This is an informal case summary prepared for the purposes of facilitating exchange during the 2025 WIPO IP Judges Forum.
Session 7: Calculation of Damages in IP Disputes
Intellectual Property High Court, Republic of Korea [2024]: Case No. 2023Na11276
Date of judgment: October 31, 2024
Issuing authority: IP High Court of Korea
Level of the issuing authority: Appellate Instance
Type of procedure: Judicial (Civil)
Subject matter: Patent, Enforcement of IP and Related Laws
Plaintiff: Hongsan Gyeong Metal Co., Ltd.
Defendant: HC Company Co., Ltd.
Keywords: Patent Infringement, Calculation of Damage, Intentional Infringement, Enhanced Damage, Contribution Rate, Apportionment
Basic facts: Plaintiff is the patentee of the patented invention entitled “Lid for Cooking Vessels” (the “Patent-in-Suit”). Defendant manufactured and sold vacuum pot products incorporating the patented invention (the “Defendant’s Products”). Plaintiff sought damages for patent infringement against Defendant, further asserting that Defendant’s acts of infringement were intentional. Accordingly, Plaintiff argued that the enhanced damages provision under Article 128(8) of the Korean Patent Act should apply.
Held:
1. Patent Infringement: Recognized
The Court found that Defendant’s Products infringed Plaintiff’s Patent and the infringement was Intentional.
2. Claim for Damages
The Court recognized intentional infringement and awarded enhanced damages equal to double the amount of recognized damages.
Relevant holdings in relation to Calculation of Damages in IP Disputes:
1. Applicability of Statistically Derived Marginal Profit Rate under Article 128(4) of the Korean Patent Act
Article 128(4) of the Korean Patent Act provides that, in cases where damages are claimed under paragraph (1), the amount of profit obtained by the infringer through the infringing acts shall be presumed to be the amount of damage suffered by the patentee or exclusive licensee. The term “profit” in this context refers to the economic gain realized by the infringer as a result of the infringement, without any specific limitation on its nature (see Supreme Court Decision 2006Da1831, rendered October 12, 2006).
Where the infringer has manufactured and sold infringing products, the “profit obtained through the infringing act” may, absent special circumstances, be calculated as the marginal profit—that is, the total sales revenue from the infringing products minus the additional costs incurred in their manufacture and sale. As a rule, to determine marginal profit, the court must first establish, based on evidence, (i) total sales revenue of the infringing products, and (ii) additional costs incurred for their manufacture and sale (i.e., variable costs).
The standard method of calculation is to subtract the variable costs from the total sales revenue. However, where it is difficult to directly establish the amount of variable costs through specific evidence, it is not appropriate to conclude that Article 128(4) is inapplicable solely on that basis.
If, upon consideration of the entire evidentiary record and the substance of the proceedings, it is reasonably established that the actual marginal profit obtained by the infringer is comparable to or exceeds the amount derived by applying a statistically reliable marginal profit rate used in the relevant industry, then the court may calculate the infringer’s marginal profit by multiplying the infringing product’s sales revenue by the statistical marginal profit rate.
2. Method for Determining the Contribution Rate of a Patented Invention
Where the patented invention is implemented in only a portion of the product, or where factors other than the patented technology—such as the infringer’s capital investment, business capability, brand recognition, corporate goodwill, product quality, or design features —are found to have contributed to the generation or increase of the infringer’s sales profits, the entirety of the profits obtained from the manufacture and sale of the product cannot be deemed attributable to the infringing act alone. In such cases, the court must determine the contribution rate of the patented invention to the total profits derived from the infringing product, and calculate the infringer’s profits attributable to the infringement accordingly.
Where only part of the product is related to the infringing technology, the contribution rate of the patented invention to the total profits must be assessed by comprehensively considering the factors including but not limited to, (i) whether the infringing portion constitutes an essential part of the whole product, (ii) the technical and economic value of the patented portion, (iii) the proportion of the infringing portion in relation to the overall composition and price of the whole product.
In determining the contribution rate, the burden of assertion and proof regarding the existence and extent of contributing factors contributed to the generation and increase of the infringer’s profits other than the implementation of the patented invention in the infringing product rests with the infringer (See Supreme Court Decisions: 2005Da36830, rendered October 13, 2006; 2005Da75002, rendered March 27, 2008; 2021Da310873, rendered April 28, 2022.).
3. Meaning of “Intentional Infringement”
Under Article 128(8) of the Patent Act, where an act of infringement of another’s patent right or exclusive license is found to be ‘intentional’, the court may, notwithstanding Article 128(1) of the Patent Act, determine the amount of damages within a range not exceeding three times the amount recognized under paragraphs (2) through (7) of Article 128 of the Patent Act. The phrase “where the infringement of a patent right or exclusive license is found to be intentional” refers to circumstances in which the infringer knew or foresaw that their conduct would result in the infringement of the patent right or exclusive license, and nonetheless proceeded with the infringing act, accepting the potential outcome. This includes both actual intent (dolus directus) and reckless disregard or willful blindness (dolus eventualis).
Where direct evidence of such intent is unavailable, the infringer’s subjective state of mind can be proven by establishing circumstantial facts that bear a substantial and logical connection to the existence of intention. The determination of what constitutes sufficiently probative circumstantial evidence must be made through a rational assessment of the factual matrix, guided by principles of logic and rules based on common experience (See Supreme Court Decision 2000Da67020, rendered March 9, 2001).
4. Evaluation of Factors Under Article 128(9) of the Korean Patent Act
Article 128(9) of the Patent Act provides that, in determining the degree of enhanced damages, the court shall comprehensively consider the following factors:
(i) Whether the infringer held a superior bargaining position;
(ii) The extent to which the infringer recognized the intention of the act or the likelihood of causing harm;
(iii) The scale of damages suffered by the patentee or exclusive licensee as a result of the infringement;
(iv) The economic benefit obtained by the infringer through the infringing act;
(v) The duration and frequency of the infringement;
(vi) Criminal fines imposed in connection with the infringement;
(vii) The financial status of the infringer;
(viii) The extent of the infringer’s efforts to remedy the harm caused.
These factors are not limited to circumstances occurring strictly within the infringement period. Rather, the court may take into account all relevant circumstances before, during, and after the infringement in order to reach a fair and equitable determination.
Relevant legislation:
The Korean Patent Act, Article 128 (Right to Claim Damages, etc.)
(1) A patentee or an exclusive licensee may claim damages against any person who has intentionally or negligently infringed their patent right or exclusive license.
(2) In an action for damages under paragraph (1), if the infringer has assigned goods that were involved in the infringing act, the patentee or exclusive licensee may calculate the amount of damages as the sum of the following:
(i) The amount calculated by multiplying the quantity not exceeding the quantity of products that the patentee or exclusive licensee could have manufactured, less the quantity of products actually sold among the quantity of the products assigned (the quantity calculated by subtracting the quantity of products that the patentee or exclusive licensee could not sell due to any cause other than the infringement, where such cause other than the infringement prevented him or her from selling the products) by the profit per unit of the products that the patentee or exclusive licensee could have sold if not for such infringement;
(ii) The amount that the patentee or exclusive licensee would reasonably receive for practicing a patented invention, where there is any quantity exceeding the quantity of products that the patentee or exclusive licensee could have manufactured, less the quantity of products actually sold among the quantity of the products sold, or any quantity of products that the patentee or exclusive licensee could not sell due to any cause other than the infringement (the quantity calculated by subtracting the relevant quantity, where it is not deemed that the patentee or exclusive licensee was able to grant an exclusive or non-exclusive license for the patent of such patentee or to grant a non-exclusive license for the exclusive license of such exclusive licensee).
(3) [Repealed]
(4) In an action for damages under paragraph (1), the amount of profit earned by the infringer as a result of the infringement may be presumed to be the amount of damages suffered by the patentee or exclusive licensee.
(5) In an action for damages under paragraph (1), the patentee or exclusive licensee may alternatively claim as damages a reasonable royalty that would have been received for the use of the patented invention.
(6) Notwithstanding paragraph (5), if the actual damages exceed the amount of the reasonable royalty, the patentee or exclusive licensee may claim compensation for the excess amount. In such cases, if the infringer did not act intentionally or with gross negligence, the court may take that fact into account when determining the amount of damages.
(7) In a patent infringement action, if the court finds that damages have occurred but it is extremely difficult, due to the nature of the facts, to prove the amount of damages, the court may determine a reasonable amount of damages based on the entire tenor of the proceedings and the results of the evidentiary examination, notwithstanding paragraphs (2) through (6).
(8) If the court finds that the infringement of another’s patent right or exclusive license was intentional, the court may, notwithstanding paragraph (1), award damages up to three times the amount determined under paragraphs (2) through (7).
(9) In determining the amount of damages under paragraph (8), the court shall consider the following factors:
(i) Whether the infringer held a superior bargaining position;
(ii) The degree to which the infringer acted with intent or recognized the likelihood of harm;
(iii) The scale of damages suffered by the patentee or exclusive licensee as a result of the infringement;
(iv) The economic benefit obtained by the infringer through the infringing act;
(v) The duration and frequency of the infringing acts;
(vi) Any Criminal fines imposed for the infringement;
(vii) The financial status of the infringer;
(viii) The extent of the infringer’s efforts to remedy the harm caused.
*************************