The Korean National Assembly recently promulgated amendments to the Trademark Act, Design Protection Act, and Unfair Competition Prevention and Trade Secret Protection Act ("UCPA") as of December 22, 2020, which will allow compensation for large scale infringement that exceeds the rights holder's production capacity. The amendment will go into effect 6 months from the promulgation date.

Damages from an infringer can be calculated in several different ways, and a major method is to treat the infringer's profits gained from the infringement as damages. However, damages under this calculation have been expressly limited according to the right holder's own production capacity, so it has been common for large infringers to pay a relatively minimal amount of damages even if they have committed significant infringing acts over many years, if the right holder is a relatively small-scale producer of goods. Accordingly, the existing damages provisions have been criticized as actually encouraging major domestic companies to infringe their smaller competitor's rights on a massive scale, since the amount of profit to be gained generally substantially exceeds the amount of damages they would have to pay. As a result, there have been heated discussions in the legal community about the need for stronger punitive damages as a protective measure. Even after the Trademark Act, Design Protection Act, and the UCPA were amended to allow treble damages to be awarded in certain infringement cases, this was still considered insufficient to properly protect right holders.

In response to this concern, a recent amendment to the Korean Patent Act, which was promulgated on June 9, 2020, added a provision that if the "sales figure of an infringer" exceeds the patentee's own production capacity, the patentee will be entitled to receive reasonably expected royalties for such excess sales. The amendment to the Trademark Act, Design Protection Act, and UCPA introduce the same provision into those Acts, to help curb abuses by large infringers in South Korea.

For example, under the current laws, if the right holder's product production capacity is 100, and the infringer sells 10,000 infringing products, the right holder was only able to claim the infringer's profit per unit multiplied by 100. However, under the amendments, for the sales exceeding the production capacity of the right holder (9,900 in this example), the right holder will now be able to additionally claim an amount equivalent to the reasonably expected royalties for the sale of the 9,900 infringing products.

It is generally expected that, together with the treble damage provisions, the new damage compensation calculation standard will significantly assist in protecting intellectual property right holders from malicious and deliberate large-scale infringement.