The Korean Supreme Court rendered a decision denying prior art use defense based on the design registrant’s own disclosure made prior to the filing of a design application in a design scope confirmation trial, even though no claim for the benefit of grace period was made until an invalidation trial against the design registration was lodged, and, further, rejecting the accused’s claim for prior user’s right allegedly accrued during the interim period between the date of public disclosure and the date of requesting for the benefit of grace period (Supreme Court Case No. 2021 Hu 10473, rendered on February 23, 2023).

▶Prior Art Use Defense; Prior User’s Right to Acquire Non-exclusive License

The prior art use defense may be raised by an accused infringer in patent/design infringement litigation or scope confirmation proceedings. The defense allows the accused infringer to argue that its accused product/design is identical to, or readily derivable from, prior art that was already in the public domain; and, therefore, should be deemed to fall outside the reach of a patent/registered design (Supreme Court Case No. 99 Hu 710, rendered on October 30, 2001).

Further, Article 100 of the Design Protection Act provides that:

At the time of filing a design application, if a third party has, independently and without the knowledge of the design disclosed in the design application, created an identical or similar design or acquired such identical or similar design from someone other than the design applicant, and has commercially worked the identical or similar design or is preparing for the commercial working thereof, the third party shall have a (royalty-free) non-exclusive license to practice the design notwithstanding the design registration.

▶Exception to Loss of Novelty: 1-Year Grace Period

Truistically, a patent/design application based on an invention/design that was publicly known or worked before the filing of the application is rejected for lack of novelty. However, the Patent Act and the Design Protection Act recognize an exception to the loss of novelty in case of pre-filing disclosure (by the right holder or by a third party against the will of the right holder), and this pre-filing disclosure may not be used as prior art to destroy the novelty of the invention or design, if the application is filed within a grace period of 12 months from the pre-filing disclosure, while claiming the benefit of the exception clause at the time of filing.

In addition, the Patent Act allows the request for the benefit of grace period to be made at the time of filing an amendment, e.g., within a period for responding to an Office Action; while the Design Protection Act allows such request for the benefit of grace period to be made within a period for answering a petition in an invalidation trial lodged against the registered design.

▶Background

In this case, the right holder created a bed headboard design and disclosed the design by sending photos thereof to an online distributor who had no obligation to maintain confidentiality thereof. Thereafter, the right holder filed a design application thereon, which matured into a registered design. No prior art was cited during the examination, nor did the applicant claim the benefit of grace period by invoking the exception clause to loss of novelty at the time of filing.

Later, upon identifying an entity (“Defendant”) that sold bed headboard products embodying a design similar to the registered design, the design registrant (“Plaintiff”) filed a scope confirmation trial at the Board of Trials, seeking a decision that Defendant’s design falls within the scope of the registered design.

During the scope confirmation trial, Defendant raised the prior art use defense, arguing that his accused design was based on the design that had been publicly disclosed by the Plaintiff prior to the filing of the design application, which became available to anyone for free use thereof. Accepting Defendant’s prior art use defense, the Board of Trials ruled that Defendant’s accused design was based on what was already in the public domain and, therefore, was outside the reach of the registered design.

After Plaintiff appealed the Trial Board decision to the IP High Court, Defendant, in a surprise move, lodged an invalidation trial, which enabled Plaintiff to claim the benefit of grace period, albeit belatedly. Although Defendant argued that the registered design should be invalidated by virtue of Plaintiff’s own pre-filing disclosure, the Board of Trials recognized Plaintiff’s statutory right to claim for the benefit of grace period; and determined that the registered design was valid. Defendant did not appeal against this decision; and this validity decision became final.

While the invalidation trial was pending before the Trial Board, the IP High Court rendered a decision affirming the Trial Board’s decision recognizing Defendant’s prior art use defense based on Plaintiff’s pre-filing disclosure. The Court reasoned that, even if Plaintiff’s claim for exception to loss of novelty were to be recognized in the invalidation trial, such belated claim for the benefit of the exception clause should not be allowed to disturb Defendant’s right of utilizing the design which had been already in the public domain.

▶The Supreme Court Decision

Among the issues presented on appeal before the Supreme Court, Defendant, in particular, argued that it should be given the right to continue to use the design, or to acquire royalty-free non-exclusive license, analogous to the prior user’s right set forth in Article 100 of the Design Protection Act referred to above.

The gist of Defendant’s argument was:

Inasmuch as Plaintiff did not fulfill the procedural requirement of formally submitting a request for the benefit of grace period at the time of filing the design application, Plaintiff’s registered design was, in effect, in the state of “limbo” in the sense that it could not be used to exclude others from using the design that had been voluntarily disclosed by the Plaintiff prior to the filing of the design application. And, Plaintiff’s belated curing of the defect by way of submitting a request for the benefit of grace period during the invalidation trial should not be allowed to deprive Defendant of its legally secured right of commercially utilizing the public domain design: For such allowance would be tantamount to an ex-post-facto forfeiture of Defendant’s legitimate right to practice the public domain design.

In response, the Court clarified that there should be a clear distinction drawn between the present case and an Article 100 situation. Defendant did not create (or acquire from someone else) its own design, independently and without the knowledge of the registered design. Rather, admittedly, Defendant copied the design disclosed by the registrant, who is entitled to the statutory protection under the grace period clause.

Failure to draw the distinction and to thereby recognize the prior user's right would undermine the statutory regime pertaining to the grace-period system, admonished the Court.

Based on the foregoing reasoning, the Supreme Court held that Defendant’s design falls within the scope of Plaintiff’s design registration.

▶Upshot of The Decision

The above Supreme Court decision, in effect, “rewrites” the statute in the sense that, as long as an applicant files a design application within a period of 12-months from its public disclosure of the same design, the design registration can be effectively used to exclude others from using the design, even though no request for the benefit of grade period was timely made. This is because the registrant can cure the procedural defect (i.e., failure to make the timely request for the benefit of grace period), at any time (even after the expiration of the registration), by way of having, e.g., a third party with proper standing bring an invalidation trial and, then, during the trial, making the request for the benefit of grace period.