According to Articles 98 to 100 of the Korean Civil Procedure Act, which apply mutatis mutandis to allocation of trial expenses of inter partes IP trials, trial expenses shall be borne primarily by the losing party, while the winning party may bear some of the trial expenses when there are special circumstances, e.g., the trial proceeding was delayed due to a cause attributable to the latter. Accordingly, trial expenses incurred in association with a patent invalidation trial, a trial for invalidation against registration for an extension of a patent term, a patent scope confirmation trial or a trial for invalidation of a correction may be recovered in accordance with a decision rendered by the Board of Trials in light of relevant facts.

The details of the recoverable IP trial costs, e.g., types of recoverable expenses and the limits thereof, are specified in the Administrative Decree entitled “Public Notice on Determination of Trial Costs of IP Trials (‘Notice’).” However, the Notice does not provide a separate provision applicable to the trial expenses incurred where, for example, a party intentionally delayed the trial proceeding or committed a fraudulent act before the Board of Trials. Further, the professional fees recoverable under the Notice are limited to the amount of the official fee for filing a trial petition with the Board of Trials. Therefore, there has been criticism that due to the excessively low cap for recoverable attorney’s fees, the allowance of recoverable trial expenses under the Notice had no practical effect of deterring a party from committing abusive or fraudulent conduct during trial proceedings.

To ameliorate the situation, the KIPO announced two revisions to the Notice, which went into effect on January 25 and June 1, 2022, respectively. The revisions aim to increase the financial burden on the party committing abusive or fraudulent acts during an inter partes trial, by way of increasing the upper limit of the recoverable attorney’s fees and expanding the types of expenses that can be recovered.

In the first revision of the Notice, the upper limit of the recoverable attorney’s fees is increased up to about USD 6,500 in instances:

(i) where a party, who failed to submit necessary evidence during the trial proceedings before the Board of Trials, intentionally or by gross negligence, belatedly submits same to the appellate court and prevails in the appeal by virtue thereof; and 

(ii) where it is belatedly found that the subject matter (e.g., a patent right that survived an invalidity challenge at a trial) of the trial had been procured by fraud or other improper means, or the party’s conduct before the Board of Trials was fraudulent or improper.

Under this revision, therefore, in a case where a party whose petition for a patent invalidation trial was dismissed by the Board of Trials, but subsequently files an appeal against the trial decision, submits additional evidence to the Patent Court, and has the Patent Court overturn the trial decision based on the additional evidence, that party may have to bear the attorney’s 4 fees of the other party incurred for the trial, up to the above increased upper limit, even if the appellant eventually prevails in the appeal.

In addition, when a fraudulent or other improper conduct of a party before the Board of Trials is later found during appellate proceedings, the attorney’s fees of the other party for the trial may be borne by the party who committed such fraudulent or other improper conduct. In such an event, the attorney’s fees recoverable by the other party will be increased to the upper limit.

The second revision allows costs for collecting and examining evidence to be included in the realm of recoverable trial expenses. As a result, recoverable trial costs may include actual expenses incurred in collecting evidence, e.g., image analysis, digital forensic evidence, etc., as well as fees for expert testimony, translations, interpreters and on-site inspections for collecting evidence, subject to the upper limit of about USD 5,000.

The recent revisions are expected to encourage parties of inter partes IP trials to exercise proper conduct and due diligence before the Board of Trials, as well as to carry out in-depth search for evidence, e.g., during the preparation stage of trials.