On May 20, 2020, the Korean National Assembly passed an amendment to the Korean Patent Act (“KPA”), expanding the scope of damages for patent infringement to include infringing articles exceeding a patentee’s production capability.  Effective as of December 10, 2020, this amendment, together with the punitive damages system that has been in effect since July 9, 2019, is expected to further strengthen protection against patent infringement in Korea.

▶Damages for Infringing Articles Exceeding Patentee's Production Capability 

Under the current KPA, the amount of damages that may be assessed against an infringer is calculated by multiplying the number of infringing articles transferred by the infringer by the profit per unit of articles that could have been sold by the patentee but for the infringement.  However, the amount of damages is capped by the production capacity of the patentee, and cannot exceed the amount calculated by multiplying the profit per unit by the number of articles that the patentee could have produced.  For example, if the number of articles that the patentee could have produced is 300 units and the number of infringing articles transferred by the infringer is 10,000 units, the patentee may not receive damages for the 9,700 infringing articles exceeding the patentee's production capability.  Accordingly, there has been criticism that the amount of damages that may be awarded under the current KPA is inadequate in cases where the production capability of the patentee (e.g., small and medium-sized enterprises) is lower than that of the infringer. 

Addressing the criticism, the amendment to the KPA reinforces IP protection by allowing the patentee to receive, in addition to the damages within the patentee's production capability currently awarded under the current KPA (i.e., 300 units * profit per unit), damages calculated by multiplying a reasonable royalty with the number of infringing articles exceeding the patentee's production capability (i.e., 9,700 units * reasonable royalty).  This amendment will become applicable to an infringement action filed on or after December 10, 2020. 

▶Damages for Patent Infringement Is Expected to Increase in Korea 

The amendment to expand the scope of damages for patent infringement, in addition to the punitive damages system adopted last year, in which punitive damages of up to three (3) times the actual amount of damages may be assessed if a violative act of patent infringement is determined to be willful or intentional, is viewed to help create a reliable patent system for patentees.  Among the IP5 countries (Korea, U.S., Europe, China, and Japan), Korea is the only country that has stipulated, in the patent law, both the provision for rewarding damages for infringing articles exceeding the patentee's production capability as well as the provision for allowing punitive damages.  Accordingly, the amount of damages for patent infringement is expected to greatly increase in Korea.