Prior to a recent holding by the Supreme Court of Korea, the Korean Supreme Court had conflicting holdings on the definition of an “interested party” under Korean Patent Law. In order for a party to challenge the validity of a patent, in Korea, a party challenging the patent must be an “interested party.” Until this year, it was not clear whether a licensee of the patent in question is an “interested party” with standing to challenge the patent in Korea.
A recent holding by the Supreme Court shall, likely, lead to substantially increased risk of non-payment of royalty payments and litigation in Korean courts. We, thus, suggest all that are receiving, or are expected to receive, royalty payments from Korean companies to have a comprehensive review of your patents and licensing agreements. A good deal of the risk can be mitigated by a nuanced license agreement and a Korean-tailored patent.
The “Interested Party” Conflict at the Supreme Court of Korea
A 1983 Supreme Court case ruled a licensee of a patent is not an interested party when challenging the licensed patent (Supreme Court of Korea, 82Hu58, Decided December 27, 1983) , while a 2018 Supreme Court case noted that a licensee is not disqualified from being an “interested party” merely from having the status as a licensee of the patent (Supreme Court of Korea, 82Hu30, Decided May 29, 2018). Thus, the 1983 Supreme Court case precludes the ability of a licensee of a patent to be an “interested party,” for challenging the patent, while the 2018 case does not preclude a licensee of a patent from being and “interested party.” The seeming conflict was settled this year.
Supreme Court of Korea Settles the Conflict
The Supreme Court, in February of 2018, issued a decision that overrules all precedence noting that a licensee is not an interested party and, thus, not capable of challenging the validity of a patent. The Supreme Court, in short, opined that the choice to obtain a license should not disallow the challenging of the validity of the patent in the future since, inter alia, royalties can cause a significant burden on a licensee and challenging a patent can be costly and time consuming and some parties may reasonably choose to forego the challenge for the future.
The Supreme Court holding shall have a substantial impact on patent holders in Korea. We suggest, immediately, contacting your attorney in order to analyse the validity of your patent in Korea and, also, modifying your Korean license/royalty agreements.
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