In cases where a licensee who has obtained permission from a patentee for an invention of a method requests the manufacture of goods only used by the licensee to a third party, and then acquires them and implements the invention of a method, whether the production, transfer, etc. of the goods by the third party constitutes an indirect infringement of the patent right (negative)

Article 127 Subparag. 2 of the Patent Act provides that where a patent is an invention of a process, the act of producing, transferring, leasing, importing, or subscribing for the transfer or lease of the product used exclusively for the working of the process shall be deemed infringement of the patent right or exclusive license. Such indirect infringement system aims to ensure its effectiveness to the extent that the patent right is not unfairly extended.

In cases where a licensee, who has obtained permission from a patentee with respect to an invention of a method (hereinafter referred to as "act invention"), entrusts a third party with the production of an article used exclusively for the working of the method (hereinafter referred to as "exclusive product") and supplies a method invention, if such third party's act, such as the production and transfer of the exclusive product, is recognized as an indirect infringement of the patent right, the licensee's right to practice the exclusive product would be unfairly restricted and the patent right would be unreasonably extended. Furthermore, when a patentee establishes the license, he/she may recover profits equivalent to the value of the patent by determining a royalty, such as where he/she is expected to receive the exclusive product from a third party and implement the method invention. Thus, it is difficult to deem that the exclusive profit of the patentee is new because the licensee is supplied with the exclusive product from a third party. Accordingly, in cases where the licensee who has obtained permission from the patentee with respect to the method invention, requests the third party to produce the exclusive product and conducts the method invention, such act does not constitute an indirect infringement on the patent right.

Article 127 subparag. 2 of the Patent Act

Supreme Court Decision 2014Da42110 Decided July 23, 2015 (Gong2015Ha, 1221)

Furthermore, Hybing Inc. (Law Firm Multilater, Attorneys Park Ba-mun et al., Counsel for the plaintiff-appellant)

Postal Co., Ltd. (Law Firm LLC, Attorneys Choi Han-soo et al., Counsel for the plaintiff-appellant)

Patent Court Decision 2016Na1455 Decided November 16, 2017

The appeal is dismissed. The costs of appeal are assessed against the plaintiff.

The grounds of appeal are examined.

1. Regarding ground of appeal No. 2

A. Article 127 Subparag. 2 of the Patent Act provides that where a patent is an invention of a process, a patent shall be deemed infringement of a patent right or exclusive license if the patent is engaged in producing, transferring, leasing, importing, or subscribing for the transfer or lease of, the product used exclusively for the working of the process. Such indirect infringement system is intended to ensure its effectiveness to the extent that the patent is not unfairly extended (see, e.g., Supreme Court Decision 2014Da42110, Jul. 23, 2015).

In cases where a licensee, who has obtained permission from a patentee with respect to an invention of a method (hereinafter referred to as "act invention"), entrusts a third party with the production of an article used exclusively for the working of the method (hereinafter referred to as "exclusive product") and supplies a method invention, if such third party's act, such as the production and transfer of the exclusive product, is recognized as an indirect infringement of the patent right, the licensee's right to practice the exclusive product would be unfairly restricted and the patent right would be unreasonably extended. Furthermore, when a patentee establishes the license, he/she may recover profits equivalent to the value of the patent by determining a royalty, such as where he/she is expected to receive the exclusive product from a third party and implement the method invention. Thus, it is difficult to deem that the exclusive profit of the patentee is new because the licensee is supplied with the exclusive product from a third party. Accordingly, in cases where the licensee who has obtained permission from the patentee with respect to the method invention requests the production of the exclusive product to a third party and conducts the method invention, such act does not constitute an indirect infringement of the patent right.

B. The lower court determined that the Defendant’s act of manufacturing and supplying the Minging Tinging Tinging Tinging Tinging Co., Ltd. (hereinafter “Korea-style Co., Ltd.”) which is a non-exclusive licensee of the patented invention of this case, which is a method inventor, cannot be deemed as an indirect infringement on the Plaintiff’s patent right regarding the patented invention of this case.

C. Examining the reasoning of the lower judgment in light of the aforementioned legal doctrine and the record, the lower court did not err by misapprehending the legal doctrine on indirect patent infringement, contrary to what is alleged in the grounds of appeal.

2. Regarding ground of appeal No. 1

The lower court recognized that the Defendant engaged in the conduct of tallying and transmitting the instant patented invention using the instant patented invention for the purpose of verifying the performance of tallying anti-tallying devices in the process of manufacturing and supplying the tallying counter-tallying devices to Hanra Mutual Aid. Then, insofar as it cannot be deemed that the Defendant’s act of manufacturing and supplying the tallying counter-tallying devices to Hanra Mutual Aid, which is a non-exclusive licensee of the instant patented invention, infringes the Plaintiff’s patent right regarding the instant patented invention, the lower court determined that it was difficult to view that the tally accompanying the act of manufacturing and

Examining the reasoning of the lower judgment in light of the relevant legal principles and records, the lower court did not err by misapprehending the legal doctrine on patent infringement, as otherwise alleged in the grounds of appeal.

3. Conclusion

Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Jo Hee-de (Presiding Justice)