8.9 Criminal proceedings
Chapter XII (penalty provisions) of the Patent Act provides for criminal punishment for certain acts related to patent rights – lawsuits related thereto are called criminal patent lawsuits. Such acts include patent infringement,175 the divulgence of confidential information,176 perjury,177 false indication,178 fraud179 and a breach of orders to maintain confidentiality.180 Of these, we will mainly discuss patent infringement in this section because it is the most common in practice.
8.9.1 Offense not punishable against the victim’s will
Previously, patent infringement was an offense subject to prosecution only upon complaint, meaning that it could not be prosecuted without the victim’s complaint. However, with the amendment of Article 225(2) of the Patent Act on October 20, 2020 (partial amendment by Law No. 17536), patent infringements committed thereafter became an offense that cannot be prosecuted against the express will of the victim but are prosecutable without the victim’s official complaint.
8.9.2 Jurisdiction
8.9.2.1 Territorial jurisdiction
Unlike civil patent cases, there is no provision on territorial jurisdiction specifically carved out for criminal patent cases. Thus, like in any criminal case, the court having jurisdiction over the place of the offense, the place of domicile or residence of the defendant, or the place where the defendant is presently located has territorial jurisdiction over the criminal patent case.181
8.9.2.2 Subject matter jurisdiction
For civil cases, the judicial power of a district court is exercised by a single judge, in principle, while the cases defined in Article 32(1) of the Court Organization Act may exceptionally be judged by a panel of the district court (Articles 7(4)–(5) and 32(1) of the Court Organization Act). Article 32(1)(iii) of the Court Organization Act dictates that, except for certain types of cases, a panel should preside over cases that may result in “capital punishment, imprisonment with or without labor for an indefinite term or for not less than one year in the short term.” However, such punishments are not applicable to the patent crimes defined in Chapter XII of the Patent Act. Therefore, all criminal patent cases are handled by a single-judge bench.
8.9.2.3 Jurisdiction by court level
As stated above, criminal patent cases go to single judges in district courts or their branches and are appealed to panels of district courts (Article 32(2) of the Court Organization Act). Appeals thereof are heard by the Supreme Court.
8.9.3 Investigation
8.9.3.1 Investigators and initiation of investigation
The Criminal Procedure Act amended on January 1, 2021 has excluded violation of the Patent Act from the offenses subject to initiation of investigation by a prosecutor. As a result, the primary investigators of patent infringement in the Republic of Korea were divided into general judicial police officers and special judicial police officers of the KIPO.
At the same time, the provision that required a patentee to file a complaint within six months from the date on which they became aware of the infringer was no longer applicable. Patent infringement was changed from an offense subject to prosecution only upon complaint to an offense not punishable against the victim’s will, and a special judicial police officer may recognize patent infringement if they discover it. However, in practice, patent infringement is brought as a criminal case after the patentee has analyzed whether the infringer’s act constitutes infringement. Therefore, the primary investigation into most patent infringement is still initiated upon a patentee’s complaint.
As described above, a two-track investigation system is in place for criminal patent infringement – by general judicial police officers and special judicial police officers. After the primary investigation by them, the case may be transferred to the prosecutors’ office from each but in different manners. A general judicial police officer transfers the case to the prosecutors’ office if they decide to acknowledge the allegation or, even when they decide not to acknowledge the allegation, if there is an objection by the patentee (Articles 245-5(1) and 245-7(2) of the Criminal Procedure Act). When a special judicial police officer conducts a primary investigation, they express their opinion on whether to acknowledge the allegation and transfer all cases to the prosecution (Article 245-10(5) and (6) of the Criminal Procedure Act).
The prosecution may directly conduct a supplementary investigation into the transferred patent infringement case, request a judicial police officer to conduct the supplementary investigation (Article 197-2(1) of the Criminal Procedure Act) or direct a special judicial police officer to reinvestigate the case (Article 245-10(2) of the Criminal Procedure Act). If the prosecution finds an offense directly related to the transferred offense in its direct supplementary investigation, it may additionally recognize and investigate the offense (Article 4(1)(c) of the Prosecutors’ Office Act).
8.9.3.2 Designation of a focal prosecutors’ office and establishment of a specialized investigation department
Since 2014, the prosecution has been responding to criminal cases that require professional and technical backgrounds by designating focal prosecutors’ offices and establishing specialized departments. In relation to patent offenses, in November 2015, the Daejeon District Prosecutors’ Office, which is situated close to the Patent Court and the KIPO, was designated as a focal prosecutors’ office for patent offenses. In February 2018, the Patent Offense Investigation department was established. In March 2018, the Suwon District Prosecutors’ Office was designated as a focal prosecutors’ office for advanced industry protection. Finally, in February 2019, the Industrial Technology Offense Investigation department was established (its scope of work was expanded when it became the National Defense Business and Industrial Technology Offense Criminal department).
8.9.3.3 Patent investigation advisor system
A patent investigation advisor system is in place under the prosecution to provide focal prosecutors’ offices and specialized investigation departments with technical advice on new patent infringement, trade secret and other such cases. Patent investigation advisors are appointed via two procedures: three patent investigation advisors (experienced patent attorneys) are directly hired by the Supreme Prosecutors’ Office, and six patent investigation advisors are dispatched from the KIPO (Grade IV officials at the KIPO).182 Patent investigation advisors provide advice not only on the cases of the prosecutors’ office to which they belong but also on the cases of other district prosecutors’ offices through transfer.183 However, even if the suspect is investigated by the Daejeon District Prosecutors’ Office (where patent investigation advisors are located) through the transfer procedure, the actual trial is held by the court having territorial jurisdiction over the criminal case (i.e., the court having jurisdiction over the place of domicile or residence of the suspect, the place where the suspect is presently located or the place of offense).
8.9.3.4 Disposition by prosecutor
With respect to transferred cases, a prosecutor directly renders a nonindictment decision if the allegation is not proved or if the authority to indict is not vested. However, for a specialized case transferred to the Daejeon District Prosecutors’ Office, the prosecutor of the Daejeon District Prosecutors’ Office may either directly render a nonindictment decision or, after the necessary investigation at the Daejeon District Prosecutors’ Office, return the case to the prosecutor of the district having territorial jurisdiction over the case for the final disposition. If the prosecutor of the Daejeon District Prosecutors’ Office decides not to indict, the appeal process will be handled by the Daejeon High Prosecutors’ Office.
In 2020, a total of 212 cases were filed with the prosecution in relation to criminal violations of the Patent Act, including patent infringement, accounting for only about 1.1 percent of the 18,943 cases concerning IP-related offenses that year.184 The total number of cases processed in 2020 was 385. Of these 385 cases, indictment decisions were made for only 33 cases; a majority of the remaining cases were closed with “allegation not proved” or “no authority to indict.”185
8.9.4 Trial and hearing
For criminal patent infringement to be established, (i) a valid patent right should exist, (ii) the product or process practicing the patent right should be within the protective scope of the patent right, (iii) the alleged infringer’s practice of the patent right should be unlawful, (iv) the alleged infringer should have the ability to fulfill their legal responsibility, and (v) the alleged infringer should have intent. We will mainly discuss requirement (ii) below, as it is most challenged in practice.
8.9.4.1 Whether the practiced product or process falls within the protected scope of the patent right
As in a civil patent lawsuit, the protective scope of a patented invention should be defined first to determine patent infringement. Thus, an interpretation of the scope of claims is required first, with a focus on the language and text stated in the scope of claims (principle of literal interpretation), while also taking into account the descriptions and drawings of the invention and common technical knowledge at the time the application was filed (principle of reference to the descriptions of the invention).186
Additionally, to determine patent infringement, the elements stated in the patented invention’s scope of claims and the elements of the infringing product or process should be compared based on claim construction, and the elements that are stated only in the descriptions of the invention should not be compared. To fall within the protective scope of a patented invention, the defendant’s product or process must include all elements of the patented invention. If only some of the elements of the patented invention are included, with the rest missing, then the product or process does not fall within the protective scope of the patented invention in principle.187
Patent infringement includes both literal infringement and infringement under the doctrine of equivalents. Therefore, patent infringement may be established in a case where the elements of the defendant’s product or process are not literally identical but instead equivalent to the corresponding elements of the plaintiff’s patented invention.
However, whether indirect infringement can constitute patent infringement is an issue. Court precedent takes the position that indirect infringement is fundamentally a preparatory act of infringement, and, since the punishment of a preparatory act of a criminal act requires a specific provision therefor, the provision to punish patent infringement cannot itself be used in punishing indirect infringement, a preparatory act of infringement.188
8.9.4.2 Grounds for patent invalidation in criminal patent infringement cases
In cases where the elements of a patented invention are identical to those of the prior art known at the time of patent application and thus lack novelty, the patented invention has no scope of the right worth protecting regardless of the absence of an invalidation decision, and, thus, patent infringement is not established.189
Whether a lack of inventive step can be reviewed in a criminal patent lawsuit is an issue. As discussed above, in a civil patent lawsuit, the defendant typically argues against the plaintiff’s patent infringement claim to the effect that it is an abuse of rights based on a clearly invalid patent right that lacks an inventive step, and such a defense has been upheld as valid.190 Although there has not yet been explicit precedent in a criminal lawsuit, it is a common view that no criminal infringement will be found if the patented invention is found to be lacking an inventive step upon review. However, in practice, if a lack of an inventive step is alleged, the trial will generally proceed in consideration of the progress of the related judicial and administrative trials.
8.9.4.3 Intent and unlawfulness
Criminal patent infringement requires the infringer’s intent. The term “intent” here refers to the awareness and acceptance of patent infringement;191 it cannot be readily concluded that an infringer has criminal intent on the sole basis of a registered patent. Where a right holder becomes aware of another person’s act of infringement, they may secure evidence of intent by sending a warning letter to the infringer.
However, the Criminal Act provides that “[w]hen a person commits a crime mistakenly believing that his or her act does not constitute a crime under the laws and regulations, he or she shall not be punishable if the misunderstanding is based on reasonable grounds.”192 In this regard, an issue arises as to whether this provision applies when a defendant has been advised, for example, by a patent attorney on patent infringement. Courts tend to take a strict view as to whether such advice may be construed as a justifiable ground for the misunderstanding of law: the mere fact of receiving advice is not enough to escape punishment.
8.9.4.4 Number of offenses
As the legal interest sought in a patent infringement lawsuit is to protect the patent right, then even if one person has committed multiple infringements, a single comprehensive offense may be established if the unity and continuity of their criminal intent is recognized.193 In other words, in such cases, multiple infringements are treated as one offense. In addition, regardless of whether the right holder is the same, only one offense of infringement is established for each patent right.
8.9.5 Sentencing
The statutory punishment for patent infringement is imprisonment with labor for not more than seven years or a fine not exceeding KRW 100 million. In general, factors to be considered in sentencing include whether the patented invention is actually practiced by the patentee, whether the defendant is in a competitive relationship with the patentee, whether the infringement is literal infringement or infringement under the doctrine of equivalents, the degree of infringement, the degree of damage inflicted on the victim by the infringing act, whether an agreement was reached, and the degree of intent to infringe.
As seen in Section 8.9.3.4, there has been a very limited number of cases where a person has actually been indicted and subjected to a criminal patent lawsuit. Most of these indicted cases were closed by an agreement between the defendant and the victim in criminal proceedings, and guilty decisions were rarely made. Even if a person were to be found guilty, they are, in practice, rarely sentenced to imprisonment; instead, they are mostly sentenced to a fine and probation.
8.9.5.1 Forfeiture and joint penal provision
Any article created by patent infringement or obtained by such infringement can be confiscated or ordered to be delivered to the injured party upon the injured party’s request.194
If a representative of a corporation or an agent, employee or other worker of a corporation or individual commits patent infringement in connection with the business of the corporation or individual, then not only will the offender be punished by a fine, but also the corporation or individual. However, this does not apply where the corporation or individual has not been negligent in giving due attention and supervision concerning the relevant business to prevent such an offense.195
8.9.6 Appeals
As a criminal patent case is a single-judge case at the district and branch courts, an appeal from the decision is judged by the three-judge panel of the district court (Article 32(2) of the Court Organization Act), and an appeal from the panel’s decision is judged by the Supreme Court.