Redrawing the Borders of Patent Rights in a Global Era
Have you ever wondered about this? If you make parts in Korea, send them to China for assembly, and then sell the final product in the U.S. market, can you avoid infringing a Korean patent? In the past, that might have been possible. But not anymore. The traditional principle of territoriality—that a patent is only enforceable in the country where it was granted—is constantly evolving to keep up with the global business environment.
This is especially true in an age where it's common to source components from all over the world, assemble them in another country, and sell them in a third. The U.S. and South Korea, in particular, have been grappling with these kinds of patent circumvention strategies. Both countries have developed their laws in different ways to regulate the cross-border act of exporting. Today, we're going to dive deep into the fascinating evolution of their laws.
Part 1: The Evolution of U.S. Law - Legislature Fills a Judicial Gap
Let's start with the U.S. story. It all began with a famous 1972 Supreme Court case, Deepsouth Packing Co. v. Laitram Corp. At the time, the Court ruled that exporting components of a patented invention for assembly abroad was not infringement. Why? Because the Patent Act only prohibited the act of “making” the invention within the U.S. In essence, the ruling was seen as a roadmap for how to get around a U.S. patent. This created one of the most infamous legal loopholes in U.S. patent history: the “Deepsouth Loophole.”
As you can imagine, this caused an uproar. Patent holders were outraged by this disastrous decision, and eventually, Congress had to step in. Twelve years later, in 1984, Congress responded to the Supreme Court's "invitation" by enacting 35 U.S.C. § 271(f), which completely closed the loophole. The genius of this provision was that it shifted the focus of infringement from the overseas “assembly” to the domestic “supply of components.” It was a brilliant solution that respected the territoriality principle while still having an extraterritorial effect.
- (f)(1) The Quantity Approach: This applies when you supply “all or a substantial portion” of the components of a patented invention from the U.S. in a way that “actively induces” the combination abroad. Here, substantial portion means the number of components—the quantity.
- (f)(2) The Quality Approach: This applies when you supply even a single component, as long as it's a key component “especially made or adapted” for the invention and not a staple article of commerce, knowing it's for the invention and intending for it to be assembled abroad.
In the end, the U.S. followed a classic path where the judiciary's strict interpretation of the law created a clear loophole, and the legislature stepped in to fix it by defining a new type of infringement. This approach was faithful to the principle of separation of powers while also responding to the needs of the industry.
Part 2: The Evolution of Korean Law - Judicial Evolution, Legislative Completion
So, what about South Korea? Its approach has been quite different from that of the U.S. Instead of creating a new law, Korea chose to gradually expand the scope of its regulations by reinterpreting existing laws. However, as the limitations of relying solely on case law became apparent, the legislature finally stepped in to ensure legal stability.
In the past, Korean courts were hesitant to find patent infringement for the export of components or semi-finished products. However, in cases like the “Suture Anchor Case” (2019Da222782), the Supreme Court began to carve out exceptions, suggesting that even if a product was incomplete, the domestic “production” could be considered direct infringement if it embodied the substantial value of the patent and required only minor processing abroad.
But there was a consensus that these judicial exceptions weren't enough. Finally, the amended Patent Act, effective July 22, 2025, will put this issue to rest.
The Core of the 2025 Patent Act Amendment: Codifying "Export"
The key change in this amendment is the explicit inclusion of “export” in the definition of “working” a patent (Article 2) and as an act of infringement (Article 127). Now, patent holders can directly sue for an injunction or damages based on the act of exporting an infringing product. There are three important goals behind this change:
- Closing a Legal Gap: It fixes the legislative loophole identified in cases like the Nokia ruling, which failed to prevent infringing products made in Korea from being shipped overseas.
- Harmonizing the Legal System: It aligns the Patent Act with other IP laws like the Design Protection Act and Trademark Act, which already considered “export” as infringement, and harmonizes it with major countries like Japan and Germany.
- Strengthening Protections for Rights Holders: Previously, one had to prove the complex act of domestic “production.” Now, infringement can be claimed based on the act of “export” alone, significantly reducing the burden of proof.
Part 3: How the New Law and Case Law Work Together
You might be asking, “So now, is exporting any unfinished product automatically patent infringement?” The short answer is no. The amended law and existing case law (the Suture Anchor Case) don't conflict with each other; they are complementary regulations that apply to different situations.
The fundamental principle of patent infringement is the “all-elements rule,” which means a product must include every element of a patent claim to infringe. The amended law regulates the act of exporting, but it doesn't change what is being exported. Therefore, for the new law to apply, the exported item must already be a “finished product” or a “dedicated component” that constitutes indirect infringement on its own.
This is where the Suture Anchor Case becomes important. This ruling created a legal doctrine for finding direct infringement as an exception for “unfinished products” if they meet four very strict criteria, even if they aren't dedicated components, as long as the quantity is substantial.
An Interesting Parallel in U.S.-Korea Law
It's fascinating to compare the laws of the two countries. It's as if they took different paths but arrived at a similar destination.
- Korea's Patent Act Article 127 (indirect infringement) regulates the production and sale of “dedicated components” used only for infringement. This is functionally similar to how U.S. Patent Law § 271(f)(2) regulates the export of “especially made key components.” (Regulating the quality/nature of key components)
- The Korean Supreme Court's “Suture Anchor Case” allows for direct infringement in exceptional cases where an unfinished product includes “substantially all” of the components. This plays a role corresponding to how U.S. Patent Law § 271(f)(1) regulates the export of “all or a substantial portion” of components. (Regulating the substantial quantity of components)
Part 4: A Comparative Analysis - The Decisive Differences
Faced with the same problem of patent circumvention through exports, the U.S. and Korea came up with very different solutions. The process of how these laws were made—the “path of legal development”—clearly shows the different roles of the judiciary and legislature in each country.
| Category | United States (‘Judiciary → Legislature’ Model) | South Korea (‘Judiciary → Judiciary → Legislature’ Model) |
|---|---|---|
| Path of Legal Development | After the Supreme Court clearly identified a legal gap in the Deepsouth ruling and called for legislative action, Congress solved the problem by creating § 271(f). This is a classic model of division of labor: the judiciary identifies the problem, and the legislature solves it. | After the Supreme Court established a strict principle in the Nokia case, it created an exception to that principle in the Suture Anchor Case, thus performing a law-making function. The legislature later adopted this direction and codified “export” to complete the legal framework. This is closer to a model of “dynamic interaction.” |
| Approach to Infringement | Indirect Infringement Model (inducing/contributing to overseas assembly) | Direct Infringement Model (the act of exporting itself) |
| Key Burden of Proof | Proving the defendant’s subjective intent (inducement, knowledge) is crucial. | Proving the objective fact (infringing product, act of export) is sufficient. |
The biggest difference is the “approach to infringement.” The U.S. treats the export of components as “indirect infringement” that contributes to an infringement that will happen overseas, while Korea treats the act of “exporting” itself as a completed “direct infringement.” This fundamentally changes what a patent holder has to prove in court. In the U.S., you have to prove that “the defendant had bad intentions,” but in Korea, you just have to prove the objective fact that “the defendant exported this product.”
Part 5: Strategic Takeaways for Your Business
These complex legal changes present significant challenges for companies operating in the global supply chain. The naive assumption that you only need to worry about patents in your own country is no longer valid.
- Analyze Patent Risk Across the Entire Supply Chain: From product planning and sourcing components (from Korea, the U.S.) to production, assembly (in a third country), and final sales, you must conduct a comprehensive analysis of patent infringement risks. You need to check if sourcing components from Korea falls under the Suture Anchor Case criteria, or if sourcing from the U.S. falls under § 271(f).
- Refine International Contracts: When signing contracts with overseas partners for component supply or manufacturing, it's now essential to include clauses that clearly define liability in the event of patent infringement. Be sure to specify the final sales regions and uses of the products to avoid unexpected disputes.
- Prepare for Jurisdictional and Legal Application Issues: If a U.S. parent company instructs its Korean subsidiary to produce and export an infringing product, you need to anticipate in which country a lawsuit might be filed and under which laws. The jurisdictional issues are becoming much more complex.
This content is for general informational purposes to help understand complex legal issues and does not constitute legal advice. For legal judgments or strategic planning on individual cases, you must consult with a qualified patent attorney.
