KIPO’s ambitious plan for introducing the so-called “K-discovery” system into the Korean IP regime is progressing as planned. This article provides a brief introduction to the “K-discovery” bill that was submitted to the National Assembly and is currently being considered.

▶Current Evidence-Gathering Procedures in Korea and Their Limits

In Korea, unlike in US trial practice, the court is both the finder and trier of facts, and the entire discovery in accordance with the current Korean Civil Procedure Act (KCPA) is conducted by, and in the presence of, the judge appointed by the court. The parties involved may file a request or motion with the court, before or after the initiation of the civil action, to have the court conduct the discovery. In a patent infringement lawsuit, facts can be discovered mainly through requests for document production, examination of witnesses, raids of the defendants' premises (although seldom granted in civil actions), seizure of infringing goods, and appointment of expert witness to, for example, assay an alleged infringing article.

Typically, in a patent infringement action, most of the evidence necessary to prove infringement or assess damages caused by the infringement tends to be in the possession of the accused infringer, making it difficult for the patentee to meet the burden of proof. In such a case, the patentee may rely on a motion for preservation of evidence or a motion for production of documents for obtaining evidence in Korea. 

Preservation of evidence may be requested of the court, even before the institution of a court action or at an early stage of a court action, by showing that evidence is likely to be destroyed or altered if the discovery is conducted in a normal court proceeding. Upon the motion by a party (typically, the patentee), the court may gather evidence ahead of the court action and preserve the gathered evidence (see Articles 375 and 376 of the KCPA). However, in practice, the usefulness of the procedure of preservation of evidence is restrictive, in particular, in a lawsuit for infringement of a process patent, since it is quite difficult to show a substantial probability of infringement, which is a requirement for such a motion to be granted. 

Document production may be ordered upon either a party or a non-party, unless the holder of the requested document has a justifiable reason for refusing to submit it (see Articles 343 and 344 of the KCPA).

As a sui generis provision under the KCPA hierarchy, the Korean Patent Act (KPA) has its own discovery device for document production. Under the statutory provision, in the course of a patent infringement action, the court may, upon the request of one party, order the other party (but, not a third party) to submit materials (not limited to documents) necessary to prove infringement or assess damages caused by the infringement. Even if the materials involve a trade secret that is otherwise protectable under the Korean Unfair Competition Prevention and Trade Secret Protection Act, the other party cannot refuse the order to submit the materials if they are indispensable for proof of infringement or assessment of damages (see Articles 132(1) to (3) of the KPA). In such a case, the court should specify the person(s) who may gain access to the materials in the submission order. If the holder of the requested material does not obey the submission order without a good cause, the court may, at its discretion, deem the requesting party's claim about the contents of the material to be true (see Article 132(4) of the KPA). However, due to the lack of adequate measures for imposing sanctions when the holder of the materials fails to comply with the court's order or for alleviating concerns or lack of confidence in the protection of the requested party's submitted trade secrets, the procedure is not regarded as an effective device for collecting evidence.

▶K-Discovery Bill

To help ease the patentee's burden of proof and achieve early resolution of a dispute, KIPO has initiated steps for statutory revision to introduce a discovery system adapted to the judicial regime of Korea. The discovery system is geared to help patentees effectively obtain evidence for proof of patent infringement and facilitate the assessment of damages.

▶Onsite Inspections by Experts

One of the major changes the bill includes is onsite inspections by experts. Under the proposed onsite inspection process, upon a patentee's request or ex officio, the court may order an independent third-party expert to:

• conduct an onsite inspection to collect evidence of alleged patent infringement or materials for calculation of damages at the site of the alleged infringer (e.g., its manufacturing site); and 

• submit a report on the onsite inspection to the court.

In ordering such an onsite inspection, the court may consider: 

• whether the accused party infringed on the patent right;

• whether the inspection is necessary to prove infringement or calculate the damages; and

• whether the burden on the accused party is significant compared to the need for inspection.

The bill includes measures to mitigate any risk of leakage of trade secrets of the accused party, including: 

• the court-designated expert must submit an inspection report to the court only, while maintaining its confidentiality;

• the accused party, after reading the inspection report provided by the court, may request the court to redact its trade secrets not related to the proof of infringement or the calculation of damages; 

• in case the accused party’s request is deemed valid, the court shall order the expert to redact the trade secrets and allow the patentee to view the redacted report only. 

To further alleviate the concerns involving trade secret leakage, the bill includes the following measures:

• if the accused party refuses or obstructs the investigation, the court may presume the patentee's claim to be true or impose a fine of not more than 100 million won (USD 92,000) to a corporation or a fine of not more than 50 million won (USD 46,000) to employees or interested parties of the corporation; and 

• if the expert leaks any information obtained from the inspection that should have been kept confidential, the expert is subject to imprisonment for up to one year or a fine of up to 10 million won (USD 9,200).

▶Preservation of Evidence under KPA

According to the bill, upon a patentee's request or ex officio, at an early stage or even before the institution of a court action, the court may order the accused party not to spoil or disable evidence deemed to be necessary for the proof of infringement or the calculation of damages, upon the patentee’s presentation to the court of: (i) facts sufficient to specify the evidence; and (ii) proof evincing the existence of irreparable harm to the patentee if the order is not issued.

If the accused party destroys or conceals the evidence, the court may presume to be true the patentee’s contention as to what the evidence alleges to prove.

Barring unexpected developments, the bill is likely to pass into law early next year and take effect six months after promulgation. We will provide updates via FIRSTLAW IP NEWS as further developments occur.