IP High Court Upholds First Award of Punitive Damages for Willful Patent Infringement
In a late October 2024 ruling, the IP High Court of South Korea upheld the main legal findings of a Busan District Court decision to award punitive damages for willful patent infringement. The case involved alleged infringement of the plaintiff’s patent on a lid for a vacuum cooking pot.
The Busan District Court’s decision was noteworthy as it marked the first application of punitive damages since their introduction in a 2019 amendment to Article 128(8) of the Patent Act, which allowed courts to award punitive damages of up to three times the actual damages.
A subsequent amendment, which came into effect in August 2024, has since increased the possible punitive damages cap to five times the actual damages.
Against this backdrop of a pro-patentee legislative push, attention has turned to the courts, which have previously been cautious in awarding punitive damages. The IP High Court’s ruling in this case (no. 2023na11276) may signal a shift to a more assertive approach, aligning with legislative efforts to strengthen patent enforcement in Korea.
▒ Timing of Infringing Acts
A key question in the case concerned timing: the defendant’s infringing acts spanned both before and after the 2019 amendment, raising the question of whether any of the acts were subject to punitive damages. Supplementary Provisions to the amendment state that the new provision “shall apply from the first violation occurring after this Act takes effect.” Relying on this, the defendant argued that the new punitive damages provisions should not apply because their infringing acts began prior to the amendment, and are thus not a first infringement occurring after the act took effect.
The IP High Court upheld the lower court’s decision in rejecting this argument, holding that punitive damages apply to any infringing acts that continued after the amendment took effect on July 9, 2019, regardless of when the infringement first began.
The court emphasized that allowing infringers to evade the heightened damages simply because their actions initially began before the law was amended would contradict the legislative intent behind introducing punitive damages, which was to deter infringement and strengthen relief for victims.
▒ The Willfulness Determination
The threshold for applying the punitive damages provision is whether the infringement was willful. In addressing whether the defendant’s infringement was willful, the court conducted a comprehensive assessment of the facts, including the history of the parties' relationship:
● The plaintiff and the defendant had initially attempted to negotiate a non-exclusive license for the plaintiff’s patent, but after negotiations broke down, the defendant nonetheless proceeded with sales.
● The plaintiff repeatedly contacted the defendant regarding the matter, including issuing a cease-and-desist letter, which the defendant ignored.
● The parties had also unsuccessfully attempted mediation through the Korea Fair Trade Mediation Agency.
● The defendant filed both an invalidity trial and a scope confirmation trial concerning the plaintiff’s patent, but lost in both cases, including on appeal.
The court concluded that the defendant was plainly aware of the patent and that its ongoing sales, despite explicit warnings and legal defeats, showed clear willfulness. The court also dismissed the defendant’s defense that it was genuinely uncertain about the patent’s validity, noting that this defense was contradicted by the defendant’s own prior conduct.
The IP High Court’s analysis on this question brings further clarity on how courts will approach willfulness going forward, and highlights the types of evidence patentees should gather and present to demonstrate willfulness.
▒ Increased Punitive Damages
The court of first instance had awarded punitive damages of 0.5 times the actual damages for the willful infringement that occurred after the amendment. While the IP High Court reduced the overall amount of actual damages, it increased the proportion of punitive damages, awarding damages for the post-amendment period totaling double the actual damages (i.e., actual damages + punitive damages equivalent to 1X the actual damages).
Under Article 128(9), courts must consider eight factors in determining punitive damages:
1. Whether the infringer holds a dominant position;
2. Whether the infringer was aware the act would cause harm to the patentee;
3. The scale of such harm to the patentee;
4. The resulting economic benefits to the infringer;
5. The frequency and length of the infringing acts;
6. The criminal sanction for the infringing acts;
7. The infringer’s financial status; and
8. The efforts the infringer has made to reduce the harm to the patentee.
Applying these factors, the court found:
● The defendant, being significantly larger than the plaintiff, held a dominant position (factor 1).
● The defendant was on notice of the infringement and failed to take steps to reduce the harm to the plaintiff (factors 2 and 8).
● The defendant gained substantial economic benefits and maintained a strong financial position (factors 4 and 7).
● The infringement was prolonged, lasting over three years and involving substantial sales during the punitive damages period (factor 5).
Although the court did not explicitly weigh the factors or indicate exactly how they influenced the final calculation, it did note that no specific evidence was provided regarding factors such as the exact scale of harm (factor 3) and related criminal penalties (factor 6), which may have weighed against a higher punitive award.
▒ Toward Strengthened Patent Enforcement
The IP High Court thus not only affirmed the lower court’s main findings on the applicability of punitive damages, but also increased the punitive damages multiplier. Further, throughout its judgment, the court repeatedly emphasized the legislative intent of deterring willful infringement. This judgment may open the door to more frequent and more expansive punitive damage awards from other courts, and suggests that the judiciary is ready to shift away from its passive stance and begin to more actively follow the efforts of the legislature.
With the newer amendment now also allowing for quintuple damages for infringing acts occurring after August 24, 2024, this trend bodes well for patentees in Korea.