▶ Facts of the Case
Plaintiff A (patentee) owned a patent pertaining to a 13-valent immunogenic composition comprising polysaccharide-protein conjugates in which capsular polysaccharides of thirteen (13) pneumococcal serotypes are respectively conjugated to a carrier protein. Plaintiff B was the exclusive licensee of Plaintiff A’s patent and acquired market approval from the Ministry of Food and Drug Safety for the 13-valent pneumococcal conjugate vaccine composition. Plaintiff B imported the vaccine from Plaintiff A and sold it in Korea.
Defendant completed research and preparation for production of a 13-valent pneumococcal conjugate vaccine, and entered into a license and supply agreement with a Russian pharmaceutical company regarding the vaccine. Pursuant to this agreement, Defendant provided the Russian company with thirteen (13) individual stock solutions, each of which contained individually packaged polysaccharide-protein conjugates of each of the thirteen (13) pneumococcal serotypes (hereinafter, "Act 1"). Separately, Defendant also produced a finished product in the form of pre-filled syringes containing a drug suitable for human injection by mixing and formulating the thirteen (13) individual conjugate stock solutions, and supplied this product to the Russian company on four occasions for clinical trial purposes (hereinafter, "Act 2"). The Russian company conducted clinical trials using these products and subsequently obtained market approval for the vaccine in Russia.
▶ Seoul Central District Court Decision
Plaintiffs filed a patent infringement action with the Seoul Central District Court against Defendant, asserting that Act 1 constituted either direct or indirect infringement of the patent, and Act 2 constituted direct infringement of the patent.
There was no dispute that the finished vaccine composition for clinical trial manufactured by Defendant fell within the scope of patent protection.
With respect to whether Act 1 constituted direct infringement, the Seoul Central District Court referred to the Supreme Court precedent that held that: the act of producing all components or parts of a patented invention shall be deemed equivalent to producing the final product in Korea and thus constitutes direct infringement of the patent if (i) all the parts or components for making the patented product are produced in Korea, (ii) the components or parts so produced are already in a state capable of essentially achieving the intended purpose or effect of the invention, (iii) they are exported to an overseas entity for the final processing or assembly thereof, and (iv) such final processing or assembly is so technically insignificant or simple that one skilled in the art may perform the processing or assembly without technical difficulty (Supreme Court Case No. 2019 Da 222782 and 222799 (merged), rendered on October 17, 2019).
In light of the above precedent, the Seoul Central District Court held that, since each of the thirteen (13) individual conjugate stock solutions would have been manufactured to ensure immunogenicity, the 13-valent immunogenicity would naturally be exhibited upon their combination. Furthermore, based on the disclosures in the patent specification and the general technical knowledge in the vaccine field, the Court found that the process of mixing these solutions would not have presented any technical difficulty to a person skilled in the art; therefore, Defendant’s production of the thirteen (13) individual conjugate stock solutions constituted the preparation of a state in which the components of the patented invention could be readily combined and implemented in Korea. On that basis, the Court determined that Act 1 constituted direct infringement of the patent.
Regarding Act 2, the Court interpreted the term "research or testing" in Article 96(1)(i) of the Korean Patent Act—which provides an exception to the enforceability of patent rights—as referring to research or testing conducted by a domestic entity carrying out the patented invention. In this case, however, while Defendant produced the product in Korea, the research or testing was conducted outside Korea by the Russian company for its own benefit. Accordingly, the Court determined that Act 2 also constituted direct infringement as it did not fall within the scope of the exception to patent enforceability under Article 96(1)(i) of the Korean Patent Act.
▶ IP High Court Decision
On appeal, the IP High Court reversed the lower court decision and dismissed Plaintiffs' request for an injunction against patent infringement.
With regard to Act 1, the IP High Court held that, based on the evidence submitted by both Plaintiffs and Defendant, the mixing process could not be considered insignificant or simple, and, thus, it could not be concluded that merely mixing the thirteen (13) individual conjugate stock solutions would result in the realization of 13-valent immunogenicity. Therefore, the Court determined that Act 1 did not constitute direct infringement of the patent.
The Court also held that, since all thirteen (13) individual conjugate stock solutions were exported to Russia and the final product was manufactured abroad, indirect infringement of the patent could not be established.
As to Act 2, the IP High Court held that Article 96(1)(i) of the Korean Patent Act aimed to promote technological development by recognizing an exception to experimental implementation; and the application of this provision was not precluded even if the research or testing was conducted for the purpose of obtaining market approval for a pharmaceutical product in a foreign country. On this basis, the Court concluded that Act 2 did not constitute infringement of the patent under Article 96(1)(i) of the Korean Patent Act.
▶ Supreme Court Decision
The Supreme Court affirmed the decision of the IP High Court and dismissed Plaintiffs’ appeal.
First, in connection with Act 1, while the Supreme Court reiterated the standard it had established in its 2019 decision (Case No. 2019 Da 222782 and 222799 (merged)), the Court emphasized that determining whether a case meets those criteria must be done with strict scrutiny, taking into account the territoriality principle and the all-elements rule.
In this regard, the Court found that, unless the input quantities, mixing ratios, order of mixing, and mixing conditions for the thirteen (13) individual conjugate stock solutions were properly controlled during the mixing process, the 13-valent immunogenicity might not be realized. Therefore, it could not be concluded that the mere production of the thirteen (13) individual conjugate stock solutions would result in a state where the functional effect of the patented invention—namely, the 13-valent immunogenicity achieved through a systematically controlled organic combination of all components—would be implemented. Accordingly, the Court determined that Defendant’s Act 1 did not constitute direct infringement of the patent.
Furthermore, the Court clarified that, under the territoriality principle of patent rights, the "production" of a patented product in the context of indirect infringement refers to production within the territorial jurisdiction; hence, when production takes place outside of Korea, indirect infringement would not occur.
Finally, with respect to Act 2, the Court held that Article 96(1)(i) of the Korean Patent Act is a provision intended to strike a balance between the protection of patented inventions and the promotion of their utilization; accordingly, the legitimate interests of the patentee must also be considered. Nevertheless, the Court found that Act 2 constituted the practice of the patented invention for the purpose of research or testing, and determined that Act 2 fell within the scope of activities to which the patent right did not extend under Article 96(1)(i) of the Patent Act—namely, that the Bolar exemption applied.
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