IP Newsletter | Fall/Winter 2015
	PATENT
	Korean Patent-Approval Linkage System – Initial Statistics
	Introduction Pursuant to the Korea-U.S. Free Trade Agreement, Korea agreed to enact a pharmaceutical regulatory system similar to the Hatch-Waxman system in the U.S., whereby branded pharmaceutical companies would be able to publicly "list" patents covering their approved pharmaceuticals and be notified if a generic company intended to seek approval for a generic version of the pharmaceutical, and have an opportunity to file a patent infringement lawsuit against the generic to delay its entry into the market for a limited period of time while the infringement litigation was resolved. Generics meanwhile were to be incentivized to challenge pharmaceutical patents through the grant of exclusive rights to sell a generic version of a drug to the first generic company to challenge a particular patent. Korea fully implemented the new patent-approval linkage system in March of this year, and there has been much speculation in Korea as to how generic companies would react to its implementation. The initial statistics indicate that generic companies are indeed utilizing the system in large numbers, but also that certain generics may be thinking more carefully about whether they really intend to introduce specific generic products into the market. Huge increase in filings Since patent listing was first permitted in 2012, including for already-approved products if filed before June 15, 2012, the numbers of patent listing related challenges filed at the Korean Intellectual Property Office ("KIPO") have steadily increased:
	KIPO actions filed per year
	Year Filings* 2013 49 2014 216 2015 (through Sept. 2015) 1853
	* includes patent invalidation, scope confirmation, and patent term extension (PTE) invalidation actions Source: KIPO and CoreZetta (a Korean company providing pharmaceutical-relevant data)
	However, that increase has been much greater in 2015, presumably due to the fact that generics were only able to qualify for generic sales exclusivity as of March 2015. In order to qualify for generic exclusivity, a generic company must show that it is the "first to file" a successful KIPO action against the relevant pharmaceutical patent, or the first to actually receive a decision in its favor in such an action. However, because "first to file" includes companies filing within 14 days of the actual first-filed action, there is a strong incentive under the Korean linkage system for generics to file first and ask questions later once one KIPO action is filed, simply to preserve their ability to sell the relevant generic if the pharmaceutical patent is eventually invalidated. Generic strategies indicated by types of filings The types of actions being filed also give some insight into the strategies of generic companies regarding possible marketing of generics. As the following table shows, there have been a surprisingly high number of PTE invalidation filings, and a surprisingly low number of negative scope action filings:
	Types of KIPO actions filed
	Trial Type % (approx.) Patent invalidation 61 PTE invalidation 30 Negative scope confirmation 9
	Source: KIPO, CoreZetta, and Kim & Chang
	The relatively high percentage of PTE invalidation actions is surprising mainly because no invalidation actions based on PTE were previously filed in Korea. The goal of a PTE invalidation action is simply to shorten or eliminate the extended patent term granted due to regulatory delays, without affecting the original patent term. In contrast, a negative scope confirmation action requires that the product being compared with the patent actually exist or will exist. This suggests that many generics do not have concrete plans to release generic versions of drugs corresponding to challenged patents, but merely wish to preserve their rights to sell such drugs if an invalidation action is successful. Additionally, the vast majority of PTE invalidation actions have been filed against compound patents (around 80%), which suggests PTE actions were filed instead of regular invalidation actions due to the fact that compound patents tend to be stronger patents. Patent challenges at a very early stage Further, generic challenges under the patent linkage system seem to be concentrated against drugs whose post-marketing surveillance ("PMS") period will not expire before 2017:
	KIPO filings according to PMS expiry
	Date of PMS expiry % of filings (approx.) Already expired 10% Expires before end of 2016 8% Will expire in 2017 or later 82%
	Source: Kim & Chang
	The PMS period in Korea acts as a de facto data exclusivity period because generics can only apply for approval once the relevant PMS period expires. Prior to the patent linkage system, patent challenges were generally made approximately a year or less before the expiration of the PMS period. However, this has significantly changed under the patent linkage system, as many KIPO actions are now being filed against drug patents which are still very early in the PMS period (for which generics cannot be introduced for some time). This may suggest that generics are filing actions merely to try to preserve generic exclusivity rights, rather than as a result of any concrete launch plans. This is further evidenced by the fact that the actions in the "will expire in 2017 or later" category are almost entirely patent invalidation and PTE invalidation actions, since negative scope confirmation actions would require that the generic describe the specific product to be compared to the patent. Another possible reason may be due to the fact that generic exclusivity can only be granted if a patent decision in the generic's favor issues within nine months of the generic application filing date. Thus, an action filed in connection with a drug not susceptible to immediate generic approval is more likely to reach a decision before the expiration of that nine-month timeframe. Fewer actions going forward? Despite the huge initial number of generic company KIPO filings, there are indications that the number of actions may substantially decrease going forward. First, it should be noted that approximately 30-40% of the KIPO actions initially filed by Korean generic companies have since been withdrawn or terminated for procedural reasons (e.g., failure to pay fees). This indicates a significant portion of the generics' initial KIPO filings may have been simply to preserve their rights, and that Korean generic companies may now be reconsidering whether they have serious plans to produce generic versions of specific drugs. Further, the Ministry of Food and Drug Safety ("MFDS"), which administers the patent linkage system, recently clarified that generic exclusivity will only be granted if the drug patent being challenged is still in force at the time a generic company's approval application is filed. Since the vast majority of KIPO filings are currently against drugs whose PMS period will continue for at least another year and a half, it is possible some of these filings may be withdrawn and possibly re-filed at a later date, to avoid the patent being finally invalidated before the generic has an opportunity to file for approval. The MFDS will likely look at other ways to prevent indiscriminate filing of KIPO actions on the basis of the patent linkage system as well. As is clear from the above, Korea's patent-approval linkage system is still a work in progress, as the relevant parties continue to work out how the system will function in practice. However, the initial statistics from KIPO already give a clearer picture of how generic companies intend to respond to the new system and of their plans for generic drugs in particular situations.
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