period is to be regarded as withdrawn. Therefore, the shortened period to file a request for examination is expected to speed up the examination and decision making process for patent applications. When an applicant is strategically selecting the time of patent examination, the applicant must be cautious not to miss the deadline for filing the request for examination.
II. Major Updates to the Trademark Act and Their Implications
The following provisions will become effective on September 1, 2016.
A. Increased protection of holders of trademarks registered in contracting states
Article 34(1)(xxi) of the amended Trademark Act expands protection of a trademark registered in a contracting state.
Under the amended Trademark Act, a "related party" (i.e., a party who is or has previously been in a contractual, business or other relationship with a holder of the trademark registered in a contracting state) cannot obtain registration of a trademark that (i) is identical or similar to the trademark registered in a contracting state and (ii) designates goods or services identical or similar to the goods and services designated by the trademark registered in a contracting state without the consent of the holder of the trademark in the contracting state.
Prior to the amendment, the owner of the trademark registered in a contracting state needed to submit objections or notice of the registered trademark to prevent the registration of the trademark filed by the Related Party in Korea. In contrast, the amended Trademark Act denies trademark registration without requiring the filing of an objection from the holder of a registered trademark in a contracting state. In addition, under the former Act, the Related Party was confined to "a person who is an agent or a representative of the trademark owner in the contracting state, or was so within one year before the application for the trademark in Korea." The amendment removes the one year limitation, and at the same time expands the scope of the Related Party to "a person who is or was in a relationship with the trademark owner in the contracting state, which relationship includes without limitation partnership, employment, and other business relationships," thereby increasing the protection of holders of trademarks registered in a contracting state. These changes are meaningful, because the principle of good faith used to prevent trademark registration are now significantly reinforced for protection of the rights of holders of trademarks registered in a contracting state as well as those in Korea.
B. Expansion of the definition of a "trademark"
The amended Trademark Act expands the definition of a "trademark" protected under the law by drawing mainly from the core meaning and typical expressions to determine distinctiveness of a trademark and source of a product, pursuant to Article 2(1)(i) of the amended Trademark Act.
Prior to the amendment, a "trademark" was defined by a list of traditional marks, such as sign, letter, or figure and means of expressions for color, sound and odor. The revised provision defines a trademark as any indication used as a mark to distinguish one product from another and indicates the source of a product, without limitation as to its composition or means of expression. The amendment seems to reflect recent trends of putting more emphasis on the identifiable element that indicates the source of a product rather than on the means of expression comprising the trademark in judging whether a mark may be protected as a trademark under the Law.
C. Decrease in requirements for revocation of registered trademark
The amendment decreased the requirements that need to be fulfilled by a petitioner of a trial to revoke a registered trademark, so that anyone may file the petition regardless of his interest in the termination of the trademark in question, pursuant to Article 119(1) of the amended Trademark Act.
A trial to revoke a registered trademark is a procedure to terminate a registered trademark when a valid ground of cancellation, such as wrongful use or lack of use, arises for a registered trademark. Prior to the amendment, the provision limited the petitioner for such a trial to a person with a direct and material interest in the termination of the registered trademark.
As the amended Trademark Act allows anyone to file the petition for trial for revocation, it has the effect of greatly expanding the scope of a qualified petitioner for a "trial for revocation of unused registered trademarks," to include persons without any material interest in the registered trademark in question. A trial to revoke an unused registered trademark was originally introduced to prevent the continuance of unused trademarks. In order to whittling down unused trademarks, the Trademark Act now allows any third party to file a petition for a trial to revoke a registered trademark. Therefore, the amendment has the effect of increasing the termination of unused trademarks by expanding the potential pool of petitioners capable of pursuing trademark revocations, thereby allowing new businesses a wider range of trademarks from which to select.
In addition, the amended Trademark Act includes a provision where a registered trademark is deemed revoked starting from the filing date of the petition for the trial if the registered trademark is revoked through a trial for revocation of an unused trademark. This amendment corrects inequities arising from the previous version, where the registered trademark was revoked from the date the decision of the trial for revocation and a third party's use of the trademark during the litigation was regarded as an infringement.