March 5 2012 Patent laws amended in order to implement Korea-US FTA Kim & Chang | Intellectual Property - South Korea Intellectual Property IntroductionAmendments to Patent ActAmendments to Pharmaceutical Affairs ActIntroductionFollowing the ratification by both countries of the free trade agreement (FTA) between South Korea and the United States, the Korean government recently amended the Patent Act and the Pharmaceutical Affairs Act. These amendments are expected to have a significant impact on anyone with patent rights in Korea, including those relating to patent term adjustment and patent-pharmaceutical product approval linkage.The amended laws will enter into force on the date on which the FTA becomes effective, currently expected to be in March 2012 at the earliest.The major changes made to the Patent Act and Pharmaceutical Affairs Act to implement the FTA are summarised as follows.Amendments to Patent ActPatent term adjustments Under the amended Patent Act, a patent term may be extended to compensate for unreasonable delays during the prosecution of a patent, where the delay is caused by the Korean Intellectual Property Office (KIPO). The amended act provides that if the registration of a patent is delayed for more than four years from the filing date of the application or more than three years from the request for examination, whichever is later, the patent term can be extended for a period equivalent to that delay. Any delays attributable to the applicant (eg, delays by the applicant in responding to a notice from KIPO) will not be included in the patent term adjustment period.The above patent term adjustment is not automatically granted by KIPO and may be awarded only upon a petition by the applicant within three months from the date of patent issuance. Thus, applicants are advised to check whether their patents are eligible for patent term adjustment due to unreasonable delay, in order to avoid missing the three-month deadline.Novelty grace periodUnder the amended act, the six-month grace period for preserving the novelty of an invention, notwithstanding a public disclosure of the invention made by the applicant within or outside of Korea before the filing of a patent application, has been extended to 12 months.This amendment will bring the act in line with the international standards set forth in the Substantive Patent Law Treaty and will provide applicants with more flexibility in determining the timing for filing a patent application.Patent revocation provisionPrevious Korean law provided that, if a patent was not practiced in Korea for more than two consecutive years from the grant of a compulsory licence, KIPO could revoke the patent right.This provision has now been abolished, as the rule may unfairly limit the patentee's rights (and in view of the fact that it was never applied - no patent has ever been revoked in Korea based on non-practicing after the grant of a compulsory licence).Trade secrets obtained during patent litigationThe amended act introduces provisions regarding protective orders for trade secrets acquired during a patent infringement action. The new provisions stipulate that, when a party of a lawsuit proves both that its trade secrets are contained in briefs already filed (or to be filed) or evidence already investigated (or to be investigated) and that the release of the trade secrets must be limited as it may interfere with the business of the party, the court may order that the parties, counsels or employees involved in the lawsuit shall not disclose the trade secrets to others that are not under the protective order, or use the trade secrets for purposes other than for the lawsuit. However, if such parties, counsels or employees obtained the trade secrets through sources other than the briefs or evidence mentioned above, the protective order may not be issued.A party dissatisfied with the protective order may appeal against it. A person who violates the protective order without any justifiable reason may be subject to an imprisonment of up to five years or a fine of up to KRW50 million (about $40,000).With this new provision, trade secrets and any confidential information of a party can be protected in patent infringement actions.Amendments to Pharmaceutical Affairs ActPatent-product approval linkageIn respect of patented pharmaceutical products, the FTA includes provisions regarding patent-product approval linkage, requiring the Korean patent laws to be amended to provide that, when a generic manufacturer submits an application for generic drug approval: the patentee of the concerned patent must be notified of the drug approval request; and the generic manufacturer is prevented from marketing a product without the consent of the patentee.In response to the FTA, the Ministry of Health and Welfare made amendments to the Pharmaceutical Affairs Act to stipulate the listing of patents and include notice provisions, as follows: a party that has obtained product approval of a new drug (similar to a new drug application (NDA) holder in the United States) must request that the Korea Food and Drug Administration (FDA) list the patent information for the drug on the Patent List (similar to the US Orange Book), if it wishes to list such information on the list; and the generic manufacturer must notify the NDA holder or patent holder once it applies for approval of the generic product.Based on the above amendments, the ministry recently announced revisions to the enforcement regulations of the act. Some of the important details of the new regulations are as follows.Patent listingSubmission deadlineThe submission deadline for providing patent information to the FDA for drugs approved after the implementation of the FTA is now within 30 days of product approval. Notably, the new patent-product approval linkage system will also apply to drugs that were approved before the FTA became effective. For those drugs approved before the implementation, the submission deadline is within three months of the effective date of the FTA.Patent eligibilityThe FDA must list the patent information for the drug on the Patent List if the patent of the drug applied for listing satisfies the following : patents related to substance, formulation, composition and medicinal use; patents that are directly relevant to the active ingredient, dosage form, efficacy or method of use of the approved product; and patents that are directly relevant to the safety, efficacy and quality information in the application documents approved by the FDA.Listing applicationsPatent listing must be made on a claim by claim basis, depending on the relevance to the approved drug product. Thus, a detailed explanation of each claim as it relates to the product must be submitted to the FDA.Notification by generic companies A generic manufacturer filing an application for generic drug approval after the implementation of the FTA must notify both the fact that an application for generic drug approval has been filed and the filing date of the application to the product approval holder and patent owner within seven days of the application filing date. With the notice, the generic manufacturer must provide a detailed statement demonstrating that the listed patent is invalid or that the generic drug product does not infringe the patent.The above notification requirement applies only to generic manufacturers that seek product approval in order to launch their product during the term of the listed patent, not to those that indicate the intent to launch the product after the expiration of the listed patent.Stay of generic product approval In addition, the FTA requires that the Korean government implement measures in its marketing approval process to prevent a generic company from marketing a product without the consent of the patent owner before the expiration of the listed patents. It is expected that the act will be amended to set up a system that suspends the approval process for a generic drug when the original drug patentee files a legal action against the generic manufacturer.According to the documents released by the ministry, it is predicted that generic product approval can be stayed for up to 12 months, on the filing of a legal action by the original drug patentee. This 12-month period (which is shorter than the 30-month stay under the US Drug Price Competition and Patent Term Restoration Act 1984, also known as the Hatch-Waxman Act) reflects the longest average time it takes to receive a first instance decision in a patent infringement action in Korea.The FDA is also considering implementing a reward system, where a party that challenges and successfully invalidates a patent for a pharmaceutical product would be rewarded (eg, with an exclusive marketing right for the product for 180 days). Further details are still being worked out by the ministry; thus, the act and its enforcement regulations may be subject to further modifications.The above measures to stay the approval of generic product applications that challenge patents with remaining patent terms are not part of the current round of amendments to the act, but will be instituted within three years of the implementation date of the FTA.With the introduction of the patent-product approval linkage system, patent protection for original pharmaceutical products in Korea is expected to be strengthened.For further information on this topic please contact Seung Hyun Lee or Alice Young Choi at Kim & Chang by telephone (+822 3703 1114), fax (+822 737 9091 3) or email ([email protected] or [email protected]).