Quintuple Damages in South Korea

As readers may be aware, China’s IP laws now authorize up to quintuple damages for the intentional or malicious infringement of IP rights that causes serious consequences.  I was not aware until just recently, however, that South Korea enacted similar legislation last year, applicable to patents (and, by extension, to utility models and plant variety rights) and to trade secrets.  The relevant provision of the patent act is section 128(8), and the current text (in Korean) can be found at https://wipolex-resources-eu-central-1-358922420655.s3.amazonaws.com/edocs/lexdocs/laws/ko/kr/kr332ko_1.pdf.  For further discussion, there are several English-language discussions by Korean IP practitioners, including here, here, and here.  Enhanced damages remain out of bounds in Japan, however, while to my knowledge Taiwan so far has stuck with at most treble damages enhancements for certain IP rights, including patents.  

In other (albeit somewhat related) news, I am pleased to note that I have now turned in the manuscripts of my two pending book projects, Wrongful Patent Assertion:  A Comparative Law and Economics Analysis, and Remedies in Intellectual Property Law (the former to OUP, the latter to Elgar).  I now plan to take a work and blogging break for the next two weeks, with the blog resuming on or about July 7.  

Federal Circuit Vacates $300 Million Award Against Apple

The decision is Optis Cellular Tech., LLC v. Apple Inc., unanimous opinion authored by Judge Prost, joined by Judges Reyna and Stark.  Optis asserted five FRAND-committed SEPs related to the ETSI LTE standard.  The jury returned a verdict in favor of Apple and initially awarded $506,200,00.  The district court granted Apple a new trial on damages, in view of Apple’s objection “that the jury did not hear evidence regarding Optis’s obligation to license the patents on” FRAND terms (p.2; see also p. 19 n.8), after which the jury returned a verdict for $300,000,000.  The Federal Circuit vacates the infringement judgment and the second damages judgment, and remands for a new trial on both issues.  IT also addresses some of the evidence relating to the damages award.

The principal argument on appeal is that the district court erred by submitting a verdict form to the jury, which posed the following question:  “Did Optis prove by a preponderance of the evidence that Apple infringed ANY of the [a]sserted [c]laims?” (p.14).  The appellate court agrees with Apple that this question “deprived Apple of its right to a unanimous verdict on each legal claim against it related to infringement,” (p.15), because “[a]s long as each juror believed some claim of some patent was infringed, the jury was required to answer “Yes”—even if the various jurors believed that Apple was infringing a different asserted patent.  In other words, the question whether Apple infringed “ANY” of the asserted claims erroneously required an affirmative answer even in a situation where all jurors did not agree that the same patent was being infringed” (p.15, boldface and italics in original).  The court further rejects Optis’ arguments that “the jury instructions’ and the verdict form’s reference to unanimity,” and that the amount of the initial jury verdict “corresponded exactly to the sum of the five numbers that Optis’s damages expert gave as the measure of damages for each patent,” resolve the unanimity problem (pp. 17-18).  For these reasons, the court vacates the infringement judgment as well as the $300,000,000 damages judgment (pp. 19-20).

In a footnote, the court notes last month’s decision of the Court of Appeal for England and Wales awarding Optis a global royalty, in the amount of $502 million (plus interest and fees), for a portfolio of patents including the five at issue in this case (see previous discussion on this blog here).  The Federal Circuit writes:

In its opinion, the English Court of Appeal summarizes the parties’ position in the case currently before this court:

 

Apple’s position on the US appeals is that the second jury verdict should be set aside and Optis should be awarded nothing. Optis’s position is that the first jury verdict should be reinstated. Thus there are, broadly speaking, three possible outcomes: (i) Optis get[s] nothing; (ii) Optis get[s] $300 million for the past and future; and (iii) Optis get[s] $506.2 million for the past.

Id. ¶ 210. It also stated that, “[f]or present purposes . . . [the English Court of Appeal is] assuming that it will be maintained by the [U.S. Court of Appeals for the Federal Circuit] to the extent that one of the two jury awards is upheld. Comity dictates that the English courts should not interfere with such a judgment save for compelling reasons, but there is no compelling reason in the circumstances of this case.” Id. ¶ 258. On May 30, 2025, the English Court of Appeal issued an Order and annexed license. ECF No. 98 at 1. It then issued a corrected version of the Order on June 2, 2025. ECF No. 98 at 1. Based on our conclusions here—that both the infringement and second damages judgments are vacated and the original verdict of $506,200,000 is not reinstated—we do not know how this opinion affects the English Court of Appeal’s decisions (pp. 20-21 n.9).

I’m not entirely sure either.  Lord Justice Arnold also stated in the EWCA decision that “the least-worst solution to the problem which Apple has caused”—not agreeing to abide by the English courts’ determination of a global license until after the E.D. Texas proceedings were underway—"is for the US final judgment to be treated as a floor for the royalties payable by Apple under the licence determined by the English courts in the manner proposed by Optis,” meaning that “Optis retains whatever sum is awarded in the US and, to the extent that the total global royalty payment held to be FRAND in these proceedings exceeds the final US judgment sum, Apple should pay Optis the balance” (see EWCA decision paras. 244, 257).  If I’m understanding this correctly, the premise of the EWCA decision was that Optis would ultimately be entitled to $502 million (plus interest and fees), total, as a global royalty, the only question being what portion would be attributable to the U.S. litigation.  But with the U.S. verdict being vacated and remanded, we still don’t know what a U.S. trier of fact would award for the five patents in suit—a matter that is further complicated by the Federal Circuit's conclusion that two claims of one of the asserted patents might be invalid on patentable subject matter grounds, and that one claim of one of the other patents was (contrary to the district court's view) a means-plus-function claim, such that the validity of all three of these challenged claims needs to be reassessed on remand (pp. 22-32).  But if Optis has effectively consented to a maximum award of $502 million (plus interest and fees) for a global license, would a U.S. damages retrial be moot?  Has Apple requested leave to appeal the EWCA decision to the UKSC?  Is there any possibility that on retrial in the U.S. the award could be greater than $502 million? 

A final damages issue (I’ll skip the substantive issues noted above) is whether the district court abused its discretion in letting Optis’ expert testify about the terms of a 2019 settlement between Apple and Qualcomm.  Short answer, yes:

 

The Apple-Qualcomm settlement agreement is not the most reliable license in the record, and its probative value appears minimal. The scope of the patent rights under the settlement agreement was far greater than the hypothetical license to the five asserted patents in this case, and the agreement settled global litigation between Apple and Qualcomm, including matters spanning patent, antitrust, tortious-interference, and trade-secret claims. [Optis expert] Mr. Kennedy failed to meaningfully account for these differences in scope. Moreover, Mr. Kennedy opined that the settlement agreement is “informative and would be a consideration for [Optis] in the [h]ypothetical [n]egotiation,” but that “[n]one of the Apple licenses here are sufficiently comparable to the [h]ypothetical [l]icense for use as a direct indication of a reasonable royalty rate.” J.A. 7512 (¶ 416) (emphasis modified).

 

Additionally, it was highly prejudicial to Apple for Optis (and Mr. Kennedy) to repeatedly recite the large settlement figure given “the probative value of the [Apple-Qualcomm settlement agreement] is dubious.” LaserDynamics, 694 F.3d at 78. In fact, Optis posted the large settlement figure on trial slides and emphasized the dollar amount to the jury several times. . . . Accordingly, the provative value of the Apple-Qualcomm settlement agreement and Mr. Kennedy’s testimony concerning the same is substantially outweighed by the risk of unfair prejudice . . . (pp. 35-36).

Two Recent Discussions on Experts

1.  Hot-tubbing—a practice which typically takes the form of judges asking questions of  expert witnesses concurrently—is a topic I have touched upon a few times in the past, particularly as it may related to expert testimony concerning damages in IP cases (see here and here).  Samuel Kim has now published a paper on the topic, titled Post-Daubert:  Expert Hot-Tubbing as a Workable Tool for Trial Judges, 34 Fed. Cir. B.J. 121 (2025).  Here is a link, and here is the abstract:

 

Expert evidence plays an undisputedly important role in today’s courts. Judges must decide highly technical issues, and jurors must make difficult decisions based on complex, often partisan, expert testimony. Rule 702 of the Federal Rules of Evidence establishes trial judges’ gatekeeping role for expert testimony, and federal judges continue to face difficulties performing such role.

 

This Note argues that "hot-tubbing," the practice of both parties’ expert witnesses testifying concurrently in a courtroom, empowers trial judges by enhancing their comprehension of scientific evidence. This Note demonstrates that hot-tubbing is a workable tool to elevate judicial competence and suggests specific instances in which hot-tubbing proves particularly effective, such as in a Daubert hearing, Markman hearing, or a complex commercial litigation jury trial. This Note concludes with a proposed amendment to the Federal Rules of Evidence to bridge the gap of awareness and motivate judges to consider implementing hot-tubbing in their courtrooms.

2.  On Law360 today, Amy Rowe, Taylor Rubinato, and Andrew Tepperman published Prospects and Challenges for Expert Evidence at the UPC.  The authors predict that expert evidence on economic issues, including evidence on the effects of granting an injunction and on damages, will become “highly relevant in the near term,” especially after the CJEU’s decision earlier this year in BSH v. Electrolux (itself the subject of an interesting post this morning on IPKat, titled How has the UPC responded to BSH v. Electrolux over the last three months?)  The authors also note that, given the time it can take to prepare expert reports on damages, counsel may need to think about instructing experts at an early stage.

Korea Patent Court Approves Award of Extraterritorial Damages

Professor Chaho Jung has shared with me an interesting decision, the Judgment of Jan. 18, 2024, 2021Na1787 (Korea Pat. Ct.).  The decision has at least two holdings of particular interest to the subject matter of this blog.  First, to estimate the profits derived from the sale of the defendant’s product, in the absence of evidence provided by the defendant, the court calculated a contribution margin using (I'm quoting Professor Jung here and below) “the variable cost-to-sales ratio for the ‘medical substances and pharmaceutical products’ sector, as analyzed in the Bank of Korea’s Corporate Management Analysis, which is based on corporate income tax return data provided by the National Tax Service.”  Second, the court holds that “[a]s long as there is an act of patent infringement within the country, the patent holder is entitled to compensation for damages that have a sufficient causal relationship with the infringement, and such damages are not necessarily limited to those that occurred domestically.”  This second holding, if affirmed on appeal (I understand the case is pending before the Korean Supreme Court), would seem to align Korean practice with last year's decision of the German BGH, Judgment of May 7, 2024, X ZR 104/22—Verdampfungstrockneranlage (see previous discussion on this blog here).  The overall award is for over 12 billion won (about $9 million), plus interest.   

Suzuki et al. on Criminal Penalties for IP Infringement in Asia

            For the most part, criminal law does not play a large role in the enforcement of patent rights, although TRIPS article 61 does require that member states make available criminal penalties for “wilful trademark counterfeiting or copyright piracy on a commercial scale”; some free trade agreements extend the obligation to criminalize IP infringement a bit further (e.g., to anti-circumvention measures); and in some places, including the U.S., criminal penalties sometimes are imposed for trade secret misappropriation.  Some countries, moreover, make all or most types of IP infringement at least potentially subject to criminal penalties, although the criminal prosecution of patent infringement isn’t very common (though it does happen from time to time).

Anyway, I’m finishing up work on my book Remedies in Intellectual Property Law, and the last chapter deals with, among other things, criminal enforcement, so I though I would call readers’ attention to a paper that addresses the criminal enforcement of IP rights in the leading Asian jurisdictions.  The authors are Masabumi Suzuki, Su-Hua Lee, Byungil Kim, Xiuqin Lin, Prashant Reddy, Heng Gee Lim, Jyh-An Lee, and Kung-Chung Liu, and the paper is  titled Civil Follow Criminal or Criminal Follow Civil Procedure as Models to Deal with IP Infringement: Asian vis-à-vis Western Approaches, in Kreation Innovation Märkte - Creation Innovation Markets:  Festschrift Reto M. Hilty 663 (Florent Thouvenin, Alexander Peukert, Thomas Jaeger & Christophe Geiger eds., Springer 2024).  Here is a link to the ssrn version, and here is the abstract:

Art. 61 of the TRIPS Agreement of the World Trade Organization (WTO) requires members to provide criminal punishment at least for willful trademark counterfeiting and copyright piracy on a commercial scale. Sweeping criminalization of IP infringement can be observed in the West typified by Germany and many major Asian jurisdictions. However, in practice, there has been relatively rare criminal prosecution of IP infringement in the West, whereas criminal prosecution of IP infringement, excluding patent infringement, is not uncommon or even common in the seven selected Asian jurisdictions. Why is there such a difference? and what effects does it have on the overall development of IP laws in those Asian jurisdictions? These two questions among others are what this article strives to answer. It will first survey the Asian IP landscape, in the order of the introduction of IP laws into the civil law jurisdictions (Japan, Taiwan, Korea, and China), and into common law jurisdictions (India, Malaysia, and Hong Kong) respectively (2). It will then examine German experiences (3), followed by comparative study and policy analysis (4), and end with some suggestions (5).

Highly recommended!

 

  

Choice of Law and the UPC

Back in March, in a post titled UPC Choice of Law Principles for Damages, I noted a decision of the Mannheim Local Division of the UPC, Hurom Co. v. NUC Electronics Europe GmbH, setting out the following choice of law principles for patent infringement actions filed in the UPC:  "with regard to the determination whether substantive law as laid down in the UPCA or substantive national laws of the UPCA member states applies to acts allegedly infringing traditional European bundle patents, the following applies:

"a) to acts committed after the entry into force of the UPCA, the substantive law as laid down in the UPCA applies;

 

"b) to acts committed before the entry into force of the UPCA, the substantive national laws apply;

 

"c) to ongoing acts started before the entry into force of the UPCA and continued after the entry into force on 1 June 2023, the substantive law as laid down in the UPCA applies."

Furthermore, the court appears to consider damages rules as “substantive,” meaning that national law would apply to damages calculations for acts committed exclusively before the entry into force of the UPCA.

My post neglected to mention, however, a January decision of the UPC Court of Appeal, Fives ECL, SAS v. REEL GmbH, UPC_COA_30/2024 (Jan. 16, 2025), which decided the preliminary issue of whether the UPC has jurisdiction to hear isolated claims for damages, and if so whether this rule applies where the damages were suffered prior to the entry into force of the UPC on June 1, 2023.  The specific setting of this case was that the patent owner had obtained from a German national court a judgment of infringement, prior to June 1, 2023, and a declaration that the defendant would be liable for damages; but it thereafter pursued its damages claim before the UPC.  The UPC Court of Appeal held that the UPC was competent to hear the damages claim (but left open the question of whether national or UPC law would apply to that claim).  The principle established in the Mannheim decision, if correct, would hold that national law applies where the infringing activity occurred prior to June 1, 2023.  

The issues presented in these cases, including an analysis of Fives v. REEL itself, are discussed in a series of article published by Dr. Thomas J. Adam in the journal European Patent Litigation in Practice: “Reach-Back Damages” in the UPC:  Does the UPC have or, indeed, need a long arm to adjudicate on damages caused by patent uses that took place prior to the coming into force of the UPCA?, 3 EPLP 109 (2024); Which Substantive Law Does the UPC Apply as to “Reach-Back Damages”? Some General Thoughts and a Pragmatic Proposal, 3 EPLP 197 (2024); and “We’ll Take It from Here” – Calculation of Damages in the UPC Based on a National Infringement Decision and “Reach-Back” Damages:  Case note to UPC-CoA, 16 January 2025 – UPC_CoA_30/2024.  Dr. Adam’s analysis is consistent with the results reached in the two above-cited cases, if not every aspect of their reasoning.  The second article also discusses the question of what the relevant statute of limitations should be for claims that accrued prior to the entry into force of the UPC.  The UPC itself establishes a five-year statute of limitations (article 72), but Dr. Adam reasons that in these types of cases national law, if different, should apply in order to comport with the parties’ legitimate expectations.  That would mean, for example, that where the claim accrued under German law, the normal statute of limitations would be shorter (three years), except in cases in which the patent owner seeks residual damages under BGB article 252, in which case the statute of limitations is ten years (see, e.g., my previous post on the BGH’s Spannungsversorgungsvorrichtung decision here).     

Update (6-3-2025):  As noted on ip fray, just yesterday a different panel of the UPC Court of Appeal concluded, consistent with the court's January decision in Fives v. REEL, that the UPC has jurisdiction over a case alleging the infringement before and after June 1, 2023 of a non-opted out European Patent.  The new decision is XSYS Germany GmbH v. Esko-Graphics Imaging GmbH, UPC_CoA_156/2025,APL_8790/2025