[Exclusive] Prosecutors Raid Daewoong Pharmaceutical for 'Patent Lawsuit Abuse and Patent Application with False Information'

Seoul Central District Prosecutors' Office, Seocho-dong, Seoul.
Photo by Choi Seok-jin

[Asia Economy Reporter Choi Seok-jin, Legal Affairs Specialist] The prosecution conducted a search and seizure on Daewoong Pharmaceutical, which was accused of abusing patent infringement lawsuits and submitting false data to obtain patent approval in order to obstruct the sale of generic drugs by competitors.

According to the legal community on the 11th, the Fair Trade Investigation Division of the Seoul Central District Prosecutors' Office (Chief Prosecutor Ko Jin-won) conducted a search and seizure at Daewoong Pharmaceutical's headquarters in Gangnam-gu, Seoul. The search, which began in the morning, reportedly concluded around 4 p.m.

Daewoong Pharmaceutical, the patent holder of the gastrointestinal drug "Albis," is suspected of intentionally abusing patent infringement lawsuits despite knowing that the patent rights were not infringed, in order to block the sale of generics after the original patent expired in January 2013 and competitors began developing generic drugs.

It is suspected that Daewoong Pharmaceutical exploited the fact that even if patent infringement is not recognized in the lawsuit, as long as the lawsuit is ongoing, hospitals or wholesalers find it difficult to switch their business to pharmaceutical companies selling generics that may face sales suspension in the future.

In December 2014, Daewoong Pharmaceutical filed a patent infringement injunction lawsuit to block the market entry of Pavis Pharmaceutical, a competitor selling generics, but lost the case in May of the following year.

Previously, the Fair Trade Commission judged that Daewoong Pharmaceutical forced the lawsuit to damage the image of Pavis's products by promoting the fact that products under litigation might be discontinued in the future when bidding for large hospitals. The FTC issued a corrective order to Daewoong Pharmaceutical, imposed a fine of approximately 2.29 billion KRW, and reported the corporation to the prosecution.

The FTC also uncovered that Daewoong Pharmaceutical submitted false data to advance the timing of patent applications and obtained patents. Later, when Anguk Pharmaceutical's generic drug was launched, Daewoong Pharmaceutical filed a patent infringement injunction lawsuit but ended the lawsuit by inducing a settlement after Anguk Pharmaceutical raised issues of data manipulation.

However, at that time, the FTC reportedly did not file charges against former Daewoong Pharmaceutical Chairman Yoon Jae-seung and others, as there was no evidence confirming their involvement or direction in these processes. Nonetheless, it cannot be ruled out that the investigation may expand to include management during the prosecution's inquiry.

Meanwhile, Daewoong Pharmaceutical was also sued and investigated by the prosecution for allegedly stealing technology related to the botulinum strain used as the raw material for Botox from a competing company.

Recently, the 12th Criminal Division of the Seoul Central District Prosecutors' Office (Chief Prosecutor Lee Deok-jin) dismissed charges against Daewoong Pharmaceutical for violations of the Industrial Technology Protection Act and the Unfair Competition Prevention Act. However, on the 3rd, Medytox, the complainant, filed an appeal against the prosecution's non-indictment decision.

This content was produced with the assistance of AI translation services.