Method for determining inventive step of selection invention and countermeasures therefor 
Interpretation of damages in Article 128(4) of the Patent Act, with reference to Patent Court decision 2021Na1787, January 28, 2024
Next-generation display, “micro LED” technology - Korea ranked first in patent registrations
Korea, International Patent Application (PCT) continues to increase for 30 years
Korea entered top-five in European patent applications 
Breakthrough with overseas patents in era of competition for technological hegemony
C&S News

Method for determining inventive step of selection invention and countermeasures therefor [Supreme Court decision 2021Hu10022, May 30, 2024]

Woo-Taek Hwang, Patent Attorney
Hee-Jung Lee, Patent Attorney
Byeong-Hoon Yoon, Patent Attorne

1. Overview
In relation to a selection invention, a special type of invention belonging to the technical fields of chemistry and medicine, in which a higher level concept is described in prior art references or a known technology and components of the invention are lower level concepts of the higher level concept, the criteria for determining the inventive step of the invention have been changed since 2021. Until 2020, determination of the inventive step of a selection invention was solely based on salience of effect as compared to a prior art invention without determining the difficulty of composition on the ground that a lower level concept is included in a higher level concept (deemed as a case in which the presence of a selection invention can be recognized directly from the cited document). 

However, since 2021, in determine offering the inventive step of a selection invention, “difficulty of composition” has been considered as a major requirement as in determining the inventive step of an invention in other technical fields under the general patent law, and if “difficulty of composition” is acknowledged, the inventive step would not be denied. However, in a case in which the determination of “difficulty of composition” is not clear, “effect of invention” can be an important criterion for determining whether a composition is difficult or whether the composition is merely an arbitrary choice. In other words, if the “effect of invention” is salient as compared to a prior art invention, it can be used to infer difficulty of composition. 
We will introduce the recent Supreme Court decision on determination of the inventive step of a selection invention, and suggest countermeasures therefor in patent application preparation and registration invalidation procedures.

2. Issues
The main issue in this case is whether a patented invention claiming compounds related to a material for electronic devices, such as organic electroluminescent devices (OLEDs), has an inventive step by virtue of the choice of substituents and substituent positions of prior art inventions 1 and 2. 

3. Supreme Court decision 2021Hu10022
A. The Korean Intellectual Property Trial and Appeal Board and the Patent Court related to this case, held that the claimed invention had the same component structure as those of prior art inventions 1 and 2 and only the position of the substituent was different, and that there was no negative teaching about changing a substituent into another position, and by ruling that it would be difficult to conclude that the lifespan and the external quantum efficiency effect of the claimed invention are heterogeneous or quantitatively significant as compared to those of prior art inventions 1 and 2, the Korean Intellectual Property Trial and Appeal Board and the Patent Court denied the inventive step of the claimed invention. 
 

B. In relation to “difficulty of composition,” the Supreme Court ruled that, among the components of the prior art invention, the circumstances and the presence or absence of motivation or suggestion for preferentially or easily selecting a specific component or a specific substituent, and the structural similarity between the component specifically described in the prior art invention and the claimed invention should be comprehensively considered, and determined that, since the claimed invention is merely an arbitrary selection without technical significance from prior art inventions 1 and 2, a person skilled in the art could easily derive the claimed invention from prior art inventions 1 and 2.
 

C. The Supreme Court also held that, in relation to “salience of effect,” even by comprehensively reviewing the effect which can be recognized or inferred by a person skilled in the art as described in the specification of the claimed invention and the additional experimental data submitted by the patentee, the “effect” of the claimed invention could not be considered heterogeneous or to have a quantitatively significant effect as compared to the effects of prior art inventions 1 and 2.

4. Implications
The Korean Intellectual Property Office, the Korean Intellectual Property Trial and Appeal Board, and the court applied the criteria for determining the inventive step of a selection invention, generally applied since 2021, but specifically examined whether the selection invention has difficulty of composition and salience of effect as compared to a prior art invention. Thus, when “preparing a specification” for a selection invention, it would be advisable for the applicant (or patentee) to specify the difficulty of composition and salience of effect as compared to other inventions.
 

A. The applicant (or patentee), having invented a selection invention should thoroughly review related prior art inventions, and, based on the review results, he/she should specifically recite the number of components which can be theoretically included within the scope of the formula of the prior art invention, the reasons related to negative teachings indicating that it would not be easy to select a specific component or a specific substituent among the components of the prior art invention, and structural dissimilarity between the components specifically disclosed in the prior art invention and the claimed invention. In other words, it should be denoted that a person skilled in the art should go through a process of numerous trials and errors to reach a claimed invention from a prior art invention.
 

B. It should also be clearly indicated in the specification that, by comparing the effects of a claimed invention and a similar prior art invention, the claimed invention is heterogeneous or has quantitatively significant effects through specific details confirming qualitative differences or quantitative descriptions confirming that significant quantitative differences are present.
 

Also, it would be necessary to submit additional experimental data to prove the significance of the effect of a claimed invention during the examination process, trial, or court hearing, within the scope of the matters in the filed specification. 

Interpretation of damages in Article 128(4) of the Patent Act, with reference to Patent Court decision 2021Na1787, January 28, 2024

Jung-Won LEE, Attorney / Patent Attorney

One of the most important issues in a patent infringement litigation is the calculation of damages. This is because the degree of protection of the patentee’s rights is determined by how accurately and fairly the damages are calculated. Recently, Patent Court decision 2021Na1787 issued on January 28, 2024 recognized damages calculation method, which shows a groundbreaking change in this field. Herein, we will look at the significance of the decision and the impact thereof on future patent litigation.

1. Limitations of existing practice: Underestimated damages
To date, the calculation of damages in pharmaceutical-related patent infringement litigations has mainly relied on the expense ratio notified by the National Tax Service or data from the Korea Health Industry Development Institute. According to data from the National Tax Service, the profit margin for finished pharmaceuticals is about 14%, and according to data from the Korea Health Industry Development Institute, the operating profit margin for listed pharmaceutical companies is around 10%. These figures tend to greatly underestimate the actual contribution of patented technologies to corporate profits. In particular, many pointed out that this level of profit margin does not properly reflect reality in the pharmaceutical field, which is a high value-added industry.

2. Reference data in present case: Use of corporate management analysis data from Bank of Korea
This Patent Court decision brought about a significant change in existing practice. Instead of data from the National Tax Service or the Korea Development Institute, the court used corporate management analysis data from the Bank of Korea as the reference point. According to this data, the profit margin for exported drugs is around 40%, which is about three times the profit margin specified in the data from National Tax Service. The court highly evaluated the reliability of the Bank of Korea data. The data was analyzed based on the National Tax Service corporate tax reporting data of 492,288 corporations, and was determined to be relatively reliable considering the subject and the method of analysis. This is deemed as an important turning point which may enable fairer compensation to patentees.

3. Reflecting actual contribution from “marginal profit” to “contribution margin”
Another significance of the decision is that the concept of “profit of infringer” is changed from “marginal profit” to “contribution margin.” Previously, the criteria was mainly marginal profit, that is, the amount obtained by deducting direct variable costs from sales.
 

However, the court ruled that the “profit of the infringer” in Article 128(4) of the Patent Act should be regarded as a contribution margin. A contribution margin can be an indicator showing how much product sales contributed to the actual profits of the company. While marginal profit deducts only direct variable costs, contribution margin deducts indirect variable costs as well, thereby reflecting more accurate profit contributions.

4. Practical significance: Addressing problem of lack of evidence
In practice, the main problem in calculating patent infringement damages was that it is difficult to calculate “additional costs incurred for manufacturing and selling infringing products” with direct evidence. The decision presented a solution to this problem. The court held, “In cases in which it is recognized that the marginal profit actually obtained by an infringer is similar to or may exceed the figure calculated by applying the contribution margin rate based on reliable statistics in the same industry,” marginal profit can be calculated based on the statistics. It has been difficult for patentees to access internal data of an infringer, but reliable industry statistics can now be used.

5. Increased burden of proof by infringer 
The decision also favored the patentee in terms of burden of proof. If actual damages of the patentee are less than the estimated amount, the burden of asserting and proving the above lies with the infringer. This reaffirms the position of the Supreme Court decision 2005Da75002 on March 27, 2008, and decision 2021Da310873 on April 28, 2022. Accordingly, the infringer should actively prove that actual damages of the patentee are small, in addition to defending the claim of the patentee for damages. The decision would greatly increase the burden on infringers and is expected to have the effect of suppressing patent infringement.

6. Conclusion
The decision by the Patent Court sets a new milestone in patent infringement litigation. A more realistic profit rate was applied using the corporate management analysis data from the Bank of Korea, and the concept of “contribution margin” was actively introduced to reflect the actual contribution of the patented technology. Also, by providing a solution to the problem of lack of evidence and burden of proof, the protection of the patentee’s rights could be enhanced. The decision does not simply increase the amount of compensation in specific cases, but is expected to have an impact on overall patent litigation. It is hoped that the courts will continue to fairly evaluate the value of technologies and to make decisions to protect innovations.

Next-generation display, “micro LED” technology - Korea ranked first in patent registrations

It has been found that Korea applied for the most patents in the “micro LED technology,” which can be used in various fields, such as large-sized TVs and smart devices. According to the Korean Intellectual Property Office (KIPO), the result of analyzing patents registered in Korea, the United States, China, the European Union, and Japan shows that the number of micro LED patent registrations nearly doubled from 540 to 1,045 over the past 10 years, recording an average annual increase rate of 7.6%.
 

By the nationality of registrants, Korea accounted for the largest number at 23.2% (1,567 cases). The next largest number of patents was held by Japan at 20.1% (1,360), China at 18.0% (1,217), the United States at 16.0% (1,080), and the European Union at 11.0% (750).
 

Also, the average annual growth rate during the same period was, in descending order, China (37.5%), European Union (10.0%), Taiwan (9.9%), Korea (4.4%), and the United States (4.1%). Here, technological competition between Korea and China is expected to be more intensified.
 

The KIPO said that, in order for Korean companies to ensure global leadership in micro LED technology following OLED, it would be necessary to continue the research and development of micro LED chip manufacturing technology and transfer process technology, and that, to this end, the KIPO will continue to provide patent information related to high-quality examinations.

Source: Press release from KIPO (April 7, 2024)

Korea, International Patent Application (PCT) continues to increase for 30 years

The Korean Intellectual Property Office (KIPO) announced that in 2023, international patent applications under the Patent Cooperation Treaty (PCT) by Korean companies increased by 1.2% as compared to the previous year, ranking fourth in the world for four consecutive years.
 

According to statistics from the World Intellectual Property Organization (WIPO), PCT patent applications, Madrid protocol trademark applications, and Hague system design applications by Korean applicants all increased in 2023, proving the continuous innovation activities of Korean companies.
 

As for the companies having filed multiple PCT applications, three domestic companies, including Samsung Electronics (2nd), LG Electronics (6th), and LG Energy Solutions (17th), were included in the top 20 applicants, leading to an increase in the volume of applications in Korea.

Source: Press release from KIPO (March 22, 2024)

Korea entered top-five in European patent applications 

The Korean Intellectual Property Office (KIPO) announced that, in the “Patent Index 2023” recently announced by the European Patent Office (EPO), Korea was included in the top five countries for the first time among countries having filed with the European Patent Office (EPO) last year.
 

The number of patent applications filed by Korean companies also exceeded 12,000 for the first time, reaching an all-time high, and the year-on-year growth rate was 21%, ranked first.
 

The top 10 companies include two companies from each of Korea, the United States, and Germany, and one company from each of Japan, China, Sweden, and the Netherlands. Huawei of China ranked first, followed by Samsung, LG, and Qualcomm. In particular, Samsung filed 4,760 applications, a 58.9% increase from the previous year, ranking first in application growth rate among the top 10 companies.
 

By detailed technologies, Korea ranked second in the fields of electrical machinery, devices, energy, and semiconductors, including secondary batteries, indicating an advantage over other countries in these fields, which have recently been attracting attention as important technologies determining national competitiveness. In particular, it was found that, in the semiconductor field, competition among Korea, the United States, and China which dominated core technologies was fierce.

Source: Patent News (March 26, 2024)

Breakthrough with overseas patents in era of competition for technological hegemony

According to the “IP5 Core Statistical Indicators” data jointly announced by the IP5 (Korea, the United States, Europe, Japan, and China), a consultative body of the five major advanced countries in the patent field, the total number of patent applications (including domestic applications) filed in IP5 countries last year was 3.02 million, an increase of 2.9% as compared to the previous year.
 

Among the applications, the number of applications filed by Koreans in the other four countries other than Korea has steadily increased every year, reaching 83,821 last year, a 9.4% increase from the previous year. Applications filed in the United States amounted to 43,310, accounting for more than half (51.7%), followed by China (23.9%), Europe (15%), and Japan (9.4%).
 

Koreans also had the highest rate of patents registered overseas. Last year, the proportion of Korean applications examined in the U.S. and Europe and granted patents was 85% and 78.1%, respectively, the highest among patent applications by any IP5 country, and exhibited a difference of 5% points or more from China, which ranked second.
 

The Korean Intellectual Property Office (KIPO) said that, under circumstances in which technological competition between countries has intensified, securing exclusive rights overseas through patents would be directly related to the survival of companies, and that the KIPO will develop various support measures to help Korean companies have a dense patent network overseas.

Source: Press release from KIPO (May 15, 2024)

C&S News

Attended 2024 INTA Annual Meeting 

From May 18th to 22nd, Representative Patent Attorney Eui-Hoon Lee, Partner Patent Attorney Hong-Joo Ahn, and Attorney Jung-Won Lee attended in 2024 INTA Annual Meeting held in Atlanta, USA. Our firm’s representatives had meetings with patent attorneys and experts from around the world, and discussed the latest IP issues and changes in legal system while building and maintaining valued business relationships.