South Korea is significantly strengthening its intellectual property (IP) protection through the expansion of its enhanced damages system, often referred to as punitive damages, for willful IP infringement. This initiative aims to deter deliberate violations and reinforce the rights of IP holders.

The enhanced damages system was initially introduced in the Patent Act and the Unfair Competition Prevention Act. In 2019, amendments to these laws allowed for damages of up to three times the recognized loss for willful patent infringement and trade secret misappropriation. The Industrial Technology Protection Act followed suit in 2020, implementing a similar three-fold damages cap for willful infringement of industrial technology. By late 2020 and early 2021, the Trademark Act, Design Protection Act, and the Unfair Competition Prevention Act (for idea misappropriation) also adopted the three-fold damages system.

Transition to Five-Fold Damages

A major enhancement took effect on August 21, 2024, with amendments to the Patent Act and the Unfair Competition Prevention Act. These changes increased the punitive damages limit from the previous three times to five times the recognized loss for willful patent infringement, trade secret misappropriation, and idea misappropriation. This marks a significant escalation in the penalties for deliberate IP theft.

The Industrial Technology Protection Act, Trademark Act, and Design Protection Act are also set to adopt the five-fold enhanced damages system. Amendments for these acts were promulgated on January 21, 2025, and are scheduled to take effect on July 22, 2025.

According to a press release from the Korean Intellectual Property Office (KIPO), this five-fold damages system positions South Korea’s IP protection at the highest level compared to the United States and Japan.

Judicial Precedent and Future Application

While the five-fold damages system is relatively new or upcoming for many IP laws, judicial precedent has already begun to emerge for the previous three-fold system. A notable Patent Court ruling on October 31, 2024 (Patent Court Decision 2023na11276, applying the former Patent Act), awarded two times the damages for willful patent infringement.

In this ruling, the court clarified that “willful infringement” includes both definite and willful intent. It also stated that such intent can be proven through indirect evidence strongly related to the intent. The court meticulously considered several factors in determining the degree of enhanced damages, which are common across various IP laws. These factors include:

i) The infringer’s dominant position;

ii) The degree of awareness of intent or risk of damage;

iii) The scale of damage to the rights holder;

iv) The economic benefit gained by the infringer;

v) The duration and frequency of the infringing act;

vi) Any fines imposed for the infringement;

vii) The financial status of the infringer; and

viii) The infringer’s efforts to remedy the damage.

In the aforementioned Patent Court case, the court determined the defendant acted with definite willful intent by acknowledging the defendant’s knowledge of the patent, proceeding with unauthorized production despite license negotiations and a cease-and-desist letter, and continuing sales even after losing invalidation trials.

Strategies for Successful Implementation

While courts can now impose enhanced damages, specific criteria for determining the exact multiplication factor (e.g., how many times the damages should be increased in a given case) have not yet been established. Notably, the two Patent Court rulings mentioned earlier applied the previous three-fold enhanced damages provision. With the application of the five-fold enhanced damages provision, the courts’ discretion will become even broader. Therefore, it is anticipated that it will take a long time for lower court rulings applying five-fold enhanced damages to be issued and for such cases to reach the Supreme Court to establish clear precedents.

To expedite the activation of the five-fold enhanced damages system, it’s crucial for rights holders (victims) and their legal counsel to show greater interest and actively pursue these claims. Concurrently, if courts were to proactively establish concrete internal guidelines, similar to sentencing guidelines, recommending enhanced damages for clear willful infringement cases, it would alleviate the burden on lower courts when awarding such damages, significantly contributing to the system’s revitalization.