Where a patent becomes null and void after the conclusion of a patent license agreement, whether the patentee may claim payment of the patent license fee for the period during which the patent license agreement exists effectively (affirmative in principle)

If a patent becomes null and void, the patent shall be deemed never to have existed except as otherwise provided by Article 133(1)4 of the Patent Act (Article 133(3) of the Patent Act). However, if a patent becomes null and void after the conclusion of a patent license agreement, whether the patent license agreement becomes null and void after the conclusion of the patent license agreement should be determined separately from the effect of the patent.

Upon entering into a patent license agreement, a patentee may not file a claim against a licensee for damages arising from, or prohibition against, patent infringement. Before the invalidation of a patent becomes final and conclusive, a third party’s patent license agreement is prohibited depending on the exclusive and exclusive effects of the patent right. In light of the foregoing, unless it is impossible to practice the patented invention which is the subject of the patent license agreement, the license agreement for the patented invention, which is concluded as the subject of the patent license agreement, cannot be deemed to have been originally impossible since the conclusion of the contract, notwithstanding the retroactive effect of invalidation of the patent. However, the license agreement for the patented invention should be deemed to have been invalidated from the time when

Therefore, even if a patent becomes null and void after the conclusion of a patent license agreement, a patentee can, in principle, claim a royalty for the period during which the patent license agreement exists, unless the patent license agreement was originally impossible or there is no separate ground for invalidation in the patent license agreement itself.

Articles 100, 102, and 133 of the Patent Act; Article 390 of the Civil Act

Supreme Court Decision 2012Da42666, 42673 Decided November 13, 2014 (Gong2014Ha, 2323)

Papy Co., Ltd. (Attorney Kim Han-soo, Counsel for the defendant-appellant)

Co., Ltd.

Busan High Court Decision 200Na11448 delivered on August 2, 200

Seoul High Court Decision 2015Na2047271 decided October 11, 2018

All appeals are dismissed. The costs of appeal are assessed against the defendant.

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. If a patent becomes null and void, the patent shall be deemed never to have existed except as provided under Article 133(1)4 of the Patent Act (Article 133(3) of the Patent Act). However, if a patent becomes null and void after the conclusion of a patent license agreement, whether the patent license agreement becomes null and void after the conclusion of the contract should be determined separately from the effect of the patent.

Upon the conclusion of a patent license agreement, a patentee may not file a claim against a licensee for damages arising from, or prohibition against, patent infringement. Before the invalidation of a patent becomes final and conclusive, a third party’s working of a patent is prohibited according to the exclusive and exclusive effect of the patent. In light of the foregoing, unless the working of a patent, which is the purpose of the patent license agreement, is impossible, the license agreement for a patent concluded on the basis of such patent, notwithstanding the retroactive effect of invalidation, shall not be deemed to have been in an original impossible state since the conclusion of the agreement. Provided, That the license agreement for a patent should be deemed to have been omitted from the time when the invalidation of the patent becomes final and conclusive (see, e.g., Supreme Court Decision 2012Da4266, 42673, Nov. 13, 201

Therefore, even if a patent becomes null and void after the conclusion of a patent license agreement, a patentee can, in principle, claim a royalty for the period during which the patent license agreement exists, unless the patent license agreement was originally impossible or there is no separate ground for invalidation in the patent license agreement itself.

2. The lower court recognized the following facts. On June 201, the Plaintiff and the Defendant, verbally, concluded the instant agreement that “the Plaintiff shall grant the non-exclusive license on the instant invention to the Defendant, and the Defendant shall pay the Plaintiff KRW 6,500,000 per month a royalty.” The Defendant delayed payment of the royalty from March 1, 2014, and the Plaintiff terminated the instant agreement on May 21, 2014.

Based on such factual basis, the lower court determined that the instant agreement cannot be deemed to have been originally impossible solely on the ground that the instant invention became null and void thereafter, and that the Plaintiff and the Plaintiff’s succeeding intervenor’s claim for payment of unpaid royalties did not constitute abuse of rights, and that the Defendant was liable to pay the unpaid royalty KRW 17,403,225 from March 1, 2014 to May 21, 2014 when the contract was terminated. There was no other circumstance to deem that the instant agreement itself has separate grounds for invalidation.

The lower court’s determination is justifiable in light of the foregoing legal doctrine. In so determining, contrary to what is alleged in the grounds of appeal, it did not err by misapprehending the legal doctrine regarding patent abuse or by misapprehending the validity

3. The Defendant’s appeal is without merit, 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 Lee Dong-won (Presiding Justice)