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The Supreme Court of Korea recently ruled that a licensee of a patent is “an interested party” who may request a trial to invalidate the licensed patent under Article 133(1) of the Korean Patent Act. Article 133(1) of the Korean Patent Act pertaining to “Invalidation trial of Patent” stipulates that “an interested party” or an examiner may request a trial to invalidate a patent (Supreme Court en banc Decision 2017Hu2819, rendered on February 21, 2019).
The respondent of the case is a manufacturer and seller of video related products which uses video compression technology and listed as a licensee of standard essential patent pool under the “HVEC Patent Portfolio License” Program of MPEG LA, which is a company providing one-stop licenses for standard essential patents. Under the license agreement of the “HVEC Patent Portfolio License” Program, if a patent in the pool is invalidated, the license agreement is terminated, rendering the licensees under the program to practice the invention of the invalidated patent without any restrictions. The respondent filed for an invalidation trial of a patent under the pool at the Patent Court of Korea and the appellant (the patent owner under the pool) requested a dismissal of the trial. The Patent Court deemed that the respondent is “an interested party” who may request a trial to invalidate the patent is question and invalidated the patent for being identical to an invention described in a reference filed prior to the filing date of the application of the opposed patent and laid open/published after the filing date of the subject patent application in accordance with Article 29(3) of the Korean Patent Act.
The appellant appealed the Patent Court’s decision to the Supreme Court arguing that the respondent is not “an interested party” under Article 133(1) of the Korean Patent Act as the interest/right in which the respondent can request an invalidity trial has expired due to the circumstances that the respondent is a licensee and therefore, is not or will not be challenged by the patentee for practicing the patent in question.
In the appeal to the Supreme Court of Korea, the Court ruled that “an interested party” under Article 133(1) of the Korean Patent Act is a party who has a direct and realistic interest in the right of the patent invention and includes parties that manufacture and sell or plan to manufacture and sell the patented invention. The right of a licensee of a patent right as “an interested party” of requesting an invalidity trial has not been forfeited simply because the licensee is not or will not be challenged by the patentee for practicing the patent in question by the patentee.
The Supreme Court, in its opinion, reasoned that since the licensee is generally subject to various constraints such as the payment of the license fee and the scope of implementation, the licensee can be released from these obligations if the patent in question is invalidated through an invalidity trial. Further, even if there is the existence of grounds for invalidity, until the invalidation is confirmed, the patent rights remain valid and cannot be denied. Moreover, even if an invalidity trial is instituted, it will take a considerable amount of time and money to determine the validity of the patent in question. For these reasons, even for any party who wants to practice the patented invention without a license, such party can first obtain a license and then dispute the validity of the patent and therefore, it cannot be said that a licensee has expressed the intention not to dispute the validity of a patent just because the licensee has been granted a license to practice the patent in question.
This en banc decision is significant in that it overturns the Supreme Court’s precedents ruling that the right of a party as “an interested party” of requesting an invalidity trial is forfeited simply because the party is a licensee. For patent owners, the Supreme Court’s decision signifies the importance of including clauses in patent license agreements that prevents licensees from disputing the validity of the licensed patents.
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