The Unfair Trade Practice Review Guidelines ("Guidelines") of the Korea Fair Trade Commission ("KFTC") provide examples of the types of unfair trade practices, such as unfair solicitation of customers, abuse of superior bargaining position, and interference with business activities. As of December 30, 2024, the Guidelines have been amended to add filing abusive patent lawsuits as a specific example of illegal conduct constituting "unfair solicitation of customers."

Specifically, the amended Guidelines now recite "filing a patent lawsuit without a reasonable cause by abusing patent rights, such as filing a patent lawsuit against a competitor despite knowing of non-infringement or filing a patent lawsuit against a competitor after obtaining a patent through deceptive means, and using it in business activities to solicit customers of the competitor" as an example of illegal conduct, which reflects some recent KFTC decisions and court rulings. This newly added conduct also is categorized as an unfair means of competition that can be regulated without proving anti-competitive effects in the relevant market.

In one case, on March 11, 2021, the KFTC imposed sanctions on a Korean pharmaceutical company ("Company X") for abuse of patent rights based on two types of misconduct:

(i) unfairly interfering with the business activities of one generic company by filing a preliminary injunction action and notifying the generic company's customers about the generic drug supply possibly being suspended, even though Company X had conducted tests indicating the generic product was outside the scope of Company X's patents and thus knew there was no infringement, and

(ii) unfairly interfering with the business activities of a second generic company by filing and actively publicizing an infringement action asserting another patent that had been obtained based on manipulated and falsified bioequivalence test data.

The KFTC determined that these acts constituted unfair solicitation of customers in violation of the Monopoly Regulation and Fair Trade Law ("FTL"). The Seoul High Court subsequently affirmed this decision on August 30, 2023 (Seoul High Court Decision No. 2021Nu40470), and the Supreme Court recently reaffirmed the decision on January 25, 2024 (Supreme Court Decision No. 2023Du55535), which is now final and conclusive. The amended Guidelines reflect these KFTC and court rulings clarifying abusive misconduct that is outside the scope of legitimate exercise of patent rights.

As the amended Guidelines now expressly identify abusive patent lawsuits as potentially constituting unfair solicitation of customers, companies may need to reconsider their risks or potential defenses under the FTL before engaging in patent lawsuits in Korea.