KIPO Plans to Revise the Korean Patent Act

The Korean Intellectual Property Office ("KIPO") plans to revise the Korean Patent Act and is currently collecting public opinion through a public hearing for revising the law. The revised bill of the Korean Patent Act will be previously announced in May of 2005 and is scheduled to be enforced from October of 2006 after the deliberation of the assembly on the bill around the end of 2005. Major contents of the revised bill are provided below.

(A) One-Month Time Extension Allowed for Filing a Korean Translation of PCT Application

The current Korean Patent Act stipulates that the applicant should file a Korean translation of a PCT application within 30 months from the priority date for entering the national stage. However, the revised bill will revise the law to provide foreign applicants with an one-month grace period for entering the Korean national stage. In particular, the applicant will be able to file the Korean translation of the PCT application within 31 months from the priority date.

(B) Expansion of Grounds for Losing Novelty

The revised bill stipulates that inventions identical to inventions publicly known or worked outside of the Republic of Korea prior to the filing date of the patent application (or prior to the priority date if a patent application contains a priority claim) will lose novelty as well.

(C) Unification of Opposition Procedure and Invalidation Trial

The revised bill will abolish the current opposition procedure and allow anyone to lodge an invalidation trial within three months from a publication date of a patent registration. The two systems will be unified since the number of opposition cases is annually at most 300 and the opposition procedure is quite similar to an invalidation trial. Meanwhile, concerned parties may lodge an invalidation trial at anytime.

(D) Restoration of the Utility Model Registration With Substantive Examination

The Korean Utility Model Act will be revised to abolish the current Utility Model registration system without a substantive examination, and restore the Utility Model Registration system with a substantive examination as in the past Utility Model Act. Accordingly, the current double application system will be abolished and the application conversion between a patent application and a utility model application will be newly established. An applicant may file a request for a substantive examination within three years from the filing date, and the term of the utility model right is 10 years from the filing date as in the current Utility Model Act.

After the introduction of the utility model registration system without a substantive examination, the filing number of utility model applications has not decreased; rather, it has maintained at the same level as in the past. Small and middle-sized companies have been continuously showing interest for the utility model system, thus fueling a demand for restoring the current Utility Model Act system without a substantive examination into the Utility Model registration system with a substantive examination.

(E) Saturday Stipulated to be a Closing Day

The KIPO will implement a system of 40 business hours per week (Saturday day off system) from July of 2005. Thus, if the due date of the term period falls on Saturday, the due date of the term period will automatically extend to the next business day.

Duty to File the Korean Translation of the Priority Documents Will Be Abolished

The KIPO revised the Regulation of the Patent Act on February 11, 2005 to abolish the duty of filing the Korean translation of the priority documents at the time of filing a patent application. However, the examiner can request an applicant to file a Korean translation of the priority documents at anytime if the examiner determines that it is necessary to do so in such a case when a reference publicized between the prior date and the Korean filing date is found. The new regulation will be enforced from January 1, 2006. The KIPO announced that the newly revised Regulation will be applied to applications whose due date of filing a Korean translation is after January 1, 2006. Accordingly, the revised Regulation will be applicable to applications filed after August 1, 2005.

A Typeface Can Be Protected Under the New Industrial Design Act

Under the new Korean Industrial Design Act, which will be enforced as of July 1, 2005, a typeface will be added as a statutory subject matter. Typefaces have not been protected so far as an intellectual property right under either Industrial Design Act or Copyright Act. Accordingly, a designer who designs a new and creative set of typefaces can apply for protection under the law by filing an application for a typeface registration.

21.5% Increase of Patent Applications Filed in Korea

On April 11, 2005, the Korean Intellectual Property Office (KIPO) announced that the number of patent applications filed in Korea from January to March of this year was 33,070, a 21.5% increase compared to 27,211 cases filed during the same period last year. The KIPO explained that this increased rate is much higher than last year's increased rate of 17.4%, and the number of patent applications filed in Korea has been sharply increasing every year.

According to the KIPO, the numbers of patent applications filed in the name of Korean applicants and foreign applicants from January to March of this year were 23,869 and 9,201, respectively, 23.2% and 17.4% increases compared to the same period last year. In other words, Korean applicants have outpaced the foreign applicants in both the number of applications and increased rate, which confirms that the interests of Korean people in patent filings are rising.

Also, the top patent filing company was Samsung Electronics with 3,757 applications, accounting for 15.7% of the total 23,869 applications filed in the name of Korean applicants, followed by LG Electronics with 3,439, accounting for 14.4%, Samsung SDI with 1,101, Hynix Semiconductor with 372, and SK Telecom with 277. The number of patent applications filed by these five large enterprises was 8,946 accounting for 37.5% of total patent applications filed by Korean applicants, which represents an enormously high rate of patent filings by the large enterprises.

Increase of Filing Industrial Design Applications for Graphic Designs

A graphic design according to the following definition has been protected as an industrial design under the Korean Industrial Design Act since July 1, 2003.

Under the examination guideline of the KIPO, a graphic design is defined as a graphic or figure displayed on the screen of any informational technology apparatus, e.g., mobile phones, computer monitors, navigators or any apparatus which has a display, i.e., refrigerators, washers, microwaves, CD players.

The protection of graphic designs has been actively used since July of 2003. Since that time, a total of 420 graphic design applications have been filed, 157 designs have been registered, 247 design applications are still pending, and 16 design applications have been refused up to now.

The company that filed the most graphic design applications is NHN, an internet-related company. The filings of those design applications relate to computer monitors (48 design applications) and mobile phones (11 design applications), and 42 design applications have proceeded to registration. The next companies are Samsung SDS (47 design applications), LG Home Shopping (31 design applications), WRG Co. (28 design applications), Samsung Electronic Co. (26 design applications), and BCQRE (26 design applications).

279 applications (66% of the total design applications for graphic designs) were related to computer monitors, 71 applications were for mobile phones, and 24 applications were for PDAs. However, it is expected that design applications for washers, refrigerators, air conditioners and microwaves, which incorporate a liquid crystal display, will increase.

Samsung Electronics Paid 1.3 Billion Dollars in Patent Royalty Fees in Year 2004

According to the "Audit Report of Year 2004" of Samsung Electronics released on April 6, 2005, Samsung Electronics spent USD 1,281,335,700 (exchange rate of USD: Korean won of 1:1,000) on royalty payments last year for using technologies and patents owned by other domestic and foreign companies. This figure accounts for a 5.6% increase compared to year 2003 and amounts to 11.8% of net profits (USD 10,786,700,000) for the year 2004.

Royalty payments paid by Samsung Electronics has been sharply increasing during the recent several years, such as USD 772,142,000 in 2001 and USD 965,714,000 in 2002, and exceeded 1 billon dollars in 2003. The increasing rate in the payments subsided more or less last year.

A person concerned with Samsung Electronics said, "Because technical royalties are mostly determined based on total sales, an increase in total sales results in more technical royalties." The person also stated, "However, reinforced negotiation skills as well as increased cross licenses due to the increase of self-owned patents contributed to the reduction of increasing rate of royalty payments last year."

According to the Audit Report, Samsung Electronics lodged patent infringement lawsuits at the end of last year against four Taiwan personal computer manufacturing companies - Quanta, Compal, Inventec, and Twinhead - and is currently involved in total 11 pending patent infringement related lawsuits, including lawsuits brought from abroad by nine companies such as Mosaid, Matsushita, etc. Among them, Samsung Electronics obtained a favorable judgment against Inventec at the Trial to Confirm the Scope of a Patent Right in June of last year, and recently reached a mutual agreement with Inventec. The Audit Report explained that Samsung Electronics is now involved in 3 lawsuit cases as plaintiff, incurring USD 6,540,000 in court costs and 23 lawsuit cases as defendant, incurring USD 93,822,000 in court costs, whose results, however, will not significantly affect the financial status of the company.

Jong-yong Yoon, vice chairman of Samsung Electronics, revealed "Samsung expects its annual patent royalty payment to grow significantly to some 2.5 billion dollars by 2010. An enormous budget will be needed for patent maintenance fees and patent royalty payments."

While the offensive policies regarding patent issues of foreign companies including Japanese companies have been deepened last year, Samsung Electronics set a goal to file some 2,000 U.S. patent applications in 2005 and 2006, respectively, and to be one of the top five U.S. patent recipients and become one of the top three U.S. patent recipients by 2007.

Mr. Yoon established such vision and stressed the importance of patent management as a core managing policy for this year.

Samsung Electronics ascended to sixth rank, defeating Intel (seventh rank) with 1,604 patent applications filed last year in the United States, an increase by 291 compared to 1,313 in year 2003.

A person concerned with Samsung Electronics said, "Because fees for using semiconductor related patents and mobile communication related patents owned by Qualcomm amount to large portions of royalties, the total royalty figure itself is not important. However, as competition among technology companies have become more intensive, companies have been pushing forward to become innovators in their field which is the key to competition power."

Seoul High Court Orders D Pharmaceutical Company to Pay Remuneration for Employee's Invention

The Seoul High Court ruled that it was unfair for a company to delay the payment of remuneration based on a company's service regulations to an employee who has contributed to the company by an employee's invention.

Plaintiff Wang (33 years old), a former researcher at D Pharmaceutical Company, filed a lawsuit seeking remuneration for an invention made during his course of employment. The Seoul High Court Civil (Department V) rendered a decision partially in favor of the plaintiff, ordering the company to pay about 170 million won on November 16, 2004.

The Court stated that "an employee has a right for receiving reasonable remuneration according to Article 40 of the Patent Act if he or she has assigned "a right to receive a patent right" or "a patent right" with regard to an employee's invention to a company," and "it does not comply with Article 40 of the Patent Act that the company delayed the payment of remuneration based on the company's internal service regulations, which was the only basis that Wang was not granted a patent on his invention."

Wang entered D Pharmaceutical Company as a researcher in 1994, and invented a new method for preparing an antifungal material "itraconazole," a raw material for a drug for treating athlete's foot, with his associate researchers.

D Pharmaceutical Company succeeded in obtaining the "right to receive a patent right" with regard to the method for preparing itraconazole from Wang and other researchers in 2000. Then, D Pharmaceutical Company concluded a license contract with Y Company that monopolized a domestic antifungal market, and D Pharmaceutical Company received 9.2 billion won under the pretext of royalty until June of 2004.

However, D Pharmaceutical Company paid only remuneration for the patent application and 15 million won as prize money to the research team, and delayed the payment of remuneration to individual researchers under the reason that consultation for the employee's invention was not held according to the company's internal regulation for employee's inventions. Thus, Wang filed a lawsuit seeking remuneration for the invention.

Recently, lawsuits with regard to remuneration for employee's inventions have been on the rise.