"Daewoong Pharmaceutical's Fine for Hindering Competitors Upheld"… Fair Trade Commission Wins at High Court

Daewoong Pharmaceutical Files Unfair Patent Lawsuit Against Competitor Pavis Pharmaceutical
Manipulated Data for Patent Application as Well

The Korea Fair Trade Commission (KFTC) won a lawsuit challenging the 2.297 billion KRW fine imposed on Daewoong Pharmaceutical for obstructing the sale of generic drugs by competitors. The court recognized that Daewoong Pharmaceutical filed an unfair patent lawsuit to block competitors' entry into the generic drug market.

According to the KFTC on the 12th, the Seoul High Court ruled in favor of the KFTC on the 30th of last month in the administrative lawsuit filed by Daewoong Pharmaceutical seeking to cancel the corrective order and fine payment order. Previously, the KFTC had determined that Daewoong Pharmaceutical hindered competitors' market entry by filing unfair patent infringement lawsuits and imposed corrective orders and fines (2.297 billion KRW).

Daewoong Pharmaceutical, the patent holder of the gastrointestinal drug 'Albis,' knew that the generic drug by competitor Pavis Pharmaceutical did not infringe the patent but filed a provisional injunction lawsuit to prohibit patent infringement in December 2014. Ultimately, Daewoong Pharmaceutical lost the case in May 2015 as it failed to prove patent infringement. Additionally, on January 30, 2015, the same day it filed a patent application for the follow-up product 'AlbisD,' Daewoong Pharmaceutical manipulated data to file the patent. The KFTC found that Daewoong Pharmaceutical filed a patent infringement injunction lawsuit in December 2016 to obstruct sales when a generic drug by Anguk Pharmaceutical was released, and based on this, set the corrective order and fine amount.

Displeased with this disposition, Daewoong Pharmaceutical filed an administrative lawsuit with the Seoul High Court in April 2021. Daewoong Pharmaceutical argued that there were circumstances that reasonably suspected the competitor’s patent infringement related to this patent lawsuit, and at the time of filing the lawsuit, it was unaware of data manipulation involved in the patent acquisition process; therefore, it could not be considered an abuse of patent rights and posed no risk of hindering fair trade.

The court acknowledged that Daewoong Pharmaceutical was objectively aware that patent infringement was clearly not established but still filed an unfair patent lawsuit solely to block competitors’ entry into the generic drug market and interfere with their sales activities. The court ruled that this was an “unfair exercise of patent rights contrary to the purpose and intent of the Patent Act and likely to hinder free and fair competition.”

Furthermore, the court found that acts of notifying others about filing patent lawsuits with the intent to discourage the use of generic drugs in hospitals and other institutions constitute acts of inducing competitors’ customers to transact with oneself, which is an unfair competitive practice likely to hinder fair competition. The KFTC stated, “This ruling is significant as it is the first judgment recognizing acts of obstructing competitors’ transactions through unfair patent lawsuits as unfair customer inducement under the Fair Trade Act,” and added, “The KFTC will analyze the ruling and actively respond to any Supreme Court appeals that may arise in the future.”

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