The Korean Intellectual Property Office (KIPO) and the Intellectual Property Trial and Appeal Board (IPTAB) announced a reform plan introducing a pre-announcement system for invalidation decisions (“advance invalidation notice”) in patent invalidation trials, dividing opinions within the pharmaceutical industry.

Led by the Korea Pharmaceutical and Bio-Pharma Manufacturers Association (KPBMA), the domestic pharmaceutical companies expressed concern that this system could inadvertently delay the launch of domestic generic drugs, hindering market competition.

Conversely, the Korean Research-based Pharmaceutical Industry Association (KPBMA), led by multinational pharmaceutical companies, welcomes the change, viewing it as a positive step toward strengthening patent holders' defense rights.

Amid these conflicting views, IPTAB recently held an industry meeting to hear the pharmaceutical sector's concerns and is considering supplementary measures, including new exception clauses. Notably, it is considering exceptions for the link between drug approvals and patents.

Patent trials to institutionalize additional correction opportunities, pharmaceutical industry on high alert

In April, KIPO and IPTAB introduced improvements to the ‘advance invalidation notice’ system. This procedure informs parties in advance of the final decision outcome, aiming to strengthen patent holders' defense rights by granting them one more opportunity for correction (patent amendment).

By ensuring patent holders sufficient time to defend themselves during the trial process, the reliability and stability of patents will be enhanced.

KIPO emphasized that this change will “contribute to creating ‘premium patents’ that enjoy broad exclusive rights for high-value innovative technologies, with clear rights that are also effective against third parties.”

In current practice, when a patent is ruled invalid, the patent holder has to separately file a lawsuit to overturn the decision or request a correction trial afterward. However, under the new system, if the trial division finds grounds to invalidate the patent, it will not immediately finalize the decision but will instead issue a prior notice stating it ‘will issue an invalidation decision’.

Upon receiving this notice, the patent holder gains an additional opportunity to supplement the patent through a correction request within a specified period. In essence, it offers one more chance to save the patent.

This is interpreted as part of the recently emphasized policy to foster premium patents, an effort to protect high-quality patents and support the technological competitiveness of domestic companies.

The IPTAB also stated it will enhance the burden of proof for petitioners and improve procedural aspects like strict adherence to evidence submission deadlines, aiming to operate patent disputes more transparently and predictably.

Domestic pharmaceutical companies express concern, “Generic launch delays... may be disadvantageous when obtaining first patent exclusivity ”

The system for notifying patent invalidation decisions is not going to be implemented by the industry sector. However, while the domestic pharmaceutical industry agrees with the system's intent, it maintains that the unique characteristics of the pharmaceutical sector must be considered.

Particularly, it is pointed out that if this system interacts with the drug approval-patent linkage system, it could cause critical delays for domestic pharmaceutical companies (generic manufacturers).

Under the current approval-patent linkage system, the first generic company to successfully challenge a patent is granted a 9-month exclusive marketing authorization right (first generic exclusivity). However, during the patent dispute, the original drug’s company can apply for a sales ban to block the generic's launch for up to 9 months.

If the generic company obtains a favorable ruling, such as patent invalidation, within the 9-month period, the sales ban is immediately lifted, allowing the early launch of generics. However, if no favorable ruling is obtained, the generic company must wait up to 9 months until the ban is lifted.

Domestic firms believe that an advance invalidation notice may critically affect this timing. The original drug’s companies may amend patents at the last moment to avoid invalidation, which could rob generic drug manufacturers of their exclusivity, delay market entry by up to a year, and allow originals to maintain higher drug prices longer.

The head of the patent team at domestic pharmaceutical company A pointed out, “This system could create an unreasonable situation where a generic drug that could have been approved and sold immediately ends up being released a year later. There is also the potential for some original drug companies to exploit this to maintain their drug prices for an extra year.”

Such concerns were raised at an explanatory session held by IPTAB with the Korea Pharmaceutical and Bio-Pharma Manufacturers Association, leading to additional discussions.

Domestic companies also raise concerns about the fairness of the system's application. This is because the advance invalidation notice system is highly likely to effectively favor multinational pharmaceutical companies.

They argue that while domestic pharmaceutical companies hold fewer patents and have grown through generic patent challenges, multinational pharmaceutical companies hold numerous new drug patents in Korea.

An industry insider stated, “While we agree with the intent, if implemented without exception clauses considering the unique characteristics of the pharmaceutical and biotech industry, domestic companies could be at a relative disadvantage.”

Multinational pharmaceutical companies, “Expanded opportunity to amend patents... Expect it to enhance rights protection”

Global pharmaceutical companies are welcoming the move. According to KRPIA, which represents multinational pharmaceutical companies, the introduction of the advance invalidation notice system is viewed as a positive measure that further strengthens the patent holder's right to defend.

KRPIA assessed, “Receiving advance notice of the decision and being granted an additional opportunity for correction can clearly work to the patent holder's advantage.”

Under the current Patent Act, opportunities for amendment requests are limited, mostly only possible during the early stages of invalidation trials (such as when submitting the first response). Consequently, there have been cases where patents were invalidated because amendments couldn't be made when clear issues emerged later in the proceedings.

In such cases, patent holders were forced to bear the cost and time burden of filing a lawsuit to overturn the decision and separately requesting a correction trial. The introduction of the advance notice system would allow them to rectify the situation immediately during the trial stage through additional corrections, making the process more efficient.

A KRPIA official stated, “Even a single opportunity for additional amendments could become a highly significant strategic option for patent holders in their defense. Receiving advance notice of the anticipated decision from the IPTAB to prepare tailored amendments will also substantially aid in protecting rights.”

However, multinational companies also anticipate that the effectiveness will vary depending on the detailed design of the system.

KRPIA stated, “We must await the final system design to judge, but if the structure provides an additional unconditional amendment opportunity after the anticipated decision notice, it is highly likely to positively impact patent holder rights protection. The precise effect can only be assessed upon reviewing the specific details of the system design to be released later.”

IPTAB shares concerns with the pharmaceutical industry...reviews supplementary measures

The IPTAB stated it is discussing the creation of new exception clauses as a supplementary measure to address concerns from the domestic pharmaceutical industry.

In response to Dailypharm's inquiry regarding this matter, the IPTAB’s Adjudication Policy Division stated, “We have internally discussed measures to provide exceptions to prevent domestic pharmaceutical companies from suffering disadvantages.”

Specifically, it is reviewing a proviso clause that would allow the omission of the advance notice-and-hearing procedure for invalidation trials related to the Ministry of Food and Drug Safety's approval-patent linkage system.

Given that swift rulings are particularly crucial in pharmaceutical patent disputes, the plan is to allow the trial division to issue a ruling immediately without the notice procedure upon request by interested parties, after assessing the nature of the case.

The IPTAB stated that it plans to explicitly include these details in the upcoming Patent Act amendment.

If such an exception clause is introduced, the procedure for issuing immediate decisions will be maintained in patent disputes that could affect the future launch of generic drugs, as was previously the case.

An IPTAB official emphasized, “We will ensure the intent established by other statutes is not undermined,” stressing that the implementation of the notice system will be harmoniously designed so as not to undermine the principle of concluding trials under the approval-patent linkage system within 9 months.

In practice, the MFDS and the IPTAB have long operated systems like advance trials to harmonize generic drug approvals and patent disputes. This time, they are expected to refine the scope and requirements for applying exceptions through inter-agency consultations.

The IPTAB official added, “We will supplement the system by reflecting field feedback, but we will find a balance point that does not derail the system's implementation itself.”