SOUTH KOREA Trends and Developments Contributed by: Samuel Lee, Ye In Han, Inkyoung Choi and Jaeyoung Seol, Bae, Kim & Lee LLC
production is strictly for the purpose of a third party’s research, and that purpose is objectively clear, the production itself falls within the scope of the exemp ‑ tion”. This finding was critical for the CDMO industry. It legally validates the business model of produc ‑ ing CTM for third-party clients, confirming that the “research purpose” of the client extends to protect the manufacturer. Global scope of research and regulatory approval Rejecting the narrow territorial argument, the Court held that research conducted overseas still contrib ‑ utes to the general advancement of technology and science. The Court noted that in the era of multi-regional clini ‑ cal trials (MRCTs), data generated in one jurisdiction (eg, Russia) is often used to support regulatory filings in others (eg, Korea or the USA). Therefore, produc ‑ tion in Korea for the purpose of obtaining regulatory approval in a foreign country is a legitimate invoca ‑ tion of the exemption. The Court clarified that the “research” mentioned in Article 96 is not geographi ‑ cally limited to domestic activities. The “unreasonable impairment” judgment: a new legal standard Perhaps the most significant contribution of the 2025 ruling is the establishment of a new legal standard to prevent the abuse of this broadened exemption. Addressing the lower court’s valid fear of “loopholes”, the Supreme Court introduced a safety valve mecha ‑ nism. The Court held that the experimental use exemp ‑ tion is not absolute. Instead, it applies only when the act “does not unreasonably impair the exclusive and monopolistic interests of the patent holder”. This intro ‑ duces a balancing test similar to the fair use doctrine in copyright law or the three-step test in international IP treaties. Court’s basis for decision The court ruled that the defendant’s provision of the 13-valent vaccine to company M did not constitute patent infringement for the following reasons:
• the defendant provided vaccine samples within the scope of the patented invention free of charge on four occasions; • all vaccine samples were produced for use in non- clinical or clinical trials or analytical tests in Russia; and • the defendant did not produce any other vaccine products prior to the expiration of the patent. Significance of the safety valve This unreasonable impairment test shifts the legal analysis from a binary question (“Did you manufac ‑ ture?”) to a qualitative one (“Did your manufacture harm the patentee’s market?”). It signals that while the act of outsourcing is protected, the manner in which it is conducted matters. The exemption is legally teth ‑ ered to the bona fide non-commercial nature of the activity. Broader implications for the life sciences sector The implications of the Supreme Court’s 2025 deci ‑ sion extend far beyond the specific parties involved. It fundamentally alters the risk landscape for pharma ‑ ceutical companies operating in or with South Korea. Strengthening Korea’s position as a Global CDMO hub By resolving legal ambiguity, this ruling removes a major barrier to entry for foreign clients seeking to utilise Korean manufacturers. Previously, foreign bio ‑ techs might have hesitated to contract Korean CDMOs for fear of patent litigation interfering with their clinical supply chains. The Supreme Court has now effectively declared Korea a safe harbour for manufacturing relat ‑ ed to legitimate clinical purposes. This is expected to accelerate the growth of the Korean CDMO sec ‑ tor, encouraging further investment in capacity and technology. Enabling global clinical strategies For developers of biosimilars and new drugs, the rul ‑ ing facilitates more flexible global clinical strategies. Companies can now centralise their manufacturing of investigational products in Korea and distribute them to clinical sites worldwide without the risk of export being classified as infringement. This centralisation can lead to significant cost savings and quality con ‑ sistency in global trials.
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