SK Chemical to Pay Over 12 Billion Won for Patent Infringement on Patch-Type Dementia Treatment

SK Chemicals has been ordered by the Patent Court to pay over 12 billion KRW in damages to Novartis AG for infringing the patent rights of Novartis AG's patch-type dementia treatment drug, 'Exelon Patch (Rivastigmine)'.

The 25-1 Division of the Patent Court (Presiding Judges Lim Young-woo, Woo Sung-yeop, Kim Ki-soo) ruled on the 18th in the appeal trial of the patent infringement injunction lawsuit filed by Novartis AG against SK Chemicals, stating, "SK Chemicals infringed Novartis AG's patent rights and must pay damages of over 12 billion KRW," thereby ruling in favor of the plaintiff (Case No. 2021Na1787).

Novartis AG, the patent holder of the patch-type dementia treatment drug 'Exelon Patch (Rivastigmine)', applied for an extension of the patent term to the Korean Intellectual Property Office (KIPO) in April 2012, ahead of the expiration of the patent registered on August 29, 1997. However, the application was rejected the following year.

Disputing this, Novartis AG filed an administrative lawsuit against KIPO to cancel the rejection, and won the case at the Supreme Court. Following this ruling, KIPO approved the patent term extension (873 days) in December 2018.

The issue was that before the patent term extension approval was granted, SK Chemicals produced pharmaceuticals infringing the Exelon Patch patent and exported them to various parts of Europe.

Subsequently, SK Chemicals filed an administrative lawsuit against the Commissioner of KIPO, seeking to invalidate or cancel the extension approval for Novartis AG. However, the court dismissed the case, and the decision was finalized.

Novartis AG counterattacked by filing a damages lawsuit against SK Chemicals for patent infringement. Novartis AG claimed that "SK Chemicals' acts of producing the product, exporting it to European countries, and selling it domestically constitute patent infringement."

The court judged that SK Chemicals' production of the product domestically before the patent term extension constituted patent infringement.

The court stated, "Under the Patent Act, the patent term extension approval has retroactive effect to the original expiration date, so the patent term of Novartis AG's patent should be considered extended by the approval. Therefore, SK Chemicals' production of the product domestically before the extended expiration date constitutes patent infringement."

Furthermore, the court noted, "SK Chemicals' product is a generic of Novartis AG's product with the same active ingredient, content, formulation, efficacy, and dosage. It is clear that it is a substitute for Novartis AG's product, and SK Chemicals' export to Europe likely caused a decrease in Novartis AG's sales." Ultimately, the court concluded, "It is reasonable to see that Novartis AG's damages are causally related to SK Chemicals' patent infringement acts in Korea."

However, the court found that SK Chemicals' negligence presumption under Article 130 of the Patent Act was rebutted for the period before receiving a certified letter warning of patent infringement from Novartis AG. Therefore, "only the period after the delivery of the certified letter recognizes SK Chemicals' breach of duty regarding patent infringement."

The total damages awarded amounted to approximately 11.3 billion KRW. Although SK Chemicals' domestic production and European sales of the product were causally related to the patent infringement damages, circumstances such as reliance on KIPO's initial rejection of the patent term extension were taken into account.

The court also ruled, "SK Chemicals produced the product before receiving the certified letter without permission from the patent holder Novartis AG, unlawfully exploiting the patent and gaining unjust enrichment without legal grounds. Accordingly, Novartis AG suffered damages," ordering SK Chemicals to return unjust enrichment of over 700 million KRW.

Previously, the first trial court ordered SK Chemicals to pay 2.5 billion KRW to Novartis AG.

Han Soo-hyun, Legal Times Reporter

※This article is based on content supplied by Law Times.