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Why Does Korea Have So Few Criminal Patent Cases?

Oct. 19, 2016, 4:26 PM

By Gibong Jeong, attorney at law, FirstLaw PC; email: email: firstlaw@firstlaw.co.kr

Korean law provides for criminal penalties, including imprisonment, for certain acts of intellectual property infringement. Despite the statutory availability and the unique advantage of discovery, traditionally, criminal actions have not been so widely pursued in patent infringement cases, particularly when compared to trademark infringement matters.

However, some recent changes may help to make criminal patent infringement cases more popular.

The Korean Patent Act sanctions an act of patent infringement as a crime with penalties of imprisonment of up to seven years, or a fine of up to 100 million KRW ($88,900) against a person who has infringed a patent right or exclusive license right (Article 225), and a fine of up to 300 million KRW against the employer of such infringer (Article 230). The Korean Trademark Act also has similar provisions.

In addition to the severity of the penalties, investigative authorities such as police or prosecutors can collect evidence through a search and seizure process. Ex parte raids are also available.

These investigative powers are unavailable in civil actions. A criminal action, if pursued, can provide a distinct advantage in securing evidence which may be used in a subsequent or parallel civil action.

Statistics on IP Criminal Actions.

According to statistics published by the Korean Prosecutors’ Office show that from 2010 to 2013, there were 23,496 complaints filed for criminal trademark infringement cases, 57.9 percent of which resulted in indictments.

By contrast, there are much fewer criminal actions based on patent infringement. From 2010 to 2014, there were a total of 3,742 complaints filed by the right holders, and only 3.7 percent actually resulted in indictment during the same period. During this time period, a meager 1 percent of all criminal patent infringement cases resulted in a guilty verdict.

Reasons for Low Popularity.

There are several reasons for the low number of criminal patent infringement cases.

One reason is due to the requirement for the rights holder to file a complaint within a relatively small time window. A patent infringement can be criminally prosecuted only when the right holder files a criminal complaint within six months of learning about the infringing activities. By contrast, a trademark criminal action may be prosecuted at the investigative authorities’ own initiative, even absent the trademark right holder filing of a complaint.

There is also an overwhelming sentiment shared in the industry that patent infringement should be dealt with through a civil action and not criminally. Accordingly, there is a natural reluctance on the part of the patent right holder to pursue a criminal sanction.

Furthermore, there are technical difficulties. In trademark infringement cases, a lay person may decide on similarity issues without much difficulty. When the issue of confusing similarity arises, the prosecutor or the court may address by issue in various ways, such as commissioning a public survey.

In patent infringement cases, however, there is concern about the abilities of non-scientifically trained police officers or prosecutors to comprehend and resolve the complex technical issues involved. It is not easy for a person who has no expertise in technology and patent law to determine issues such as the scope of a patent claim. What’s more, infringement analysis may require consideration of not only literal infringement but also infringement under the doctrine of equivalents. Patent validity is also a technical issue.

Further, since the invalidation rate for challenged patents has been over 50%, according to Korean IP Office statistics during the period between 2005 and 2011, the criminal prosecutors tend to suspend prosecution, pending the outcome of a patent invalidation action, which is often filed by the accused infringer.

Moreover, only intentional or willful infringement of a patent is subject to criminal charges, which is hard to prove in most cases.

For these reasons, the Korean prosecutors are generally reluctant to review a criminal patent infringement case before the court’s decision in a corresponding civil action is rendered.

Recent Developments.

Despite the practical difficulties and low inclination to pursue a criminal action by a patent right holder, efforts are being made to address systemic deficiencies which may have hampered criminal prosecution of patent infringement.

For instance, the Korean Supreme Prosecutors’ Office recently hired three patent consultants with expertise in the technical fields of electronics, mechanics, and chemistry and biology, so as to facilitate the review of criminal patent infringement cases.

Further, the Korean Department of Justice announced earlier this year the designation of the Daejeon District Prosecutors’ Office as the central office to handle criminal patent infringement cases and the plan to retain more patent attorneys as investigative consultants in order to strengthen their expertise in patent infringement cases.

Accordingly, in the event of calling for the criminal prosecution, such as against recidivistic patent infringers or multitudes of small operator infringers, the recent efforts being made by the legal authorities may encourage the patent holders to more actively pursue criminal remedies in the future.

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