Compulsory License in Korea

It was 2005 when the WTO Members adopted an instrument adopting Article 31bis and its annexes . The new article contains agreement painfully reached between the developed and developing countries on compulsory licensing of pharmaceutical products. The agreement is viewed by some developed countries as a backward movement in international intellectual property negotiations, while the same is viewed as a progress by the developing countries. Anyhow, Korea adopted and reflected the decision into its laws. The 2005 Amendment to the Patent Act is the outcome. The provisions relating to the compulsory license are as follows. (I had to translate them for my own good.)

So, what is different? The new law specifically provides for compulsory licensing of patented pharmaceutical products. It provides more grounds for granting compulsory license. And it faithfully incorporates the WTO decision. Look at the law.

Article 106 Expropriation of Patent Right etc.

(1) If a patented invention is necessary for either of the following reason in time of war, incident or other similar emergency, the Government may expropriate the patent right, work the patented invention or require a person other than the Government to work the patented invention:

(i) national defense; or

(ii) non-commercial working of the patented invention for the interests of the public.

(2) Where a patent right is expropriated, the rights to the invention other than the patent right are extinguished.

(3) If the Government expropriates a patent right, or the Government or a person other than the Government works the patented invention under paragraphthe Government or that person shall pay reasonable remuneration to the patentee, exclusive licensee or nonexclusive licensee.

(4) Matters necessary for expropriating and working a patent right as well as remuneration for these acts are prescribed by Presidential Decree.

Article 107 Adjudication for the Grant of a Nonexclusive License

(1) Where a patented invention falls under any of the following subparagraphs and if a consultation with the patentee or exclusive licensee for a nonexclusive license under a reasonable condition was attempted and could not be made or if the consultation could not be made, a person who intends to work the patented invention may request the Commissioner of the Korean Intellectual Property Office to adjudicate (referred to as “an adjudication”) for the authorization of a nonexclusive license; however, a request for the adjudication may be made without a prior attempt to consultation if the working of the patented invention is for noncommercial public interest:

(i) where the patented invention has not been worked for more than three consecutive years in the Republic of Korea, except for natural disasters, unavoidable circumstances or other justifiable reasons prescribed by Presidential Decree;

(ii) where the patented invention has not continuously been worked commercially or industrially in the Republic of Korea on a substantial scale during a period of three years or more without justification, or where the domestic demand for the patented invention has not been satisfied to an appropriate extent and under reasonable conditions;

(iii) where the working of the patented invention is necessary especially for the public interest;

(iv) where the working the patented invention is necessary to remedy a practice determined to be unfair after the judicial or administrative process; or

(v) where the working of the patented invention is necessary for exporting a pharmaceutical product, including active ingredients necessary for its manufacture and diagnostic kits needed for its use, to a country importing the pharmaceutical product for treating a disease that threatens the health of a great number of its nationals.

(2) Paragraph (1)(i) and (ii) of this Article does not apply unless a period of four years has elapsed after the filing date of the application for the patented invention.

(3) In adjudicating the authorization of a nonexclusive license, the Commissioner of the Korean Intellectual Property Office shall consider the necessity of each request.

(4) In adjudicating the authorization of a nonexclusive license under subparagraphs (1)(i) throught (iii) or (1)(v), the Commissioner of the Korean Intellectual Property Office shall impose the following conditions upon the licensee:

(i) in cases of adjudication under subparagraphs (1)(i) through (iii), the nonexclusive license shall be exercised for supplying the domestic market as its main purpose; and

(ii) in case of adjudication under subparagraph (1)(v), all the pharmaceutical products produced under the nonexclusive license shall be exported to the importing country.

(5) In adjudicating the authorization of a nonexclusive license set forth in subparagraph(1)(i), the Commissioner of the Korean Intellectual Property Office shall ensure that adequate remuneration be paid. The Commissioner may take into account the following in determining the adequate remuneration where the adjudication were made under subparagraph (1)(iv) or (v):

(i) in case of adjudication under subparagraph (1)(iv), the reason for correcting the unfair practice; and

(ii) in case of adjudication under subparagraph (1)(v), the economic value arising from the working of the patented invention to the importing country.

(6) For semiconductor technology, a request for adjudication may be made only in the cases set forth in subparagraphs (1)(iii) (only for noncommercial working for public interest) and (iv).

(7) An importing country for the purposes of this Article is a Member of the World Trade Organization (“WTO”) which made a notification to the WTO of the following or a country designated under the Presidential Decree which made a notification to the government of the Republic of Korea of the following:

(i) the names and quantities of the pharmaceutical products that the importing country needs;

(ii) if the importing country is on the United Nations list of least developed countries, a confirmation by the importing country that the country has insufficient or no manufacturing capacities for the products in question; and

(iii) a confirmation by the importing country that, where a pharmaceutical product is patented in its territory, it has granted or intends to grant a compulsory license.

(8) The pharmaceutical product under subparagraph (1)(v) is one of the following:

(i) a patented pharmaceutical product;

(ii) a pharmaceutical product produced by a patented manufacturing method;

(iii) a patented active ingredient necessary for the manufacture of a pharmaceutical product; or

(iv) a patented diagnostic kit needed for the use of a pharmaceutical product.

(9) The documents that the petitioner for an adjudication must submit and other requirements for adjudication shall be determined by the Presidential Decree.

Article 110 Formality of Adjudication

(1) An adjudication must be in writing and must state the reasons for the adjudication.

(2) The following matters must be specified in an adjudication under paragraph

(i) the scope and duration of the nonexclusive license;

(ii) the remuneration for the license and the method and time of payment;

(iii) in case of adjudication under Article 107(1)(v), packaging or marking of the products that distinguish such products from the products supplied by the patentee, exclusive licensee, or nonexclusive licensee of the patented invention and an internet address at which the contents of the adjudication will be published; and

(iv) other requirements for the grantee of adjudication to implement that which are stipulated under laws, regulations, or international treaties.

(3) The Commissioner of the Korean Intellectual Property Office must make a determination on the adjudication within 6 months from the date of petition.

(4) Where a petition for adjudication under Article 107(1)(v) satisfies subparagraphs (7) and (8) of the same Article and where all the documents required under subparagraph (9) of the same Article have been submitted, the Commissioner of the Korean Intellectual Property Office must make an adjudication for authorization unless there is a valid reason for its denial.

Article 111 Transmittal of Certified Copies of Adjudication

(1) Where an adjudication is made, the Commissioner of the Korean Intellectual Property Office shall transmit a certified copy of the adjudication to the parties and to any other persons with a registered right related to the patent.

(2) Where a certified copy of an adjudication has been transmitted to the parties under paragrapha consultation on the terms as specified in the adjudication is deemed to have been held by the parties.

Article 111bis

(1) Where a person granted an adjudication on an authorization wants to make an amendment to items specified in the adjudication according to Article 110(2)(iii), he may request the Commissioner of the Korean Intellectual Property Office for such amendment with an attached document explaining the reasons for such amendment.

(2) If the Commissioner considers the request under subparagraph (1) to have legitimate grounds, he may amend such items specified in the adjudication.

(3) Article 111 shall apply mutatis mutandis to subparagraph (2) of this Article.

Article 114 Cancellation of an Adjudication

(1) Where a person is granted an adjudication on an authorization under either of the following circumstances, the Commissioner of the Korean Intellectual Property Office may cancel the adjudication ex officio or upon the request of any interested party. However, for subparagraph(ii), such action must protect the lawful interests of the nonexclusive license:

(i) where working the patented invention is not within the purpose of the adjudication;

(ii) where the grounds for adjudicating the authorization of a nonexclusive license disappear and are considered unlikely to reoccur; or

(iii) where the person granted an adjudication violated items specified in the adjudication according to Article 110(2)(iii) or (iv) without legitimate grounds.

(2) Articles 108, 109, 110(1) and 111(1) apply mutatis mutandis to paragraph(1) of this Article.

(3) Where an adjudication is cancelled under subparagraph (1), the nonexclusive license expires as of the time.

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