The Korean Intellectual Property Office announced that the Korean National Assembly passed a partial amendment to the Korean Patent Act on May 20, 2020, which forces an alleged infringer to compensate a patent hold for the sales of products exceeding the patent holder's actual production capability.  The amendment will go into effect in December 2020.

Under the previous version of the Patent Act, for example, when a patent holder can produce 100 units, even if the alleged infringer sells 10,000 units of an infringed product in the market, the patent holder cannot be compensated for the 9,900 units that exceed the production capability (100 units) of the patent right holder.  The amendment going into effect in December 2020 will change this limitation.

Once the amended law is effective, patent holders will be able to receive compensation for royalties from the alleged infringer based on the exercise of the patent for the 9,900 units, which would not have been included in the compensation calculation under the pre-amended patent statutes.

* (Current) Scope of production capability of the patent holder × Profit per unit

** (Amended) (Scope of production capability of the patent holder × profit per unit) + (Excessive units × reasonable royalty rates)

The United States has already legally adopted this calculation method since the 1940s and Japan also amended its patent laws in a similar fashion effective in April 2020. After United States, by way of this amendment, South Korea will be the second country where both this calculation method for compensation and punitive damage are allowed.  Also, compensation for punitive damages up to triple the sales is now possible, effective since July 2019. Particularly, among the five countries leading global intellectual property rights (Korea, U.S., Europe, China, Japan), Korea is the only country that stipulates the amended method of damage calculation and triple compensation explicitly in the Patent Act.

It is notable that the policy improvements in Korea expands the scope of compensation beyond the production capacity of the patent holder and the policy of triple compensation for patent infringement in combination shows that Korea is serious about intellectual property protection. Once the amount of compensation for damages is changed to this feasible level, the legal application of triple compensation damages will increase in a combination effect. Accordingly, patent technology transfer and intellectual property financing will be significantly enhanced compared to the previous policies, resulting in a significant enhancement of intellectual property rights protections in Korea.