Invalidity Defense in Infringement Action of a Patent Previously Held Valid in Korea

Introduction

Article 163 of the Korean Patent Act (“KPA”), in relevant parts, provides:

“When a trial decision has become irrevocable, no parties may request another trial [of the same purport] based on the same fact and evidence”.

Under this provision, it is generally held that if a patent has been irrevocably held valid, no one may bring another invalidation trial against the patent based on, for example, the same prior art with respect to the same statutory basis of invalidity, say for instance, lack of inventiveness.

On the other hand, in an en banc decision (Supreme Court Case No. 2010 Da 95390) rendered on January 19, 2012, the Korean Supreme Court held that a court hearing an infringement claim of a patent may entertain a patent invalidity defense, if the patent is found prima facie invalid over prior art; and may refuse to enforce the patent under the theory of patent abuse even before an invalidation trial decision of the patent has become final and conclusive.

The question then arises as to whether the court trying a patent infringement action has the jurisdictional power to allow the patent invalidity defense and review the validity of the patent de novo, based on essentially the same prior art used in a previous patent invalidation trial which has resulted in the irrevocable decision that the patent is valid.

Before addressing the question, a quick review of corresponding Japanese developments surrounding the same issue may help highlight the underlying considerations.

Corresponding Japanese Developments

The Japanese Patent Act (“JPA”) used to have substantially the same provision as Article 163 of the KPA. Article 167 of JPA (the corresponding provision), however, was amended or in effect abolished, as of April 1, 2012, by way of replacing the restriction against any “party” with “the parties and intervenor(s)” directly involved in the trial.

In light of the statutory revision, it now appears settled in Japan that a patent validity decision, even if final and conclusive, has no res judicata effect on the defendant named in an infringement action involving the same patent, who was not a party or intervenor to the patent invalidation trial although it seems to remain controversial with regard to the res judicata effect on a party to an infringement action who was also involved in the patent invalidation trial.¹

Arguments For and Against

Although the question posed at the outset has not been actively discussed in Korea, there may be two opposing views.

One is the negative view that the res judicata provision is not applicable to a defense of patent invalidity raised in a patent infringement action, arguably for the following reasons:

• Application of res judicata would unfairly restrict a third party’s right to challenge the validity of a patent in violation of due process.

• It may encourage a patentee to collude with another to falsely procure a patent validity decision, to thereby unfairly deprive others of the right to challenge the validity of the patent.

• Inasmuch as a patent invalidity defense under the 2012 Supreme Court decision becomes available in a patent infringement action only when the patent is prima facie invalid, in practice, such defense may likely be rejected for the reason that the patent is not prima facie invalid or the defense is not raised in good faith; and, therefore, there is no reason to mechanically apply the res judicata effect of a prior patent validity decision and prevent the defendant from even raising the invalidity defense in the infringement action.

On the other hand, holders of the positive view that the res judicata provision should be applicable to a defense of patent invalidity raised in a patent infringement action could advance the following arguments:

• It would render the res judicata provision of KPA meaningless if a defense of patent invalidity based on the same fact and evidence as those of an invalidation trial decision that has become final and irrevocable is allowed in a patent infringement action, which may be viewed as an encroachment of the legislative power by the court.

• The res judicata provision is designed to maintain the credibility, stability and integrity of a trial decision by way of preventing inconsistent trial decisions and to attain judicial economy by prohibiting duplicative trials; and such statutory regime would be undermined if an invalidity defense of a patent is allowed in a patent infringement action despite the existence of a prior decision that has held the patent valid based on a judicial review of the same fact and evidence.

• The court hearing a patent infringement claim is without any jurisdictional power to review the patent validity issue again, even under the reasoning of the 2012 Supreme Court decision cited above, since the condition precedent that confers the court the power to adjudicate the validity of a patent is non-extant, inasmuch as the patent is not prima facie invalid by virtue of the prior trial decision that the patent is irrevocably valid.

Precedents

The KPA confines the applicable scope of res judicata to “the same fact and evidence” to thereby strike a balance between the legal stability of an irrevocable decision and a third party’s right to a trial.

The “same fact” requirement for applying the res judicata refers to whether or not the specific fact to be adjudicated with respect to a patent is the same.² For instance, in a patent invalidation trial, each of the statutory grounds for invalidation — such as lack of industrial applicability, novelty, and inventive step, and failure to meet the description requirement — may constitute a fact.

As to the “same evidence” requirement, if the evidence submitted in a later trial is not the same as that submitted in a related prior trial, in theory, res judicata would not apply.³

However, certain evidence that is newly submitted in a later trial and ostensibly different from that already submitted in a related prior trial may still be regarded as the same. The Korean Supreme Court considers the “materiality” of the evidence to be the controlling factor:

“Res judicata is applicable even though new evidence is submitted in a trial if such new evidence is not so material as to overturn the earlier trial decision that has become final and irrevocable” (Supreme Court Case No. 2002 Hu 1157, dated July 22, 2004).⁴

Further, although the parties are different or the evidence is construed in different ways in related trials, the evidence can still be regarded as the same under Article 163 of the KPA.⁵

On the other hand, the Korean Supreme Court enunciated that res judicata may not apply if the ruling in a later trial does not contradict the reasoning underlying a prior trial decision that has become final and irrevocable. For example, if the evidence, even if submitted in the prior trial to corroborate a fact which was not in fact adjudicated in the prior trial, may be submitted again in the later trial and used to overturn the prior trial decision if it is so material and critical.⁶

Therefore, if an issue to be heard by a court has not been fully litigated in a prior trial based on the same evidence submitted again to the court, the court hearing a patent infringement claim may refuse to apply the res judicata provision with respect to that issue.

Conclusion

In a typical patent infringement action where the patent validity is challenged, the sameness of the fact, e.g. lack of inventiveness, would not normally be an issue; and, therefore, in addition to the applicability of the res judicata, the sameness of the evidence may remain as the main issue of contention.

Accordingly, in the absence of a statutory revision as was done in Japan, discussed above, it appears logical, for the court hearing a patent infringement claim, to strike a balance between the public interest underlying the res judicata provision of KPA and the legal right of a third party to raise a patent invalidity defense, by way of taking a two-step process:

•  (i)  Absent any procedural anomalies, the court is to first review whether or not the evidence, e.g. prior art, submitted by the defendant in the infringement action is materially the same as the one tried in the patent invalidation action with respect to the validity of the patent; and

• (ii)  Then decide whether to proceed to review on the substantive issues raised through the patent invalidity defense.