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KIPO published countermeasures to a patent management company which is a non-practicing entity (NPE) troubling a Korean company.(News Letter No. 501)



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1.KIPO published countermeasures to a patent management company which is a non-practicing entity (NPE) troubling a Korean company.

-Export risk of a Korean company due to a patent dispute by NPE is expected to be mitigated.
-The Presidential Council on Intellectual Property (PCIP) decided on measures to support a patent dispute by a foreign NPE (March 23, 2023).

◇ (know your enemy and yourself) - Detailed information of an NPE’s patent information analysis and purchase activity is provided.
◇ (Intensive support) - Government support is focused on a patent dispute with a Korean flagship industry, such as semiconductors, etc.
◇ (Prevention of boomerang) - A management system including a guideline to prevent a boomerang patent, etc. is prepared.
◇ (From defense to attach) – IP monetization is carried forward by a superior patent and an indigenous NPE.

The Korean Government held a 33rd PCIP under the auspices of Prime Minister, Ducksoo HAN, in Government Complex-Seoul, to decide countermeasures against a patent dispute by a foreign NPE.

The overseas export risk of a Korean company due to a patent dispute with a foreign NPE is expected to be reduced. NPE (non-practicing entity) means an entity who holds a patent right and makes a profit by exercising the patent right (license, damage compensation suit, etc.) but does not directly have any production activities, such as manufacturing, selling, etc..

With these measures, Korean companies are able to prepare in advance for patent disputes by knowing in advance high-risk patents of foreign NPEs. Further, Korean companies’ defense abilities against foreign NPEs’ attacks in Korean key industries including semiconductors, etc. appear to increase.

In addition, the number of so-called boomerang patent cases which, after universities’ and public research institutes’ patents were sold to overseas buyers, those patents returned to litigations of NPEs to attack Korean companies, is expected to be reduced.

Beyond the defensive responses to foreign NPEs, these measures are expected to be an opportunity for Korean companies to positively make patent profits from abroad.

As the number of patent trials raised by NPEs against Korean companies increased from 90 in 2019 to 126 in 2022, Korean companies’ burdens have grown and boomerang patents, which are patents sold abroad, have returned as litigation of NPEs have occurred.

A patent infringement trial may ban the sale of the relevant product in the involved country. In US which is the major export market of Korean companies, about 95% of patent infringement trials by NPEs occurred to be a big risk factor in Korean companies’ overseas export. Further, since damage compensation amounts and litigation costs in US are much higher than in Korea, the burden of a company to be sued is heavy. The median amount of damages is 6.9 billion Korea Won in US vs one hundred million Korea Won in Korea, and the average amount of the first instance cost is 1.15~6.9 billion Korea Won in US vs 1.7~4.6 hundred million Korea Won in Korea.

KIPO and the relevant authorities established 4 strategies and 14 promotion tasks as the comprehensive countermeasures to support Korean companies in patent disputes by foreign NPEs.

The major content of these countermeasures is as follows:

Strategy 1] is to enhance information provision of a foreign NPE’s activity trend.

As a result of analyzing patents, the patents that foreign NPEs used in litigation against Korea companies showed the feature that the number of ‘citations’ and the number of ‘patent applications filed in multi countries (patent family)’ are very high, on average, compared to the patents used in general litigation.

By using the feature data of the litigation patents of NPEs, the Korean Government plans to start, at the end of March, a service to provide information on dispute-related high-risk patents and to early warn a dispute risk by industry.

Foreign NPEs tend to newly purchase patents as advanced work prior to patent litigation or to reissue the scope of right of a patent purchased. Before the end of this year, the Government will carry forward a plan to preemptively provide a Korean company with a patent risk degree analyzed after watching these specific trends.

Strategy 2] is to intensively support focusing on the industry where patent disputes frequently occurred by foreign NPEs.

Based on litigation in US, about 85% of patent disputes between Korea companies and NPEs are focused on the information and communication and electric and electronic fields. In line with this reality, the governmental supporting projects, including consultation on strategies responding to patent disputes, etc., are intensively provided to the industrial field where patent disputes by NPEs are frequent.

Since foreign NPEs simultaneously attack a number of companies to maximize profits from litigation, a cooperation system with groups and organizations in the major industrial field, such as semiconductors, etc., will be strengthened such that companies having common dispute issues are able to jointly respond rather than individually responding.

Strategy 3] is to prevent boomerang patents and Strategy 4] is to promote to make patent profits from abroad.

To prevent universities’ and public research institutes’ patents from returning boomerang patents, the Government will carry forward to provide a practice guideline to guard Korean companies when patents are transferred to abroad, and to establish a self-examination commission.

Beyond the defensive measures to foreign NPEs, Korea also needs to positively make patent profits from abroad.

To this end, the Korean Government supports in attracting a litigation investment by a Korean investment company or a litigation consignment (outsourcing) as an indigenous NPE, such that a Korean company with a patent infringed by a foreign company is able to make profits by positively exercising the right.

2. A company to grow with a young designer is recruited.

-KIPO recruits companies to participate in ‘2023 D2B Design Fair’ (March 20~April 28).

KIPO announced to recruit, from March 20 to April 28, companies to participate in ‘2023 D2B Design Fair’ to support a company needing a design idea for a new product in discovering an excellent design(s) and in commercializing the design(s). D2B means from Design to Business.
The participating companies provide a design theme to designers participating in ‘D2B Design Fair’ and go through the processes including a final examination and award.

The companies are able to discover excellent design ideas of creative designers and to expect an effect of improving the awareness of companies and their products.

‘D2B Design Fair’ having its 18th anniversary this year is to provide the participating companies with creative and excellent designs and to provide the designers with an opportunity to directly experience the processes to make rights of designs and to commercialize designs.

‘D2B Design Fair’ includes a ‘company section’ for design competition on a design theme presented by a participating company and a ‘free section’ that a designer submits a design on a free topic.

3. KIPO strengthens a customized consultation to prevent a technology leak.

-A consultation of ‘IP-MIX strategies’ to provide optimal technology protection strategies is newly promoted.
-A customized trade secret protection consultation based on a company’s management competency is strengthened.
-An outreaching technology protection on-site consultation through the technical police and attorney(s) is newly operated.

KIPO announced to strengthen trade secret and technology protection consulting support for small and medium companies, universities and public research institutes which have experienced difficulties in protecting an advanced technology as the global technological competition has deepened. The damage amount caused by a core technology leakage to abroad, etc. for the last 5 years is estimated as about 22 trillion Korea Won (2022 by the National Intelligence Service) and the damages by a technology leakage of small and medium company is 282.7 billion Korea Won (2022 by the Ministry of SMEs and Startups).

(1) From this year, an ‘IP-MIX strategy consultation’ is newly carried forward to provide the optimal technology protection strategies by utilizing diverse IP including patents, trade secrets, etc. according to the technological features.

Without effective technology protection strategies selecting or combining with proper technology protection means, a competitive company is able to easily copy the relevant technology and a situation not to legally obtain a damage relief may arises.

[Remarks] “G” which is a medical equipment developing and manufacturing company accused an executive who stole the relevant technology data and drive software material, etc. for a leakage of a trade secret. However, for the reason that “G” filed a patent application for the technical content of the relevant medical equipment and published it, the court did not recognize it as a trade secret and thus, “G” had no choice but to accept the damages by technology leakage.

A company, etc. is able to prevent a competitive company or late mover from chasing or copying the technology owned by the company supported through a visiting consultation of a technology protection expert through the IP-MIX strategy consultation.

(2) Based on the trade secret protection consultation for a company’s internalization of trade secret management system, an intensive 2nd stage is strengthened to a follow-up 3rd stage.

The Trade Secret Protection Center of the Korea Intellectual Property Protection Agency 1) diagnoses the trade secret management status of a requesting institution through the trade secret basic consultation and provides a management plane (1 days), and 2) supports in building a customized trade secret management system by an expert’s visit through a trade secret intensive consultation (3~5 days).

Then, 3) the trade secret follow-up consultation which is newly established at this time is available when the institution supported by the trade secret intensive consultation wants to additionally check and supplement the trade secret management status.

(3) Legal advice through an attorney is strengthened for damage relief of small and medium companies, universities and public institutes damaged by a technological leakage and infringement.

While legal advice through an attorney specialized in trade secret is continued to be provided, an ‘outreaching technology protection on-site consultation’ is newly operated so that KIPO’s technical police and the Trade Secret Protection Center’s attorney(s) jointly visit the actual place of damages to comprehensively support the damage relief, the investigation of technological leakage and infringement, etc.

4. KIPO and the Korea Trade-Investment Promotion Agency (KOTRA) support overseas local crackdown of counterfeit products with K-trademarks (brands).

# [Case 1] “A”, which is a cosmetics company, recognized an overseas counterfeit product stealing its own trademark and package design and has participated in a presentation to identify overseas counterfeit products since 2014. As a result, in 2022 the Vietnam control agency cracked down on a storage site having 6 types of Korean cosmetics including the product of “A”, catching and discarding 30,350 items (corresponding to 2.1 hundred million Korea Won).

# [Case 2] IP-DESK, which is an overseas IP center located in Shanghai, China found that the counterfeit products of “B”, which is a cosmetic manufacturing company, had been circulated in bulk at the Chinese electronic commerce distribution network (platform) in 2018 and invited “B” in a presentation to identify Chinese counterfeit products. As a result, the local public security cracked down the counterfeit manufacturing factory, catching and discarding 430,000 mask packs of “B” (corresponding to one billion Korea Won).

KIPO and KOTRA announced to recruit companies to participate in ‘2023 presentation to identify overseas counterfeit products’ to be held in 11 areas of 6 foreign countries including China (Beijing, Guangzhou, Qingdao, Shenyang, Shanghai, Hong Kong), India, Thailand, Vietnam, the Philippines and Indonesia.

The ‘2023 presentation to identify overseas counterfeit products’ will be held in each area of the foreign countries from May. A company which wants to participate in the presentation may apply at KOTRA website (www.kotra.or.kr) from March 15 (Wed) to April 14 (Fri).

The presentation has been operated since 2013, to support a local IP infringement regulatory agency in catching counterfeits of Korean companies’ products.

The participating companies directly publish methods to identify counterfeit products in the ‘2023 presentation’ for the local agencies, such as customs, a national police agency, etc.

Any company or organization, such as a small/medium company, a big company, or a nonprofit institution (group or organization), etc., that owns a trademark or design right in an overseas country and is concerned about damages by counterfeits may apply.

The applying company or organization needs to prepare an introduction on a trademark (brand) and the relevant product and a presentation material on a method to distinguish a counterfeit or imitation product in the local language such that a local enforcement officer is able to understand.

The companies and organizations participated in the presentation are provided with various chances to prevent the counterfeits of their own products from being spread and to induce a crackdown of the counterfeits.

In ‘Korea invitation training for overseas enforcement officers’ which will be operated for Vietnam and China this year, an opportunity to building a network with a local enforcement institution will be given such that an overseas enforcement officer is invited to a head office or factory of a participating company, to directly present the difficulties.

Additionally, when selecting items and areas which are subject to ‘a planning investigation of overseas IP infringement damages’ which is operated every year by IP-DESK, the opinions from the participating companies will be preferentially reflected.

5. A service of e-filing a patent application becomes easier and convenient.
-Convenience is improved in preparing trial documents, and a service for verifying the authenticity of the original register is provided.

In the future, the procedures for the online filing of a patent application or the procedures of filing a trial are reorganized faster and conveniently.

According to KIPO, this year the e-filing service will be improved so that a patent customer is able to file a patent application more easily through the webpage (www.patent.go.kr), and the service will be provided in December.

This webpage (www.patent.go.kr) is a portal site providing an integrated service so that an applicant is able to online proceed with all processes of an application, a registration, official fee payment, etc.

It is expected that an applicant is able to more conveniently prepare trial documents, to more easily receive and view online patent documents, and to far easily verify the authenticity of the original register.

(1) The online filing of a trial is improved making it easy and accurate to prepare the trial documents.

An automatic input function of essential information is realized and an error self-check function to check for defects prior to submitting the documents is provided, to minimize a mis-description in the process of preparing the documents.

In addition, trial forms will be provided by sorting the forms based on the features of forms and the types of rights, to easily find about 100 trial forms.

(2) The function of online receiving and viewing patent documents is enhanced.

At present, if patent documents are sent by mail, it is impossible to receive them online. However, in the future, even though the documents are delivered by mail, it is possible to receive them online and further to receive a large file more than 100 megabytes (MB) online.

The system will be improved so that a patent customer is able to easily search patent documents at this webpage anytime, without any separate request for reading.

(3) The service is improved to verify the authenticity of the original register of a patent, etc.

An application programming interface (API) for verifying the authenticity of the original register will be developed to be provided so that a demand agency, such as a patent evaluation agency, etc., is able to search, in real time, the information related to the original register.

This service is improved so that it is possible to confirm, in real time, not only the information of the original register at the point of time that it is issued at this webpage but also the details of alteration of a right.

KIPO plans to proceed with a meeting with patent customers and to collect opinions online throughout the year, so that users’ opinions relating to the e-filing service improvement can be positively reflected.


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