A Study on the History and Case Law of Indirect Infringement Doctrines in South Korea and the United States
This article is an excerpt from my presentation at the Patent Law Society Seminar on April 20, 2024.
In this paper, I concisely summarize the historical development and case law evolution of indirect infringement doctrines in Korea and the United States.
By examining the U.S. doctrines of indirect infringement, including relevant case law and legislative history, I aim to offer insights that may deepen our understanding of Korea’s approach to indirect infringement under its patent law framework.
I. Historical Development of Indirect Infringement Doctrines in Korea
1. Diverse Interpretations of Article 127 of the Korean Patent Act
Various interpretations exist concerning the legal nature of Article 127 of the Korean Patent Act, which addresses indirect infringement.
The First Interpretation:
The first view aligns Article 127 with foreign doctrines of indirect infringement, interpreting it as a provision designed to:
- Enhance the enforceability of patent rights, while
- Preventing undue expansion of those rights.
This interpretation emphasizes that Article 127 seeks to balance the protection of legitimate patent rights with guardrails against patent abuse, thereby offering fair and effective remedies without excessively extending the scope of protection.
The Second Interpretation:
A more expansive view has recently emerged regarding the legislative intent and scope of Article 127.
Under this interpretation:
- Article 127 reflects concerns about overbroad enforcement under foreign indirect infringement doctrines and addresses such concerns by limiting its application to “exclusive-use materials” (전용물).
- The provision explicitly allows certain non-infringing acts to be deemed as infringement (“~을 침해한 것으로 본다”).
Thus, Article 127 is seen as reflecting a deliberate intent to expand the enforceability of patent rights within defined limits.
This broader interpretation has gained traction in recent debates and is increasingly viewed as a dominant position among scholars and practitioners.
Korean Court Precedents on Article 127 of the Patent Act
Korean courts have consistently interpreted Article 127 of the Korean Patent Act as a provision aimed at ensuring the effectiveness of remedies for patent enforcement while preventing the undue expansion of patent rights (Patent Court Decision 2006Heo3496, rendered on July 13, 2007; Supreme Court Decision 2007Hu3356, rendered on September 10, 2009; and Supreme Court Decision 2014Da42110, rendered on July 23, 2015).
Criticism of Imported Doctrines
Despite this balanced approach, criticisms have emerged, particularly regarding the lack of dramatic case precedents related to indirect infringement in Korea. Critics argue that Korea’s adoption of doctrinal concepts from U.S. case law and legislative history may have resulted in mechanically importing principles that do not fully reflect Korea’s judicial context.
The absence of landmark historical cases in Korea comparable to those in the United States has led some to question whether Article 127 has been overly influenced by foreign doctrines without the corresponding judicial evolution to justify its scope and interpretation.
While Article 127 reflects Korea’s effort to balance patent rights enforcement with anti-abuse safeguards, further refinement is necessary to develop a more autonomous legal framework that is tailored to Korea’s judicial and technological environment.
The tension between strengthening patent enforcement and restricting overreach continues to fuel debates on the legal nature of Article 127.
※ Reference: U.S. Patent Law – Contributory Infringement under 35 U.S.C. § 271(c)
A representative example of indirect patent infringement is contributory infringement, as stipulated in Section 271(c) of the U.S. Patent Act. This provision defines contributory infringement as follows:
The component must be a "material part" of the patented invention, either a part of a patented product or a material or apparatus used in a patented process.
The seller must know that the component is specifically designed or adapted for use in a way that directly infringes the patent.
The component must not be a "staple article or commodity of commerce" suitable for substantial non-infringing use.
Contributory infringement also presupposes direct infringement. However, it does not require that direct infringement must have occurred prior to contributory infringement.
2. Evolution of Criteria for Determining "Articles Used Exclusively for the Production of the Product"
In practice, Article 127 of the Patent Act, which refers to "articles used exclusively for the production of the product," has been interpreted as a requirement for assessing the 'exclusive use' of such articles.
The concept of "production" has also served as a pivotal factor in evaluating whether an article is exclusively used for production purposes, thus forming one axis of the exclusivity requirement.
The meaning of 'exclusive use for production' in the context of the presumption of infringement under prior legal provisions is well illustrated in the following precedents established by the Patent Court.
"For indirect infringement of a patent right to be established under Article 127, Subparagraph 1 of the Patent Act, the object of the act, such as production or transfer, must be a product that is used exclusively for the production of the patented invention. Using the product must inevitably result in the production of the patented invention. If the product can be used for purposes other than the production of the patented invention, indirect infringement is not established, even if acts such as production or transfer are carried out. In this context, 'other purposes' should be recognized only if they are commercially or economically practical uses that are socially accepted or approved, based on the intent of the provision. Mere theoretical, experimental, or temporary possibilities of use do not constitute 'other purposes' sufficient to negate indirect infringement" (Patent Court Decision 2006Heo3496, rendered on July 13, 2007).
Unlike foreign systems, Korea's indirect infringement provisions specifically target products that are used exclusively for the "production" of patented inventions involving tangible goods.
Products used for other forms of exploitation, such as "use" or similar implementation activities, are not covered under this regulation.
Accordingly, the Supreme Court has defined the meaning of "production" to assess whether a product qualifies as being exclusively used for such production purposes.
" The provision governing indirect infringement under Article 127, Subparagraph 1 of the Korean Patent Act is understood to address cases where an act, although not directly implementing a product comprising all elements of the invention, nonetheless creates a high likelihood that such a product will eventually be implemented. This provision enhances the effectiveness of remedies against future patent infringements while ensuring that patent rights are not unduly expanded. In light of the wording and purpose of the provision, the term "production" refers to any act of creating a product that contains all the elements of the invention, using a product that lacks certain components of the invention. This definition encompasses not only industrial production but also processing and assembly activities. Furthermore, for a product to qualify as being "used exclusively for the production of the patented invention", it must lack any commercially, economically, or practically viable alternative uses that are socially accepted or recognized. The mere theoretical, experimental, or temporary possibility of other uses does not constitute an alternative purpose that negates indirect infringement." (Supreme Court Decisions: 2007Hu3356, rendered on September 10, 2009; 2000Da27602, rendered on November 8, 2002; 98Hu2580, rendered on January 30, 2001).
However, in its decision on July 23, 2015 (2014Da42110), the Supreme Court added a “domestic production requirement” to the exclusivity requirement based on the territorial principle.
This ruling emphasized that, for indirect infringement to be established, the product in question must not only be exclusively used for the production of the patented invention but must also be produced or intended for production within Korea.
By introducing this domestic production requirement, the Court reinforced the territorial limitations of patent rights under Korean law, ensuring that indirect infringement claims are restricted to activities conducted within the jurisdiction of Korea, thereby aligning with the principle of territoriality in intellectual property law.
"The indirect infringement system aims to ensure the effectiveness of patent rights without unduly expanding their scope. However, under the principle of territoriality in patent law, the exclusive rights granted to a patentee—such as production, use, transfer, lease, or importation of a patented product—are effective only within the territory of the country where the patent is registered. Given this principle, it is reasonable to interpret the term 'production' of the patented invention in Article 127, Subparagraph 1 of the Patent Act, as referring to production within Korea. Therefore, if such production of the patented invention occurs outside Korea, even if preparatory acts are carried out within Korea, indirect infringement cannot be established."(2014Da42110)
Although critical reviews of this interpretation have continued (Kang Myung-Soo, 2016), the domestic production requirement has since become an established judicial standard in Korean courts.
However, in 2019, the Supreme Court adopted a more relaxed stance—albeit under strict conditions—by recognizing an exception to the principle of territoriality in the so-called "facial lifting suture kit case" (Supreme Court Decision 2019Da222782, 222799 (consolidated), rendered on October 17, 2019).
This ruling marked a limited yet flexible shift in the Court’s position regarding the territorial scope of indirect infringement.
"Under the principle of territoriality in patent law, the exclusive rights of a patentee—such as the rights to produce, use, transfer, lease, or import a patented invention—are, in principle, effective only within the territory of the country where the patent is registered. However, in cases where all components or essential parts required for the implementation of a patented invention are produced domestically, or where a semi-finished product that includes all major components is manufactured domestically with most production stages completed, and this product is exported to a single entity for final processing or assembly abroad, an exception to the territoriality principle may apply. If the final processing or assembly is extremely minor or simple, and the produced parts or semi-finished products are already in a state where they can achieve the functional effects of the patented invention as a unified whole, then such activities may be deemed equivalent to the domestic production of the patented invention.
This interpretation ensures the substantive protection of patent rights by addressing practical concerns regarding cross-border manufacturing processes.
Professor Park, Sung-ho comments on the ruling in "Human Rights and Justice," Vol. 489, titled "2019 Important Case Commentaries on Intellectual Property Law," as follows:
"The case in question concerns patent infringement related to a 'medical suture insertion device and its procedural kit,' which is used to insert and secure medical sutures during surgical procedures. The patented invention consists of components (individual medical instruments for the procedure) that were all manufactured domestically and ultimately exported to Japan for use by a single entity during the procedure. However, the medical suture holder and the medical suture, specified in Claim 6 of the patent, were not combined. The lower court ruled that the defendant's actions did not constitute patent infringement, reasoning that additional processing or assembly was required to form the combined relationship. In contrast, the appellate court found that such assembly or processing was so minimal and straightforward that manufacturing the individual medical instruments for the procedure sufficed to realize the functional effects of the patented invention as a cohesive unit. The ruling thus recognized infringement, even under the principle of territoriality. Under the principle of territoriality, the effect of a domestic patent right is limited to the territory of the country. However, overly formalistic application of this principle can lead to unreasonable situations, as seen in cases where BM patents are implemented by multiple entities domestically and internationally, or where genuine patented products are parallel-imported. Hence, there is a growing need to recognize exceptions to the principle of territoriality. This ruling is significant as a precedent that acknowledges such an exception to ensure substantial protection of patent rights."
This ruling, when analyzed from the perspective of the definition of "manufacture (or product)," can be interpreted not merely as an acknowledgment of an exception to the principle of territoriality but rather as an application of the 'substantial manufacture test.'
This approach aligns with the flexible interpretations demonstrated in the Andrea II case (1937) and the Paper Converting case (1984) in the United States.
i) When the elements of an invention are sold in a form that is substantially integrated and combined, merely separating or dividing the components to leave only minor assembly tasks for the purchaser cannot avoid patent infringement. Otherwise, the patentee would be deprived of adequate protection.
ii) The patented invention in this case is defined by the combination of a vacuum tube and a circuit. Once the combination of the product has been achieved, the defendants cannot escape liability for infringement simply because the vacuum tube's electrodes were physically separated from the circuit at the time of sale.
iii) Whether the testing process occurs in an operational environment or a laboratory setting, the use of the patented technology in its fully integrated form during testing can itself be regarded as an act of infringement (Radio Corporation of America v. Andrea, 90 F.2d 612 (2d Cir. 1937)).
In the Paper Converting case (1984), the court determined that a product does not need to be fully completed or constitute a finished invention to constitute infringement. A sufficient level of assembly for testing purposes was deemed adequate. This is because, as long as the manufacturer can verify the functionality of the device, the device is considered "made" within the meaning of 35 U.S.C. § 271 under patent law (Paper Converting Mach. Co. v. Magna-Graphics Corp., 745 F.2d 11, 16 (Fed. Cir. 1984)).
II. Overview of the Historical Development of U.S. Indirect Infringement Doctrine
This section summarizes the historical development of indirect liability for patent infringement, drawing from Adams, C. W. (2005). "A Brief History of Indirect Liability for Patent Infringement." Santa Clara Computer & High Tech. LJ, 22, 369.
1. Development of Case Law Based on U.S. Common Law
Prior to the codification of indirect infringement in the 1952 U.S. Patent Act under 35 U.S.C. § 271, the doctrine developed through a series of judicial decisions grounded in common-law principles of joint tortfeasor liability.
Courts sought to address situations where third parties enabled or encouraged infringement without directly committing the act themselves.
The precedent for contributory infringement began to take shape with the 1871 ruling in Wallace v. Holmes (Wallace v. Holmes, 29 F. Cas. 74 (C.C.D. Conn. 1871) (No. 17,100)).
In this case, the defendant sought to circumvent the plaintiff's patented invention, which combined a burner and a glass chimney designed to keep the flame from extinguishing, as part of an oil lamp. To avoid directly infringing the patent, the defendant conspired with a third party, manufacturing and selling the burner while the third party produced and sold the glass chimney.
The court reasoned that the burner sold by the defendants could not be used without being combined with the chimney, which inherently established a connection between the defendants and the lamp users. Based on this dependency, the court inferred that the defendants had colluded with the users to infringe the patent and thus deemed the defendants jointly liable for infringement.
Consequently, contributory infringement in the United States cannot exist independently. There must be direct infringement by a final manufacturer or user who violates the patent holder's exclusive rights. The court views this as the only way to determine that a contributor is liable for infringement.
Once the doctrine of contributory infringement was established in courts, some patent holders sought to extend their exclusive rights beyond the patent scope by leveraging this legal theory.
Primarily, they attempted to broaden their rights through 'tying arrangements', requiring buyers of patented products to also purchase non-patented products.
The U.S. Courts of Appeals and the Supreme Court supported such claims by patent holders (Button-Fastener Case, Heaton-Peninsular Button-Fastener Co. v. Eureka Specialty Co., 77 F. 288 (6th Cir. 1896); A.B. Dick Case, Henry v. A. B. Dick, 224 U.S. 1 (1912)).
2. The Enactment of the Clayton Act and the De Facto Rejection of Contributory Infringement
In response to the evolving case law, concerns arose regarding the misuse of patent rights to establish monopolies over unpatented goods.
To address these concerns, the U.S. Congress enacted the Clayton Act in 1914, a specialized antitrust statute prohibiting collusive practices designed to create monopolistic control over unpatented products.
Subsequently, in 1917, the U.S. Supreme Court revisited the issue in the Motion Picture Patents Co. v. Universal Film Manufacturing Co., 243 U.S. 502 (1917). This case involved allegations of contributory infringement concerning a fundamental patent portfolio covering projectors invented by Thomas Edison. Motion Picture Patents Company was formed by Edison, along with select film producers and projector manufacturers, to avoid costly patent litigation and to exert control over the emerging motion picture industry.
Edison transferred all relevant patents to this company, which then exclusively licensed its patents to projector manufacturers that participated in its formation.
Each projector sold by these manufacturers was affixed with a plate stipulating that the device could only be used to screen films produced by the affiliated film producers. When a theater violated this restriction by using the projector to show films made by independent producers, the company initiated litigation, alleging patent infringement by both the theater and the independent producers.
The Supreme Court ultimately invalidated these restrictive licensing practices, holding that the exclusive rights granted by a patent are confined to the invention specified in the patent claims.
The Court firmly rejected efforts to extend patent rights beyond their statutory scope through tying arrangements or other restrictive agreements overturning the precedent set in A.B. Dick,.
This decision laid the foundation for the doctrine of 'patent misuse,' which prohibits patent holders from leveraging their patents to extend monopolies beyond the scope of the patent itself.
Initially focused on prohibiting the enforcement of patent rights over unpatented goods, the doctrine of patent misuse gradually expanded to cover practices not only 'tying arrangements' involving non-infringing products but also 'divided infringement' cases where components of a patented combination invention are manufactured or sold separately.
Eventually, the U.S. Supreme Court ruled that the doctrine of patent misuse takes precedence over contributory infringement claims (Mercoid Corp. v. Mid-Continent Investment Co., 320 U.S. 661 (1944); Mercoid Corp. v. Minneapolis-Honeywell Regulator Co., 320 U.S. 680 (1944)).
This expansion effectively limited the ability of patent holders to seek remedies under contributory infringement, leading to a landscape where claims of contributory infringement were increasingly curtailed.
3. The 1952 Patent Act and the Codification of 35 U.S.C. § 271
In response to growing concerns about judicial developments, Congress enacted the 1952 Patent Act, codifying 35 U.S.C. § 271 as part of its effort to clarify and limit contributory infringement liability.
Section 271(b) and (c) formally adopted the contributory infringement doctrine developed through case law, imposing liability on those who actively induce infringement or contribute to direct infringement.
Section 271(d) addressed concerns about patent misuse, ensuring that legitimate applications of contributory infringement doctrine were not unduly restricted.
Under Section 271(b), liability for inducement requires proof of intent, whereas Section 271(c) imposes liability for selling products that are specially made or adapted for use in infringement without requiring additional proof of intent.
Following the enactment of 35 U.S.C. § 271, the Supreme Court shifted away from recognizing joint and several liability for patent infringement based on common-law tort principles. Instead, patent infringement liability became rooted solely in statutory provisions.
In Deepsouth Packing Co. v. Laitram Corp., 406 U.S. 518, 527 (1972) and Limelight Networks Inc. v. Akamai Technologies, Inc., 134 S. Ct. 2111 (2014), the Court emphasized that infringement claims must derive from statutory authority rather than common law, stating, "If Laitram has a right to suppress Deepsouth’s export trade, it must be derived from its patent grant, and thus from the patent statute."
Accordingly, liability for infringement involving multiple parties is limited to those who perform acts explicitly defined under Section 271.
While tort-based damage claims for multi-party infringement scenarios might still be pursued under general civil law, injunctive relief for patent infringement remains governed by patent law. In such cases, establishing sufficient legal grounds to attribute multiple parties' acts to a single entity is critical to enjoining further infringement.
The doctrines of contributory infringement and inducement under Section 271 have since become firmly established. Notably, in 1984, the Supreme Court extended these principles beyond patents, applying them to copyright law in cases involving video cassette recorders and online file sharing (Sony Corp. of America v. Universal City Studios, Inc. 464 U.S. 417 (1984)).
4. The Need for Pre-1984 Case Law Research Regarding Export Activities and Section 271(f)
Prior to the 1984 amendment introducing Section 271(f) into the U.S. Patent Act, there was no statutory provision explicitly addressing patent infringement liability for export activities or supplying components abroad. This gap caused significant challenges in enforcement.
To address this, U.S. courts adopted flexible interpretations of domestic "manufacturing" activities, often recognizing infringement based solely on domestic conduct without accounting for export activities.
For example, Deepsouth Packing Co. v. Laitram Corp., 406 U.S. 518, 527 (1972) referenced earlier rulings such as Andrea II and Paper Converting Machine Co. v. Magna-Graphics Corp., 745 F.2d 11 (Fed. Cir. 1984).
Stuart Watt's analysis (60 Wash. L. Rev. 889 (1985)) highlights these precedents, illustrating how courts expanded the definition of "making" to cover partial assemblies within U.S. territory.
Later cases, such as NTP, Inc. v. Research in Motion, 418 F.3d 1282 (Fed. Cir. 2005), further evaluated domestic activities to impose liability even where part of the infringement occurred overseas.
Given that South Korea lacks a provision analogous to 35 U.S.C. § 271(f), comparative studies of pre-1984 U.S. case law and South Korean rulings—such as the "facial lifting suture kit" case—are essential to explore interpretations of "making" within domestic patent law.
Developing legal theories to recognize direct infringement based on domestic acts alone could address cross-border activities without conflicting with principles of territoriality or sovereignty.
Future studies will elaborate on pre-1984 interpretations of "making" by U.S. courts, and will also discuss why it is desirable to interpret acts of indirect infringement under Korean patent law as independent liabilities separate from direct infringement.
[References]
- Kang, M. (2016). "A Study on the Interpretation Criteria of Article 127 of the Patent Act". Intellectual Property Research, 11(4), 39-68.
- Yoon, S., Kang, M., Gye, S., & Jeong, C. (2017). "Proposed Amendments to Domestic Indirect Infringement Regulations Through a Comparative Analysis of Interpretation Criteria for Indirect Infringement in Major Patent Laws". Korea Intellectual Property Association. Final Report for the Korean Intellectual Property Office.
- Shin, H. (2016). "Indirect Infringement of Patent Rights and Implications for International Transactions." Science, Technology, and Law, 7(1), Chungbuk National University, Legal Research Institute.
- Choi, S. (2015). "The Meaning of 'Production' under Article 127(1) of the Patent Act." Intellectual Property Policy, Issue 25, Korea Institute of Intellectual Property (Calling for Legislative Solutions).
- Moon, S. (2017). "A Study on the Legal Principles of Indirect Infringement under the Patent Act. Doctoral Dissertation", Sungkyunkwan University
- Koo, C., & Noh, H. (2017). "Exploring Directions for Improving the Legal Framework for Indirect Patent Infringement in Korea through Comparative Analysis of Indirect Patent Infringement Systems Worldwide". Sogang Law Journal, 8(2).
- Kim, J. (2020). "A Study on Amendments to Article 127 of the Patent Act to Broaden the Scope of Indirect Patent Infringement". Journal of Advanced Commercial Law, Issue 90.
- Kim, C. (2016). "A Study on the Legal Nature of Acts Deemed as ‘Infringement’ under the Patent Act". Industrial Property Rights, Issue 50, Korea Intellectual Property Association.
- Jung, T. (2011). "Criteria for Determining Types of Indirect Copyright Infringement". Intellectual Property Research, 6(2), Korea Institute of Intellectual Property.
- Park, Seong-ho. (2020). "Commentary on Major Intellectual Property Law Cases in 2019", Human Rights and Justice, Vol. 489.
- Kim, K. (2012). "Criteria for Determining Alternative Uses in Indirect Infringement." Patent Case Studies (Revised Edition), Pakyoungsa.
- Park, H., & Kim, W. (2006). Patent Law Principles (3rd Edition), Saechang Publishing Co.
- Adams, C. W. (2005). A Brief History of Indirect Liability for Patent Infringement. Santa Clara Computer & High Tech. Law Journal, 22, 369.
- Stuart Watt (1985), "Patent Infringement: Redefining the “Making” Standard to Include Partial Assemblies- Paper Converting Machine Co. v. Magna-Graphics Corp., 745 F.2d 11 (Fed. Cir. 1984)". 60 Wash. L. Rev. 889
<This document is compiled for personal research and intellectual curiosity. For specific legal applications, consult a qualified expert.>
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