South Korea: Korean Supreme Court Reverses its 1985 Chevron Decision on Improvement Invention

Last Updated: 5 February 2017
Article by C. Leon Kim

In its unanimous decision rendered on August 12, 2001, the Korean Supreme Court reversed the infamous "Chevron" case decided in 1985. Specifically, in Nissan Kagaku Kogyo Kabushiki Kaisha v. LG Chemicals Co., Ltd. (Supreme Court Case No. 98 Hu 522), the Supreme Court held that a junior chemical process invention which utilizes all of the elements constituting a senior patented invention and adds a catalyst to obtain superior results still falls within the scope of the earlier patent, overturning the 1985 Chevron decision.

Improvement Invention

In Article 98 of the Korean Patent Act, it is provided that "the patentee or licensee of a patent may not practice the patented invention if it utilizes a third party's patent which was filed before the former's patent, without the consent or license from the third party."

Accordingly, under the statutory provision, it is clear that a junior invention which utilizes all of the elements constituting a senior patent constitutes an infringement of the latter. A great deal of controversies arose, however, when the Korean Supreme Court made an exception in its 1985 Chevron decision.

Chevron Research Co. v. Jin-Heung Fine Chemicals Co.
(Supreme Court Case No. 83 Hu 85; April 9, 1985)

The process patented by Chevron, which corresponds to the process employed by the accused infringer, may be described as:

The Jin-Heung method may be illustrated as:

In support of its position, Jin-Heung argued that Chevron's Korean Patent No. 4646 did not disclose the use of a catalyst such as phosphoric acid and did not contain any example employing acetic anhydride as the acylating agent; and, more importantly, the Jin-Heung process was capable of achieving a higher yield much faster than the Chevron process.

According to the trial records, it was undisputed that the patented process produces 94.53% yield after 39 hours of reaction time whereas the Jin-Heung method converts 98.62% in 2 hours.

Chevron countered that the two processes were essentially identical inasmuch as both of them employed the identical starting material and acylating agents in the same solvent to attain the like end product. The only difference, if any, lay in the use of a catalyst. Even in this context, the prior art taught the use of a strong acid, e.g., sulfuric acid, as a catalyst for a quicker synthesis of an acetylamine with the use of an acid anhydride as the acylating agent. Accordingly, argued Chevron, the use of a strong acid in this situation was so well known and obvious, at the time of filing the Chevron patent application, that there was no real difference between the two methods.

On April 9, 1985, the Supreme Court, while affirming the lower decision, held that:

Since the additional use of a catalyst by Jin-Heung is not merely a façade but entails a substantially superior result, it cannot be concluded that the two processes are identical. Even if the use of the catalyst in question was generally taught in the prior art, it does not ipso facto make the scope of the Chevron patent, which does not claim the use of a catalyst, embrace a process employing a specific catalyst.

It is important to note that, throughout the three tiers of trial, Chevron never contended that Jin-Heung's process was a "derivative" or "improvement' process of Chevron's basic invention within the meaning of Article 45 (3) of the old Korean Patent Law (corresponding to Article 98 of the present Korean Patent Law).

International controversies ensued following the Chevron decision. Among the noteworthy reactions to the Chevron case were the decisions rendered by the Board of Trials established within the Korean Patent Office, in the following three cases.

Il-Dong Pharmaceutical Co., Ltd. vs. Glaxo Group Ltd.
(Trial Board Case No. 85 Dang 401; March 10, 1986)

Glaxo Group Ltd. ("Glaxo") obtained Korean Patent No. 18657 directed to a process for the synthesis of an intermediate compound, which is used in producing an anti-ulcer agent known as "Ranitidine." The process may be described as:

wherein L is a leaving group.

On the other hand, Il-Dong Pharmaceutical ("Il-Dong") obtained a patent covering a process which may be summarized as:

The facts and legal issues in this case were almost a verbatim reproduction of the Chevron case. Il-Dong brought a confirmation trial before the Board of Trials, asking for a ruling that Il-Dong's process fell outside the scope of the Glaxo patent, relying on the Supreme Court decision in the Chevron case.

Glaxo contended that the Il-Dong process was a derivative invention from Glaxo's patented process; and, therefore, that it fell within the scope of the Glaxo patent under Article 45(3) of the old Korean Patent Law.

Interestingly enough, the Board took the position that the Chevron decision rendered by the Supreme Court on April 9, 1985 was not relevant to the present case because the Supreme Court did not concern itself at all on the question of Article 45(3), and went on to hold that:

The patentability of the Il-Dong invention is a separate and distinct issue from the question of it being an improvement invention of the Glaxo process. Since Il-Dong process employs all of the essential elements constituting the Glaxo invention, we find it an improvement invention within the meaning of Article 45(3); and, therefore, it falls within the scope of the Glaxo patent.

On appeal, the Board of Appeals questioned if a confirmation trial was a proper vehicle to determine the legal issue as to whether or not an improvement invention within the meaning of Article 45(3) falls within the scope of its basic patent; and then held that it was not, citing the Chevron decision.

While Glaxo's appeal to the Supreme Court was still pending, both parties reached a settlement, thereby missing an opportunity to have the Supreme Court directly rule on the issue involving Article 45(3).

Two Subsequent Decisions

Undaunted by the Appellate Board's decision in the Glaxo case, the Board of Trials in two subsequent cases again ruled that the Chevron/Glaxo type improvement inventions do fall within the scope of their basic patents.

In Cheil Sugar Co. v. Janssen Pharmaceutical N.V. (November 30, 1988), the two competing processes involved can be summarized as follows:

Janssen Process:

Cheil Process:

In yet another case, Cheil Sugar Co. v. Bayer A.G. (November 30, 1988), the two contested processes may be described as:

Bayer Process:

Cheil Process:

The Board of Trials in both cases essentially reiterated its position taken in the Glaxo case discussed above: a confirmation trial can and should determine, in order to resolve a patent infringement dispute, as to whether or not an improvement invention in the context of Article 45(3) falls within the scope of its basic patented invention; and, as long as the derivative invention fully utilizes all of the ingredients constituting the basic invention, the former is encompassed by the domain of the latter.

Both decisions were appealed to the Board of Appeals, which, as it had done in the Glaxo case, reversed the lower decisions.

On appeal to the Supreme Court, seemingly opposite decisions were rendered. With respect to the Bayer case, the Highest Court affirmed the Appellate Board's negative ruling; whereas in the Janssen case, the Court overturned the lower decision on the ground that Cheil Sugar failed to corroborate the presence of a superior effect in its catalytic process, setting a stage for the Nissan case.

Nissan Kagaku Kogyo Kabushiki Kaisha v. LG Chemicals Co., Ltd.
(Supreme Court Case No. 98 Hu 522; August 21, 2001)

This scope confirmation trial was initiated by LG Chemical ("LG") against Korean Patent No. 28242 entitled "A process for the preparation of pyrazolsulfonylurea derivative" owned by Nissan. The process of LG also relates to the production of pyrazosulfuronethyl from 1-methyl-4-ethoxycarbonylpyrazol-5-sulfonylchloride ("PSC") as a starting material and sodium cyanate, pyridine and 2-amino-4, 6-dimethoxypyrimidine ("ADMP") as a reacting material, wherein PSC, sodium cyanate and pyridine result in the pyridinium adduct as an intermediate, whereas the patented process is directed to the preparation of the same end product from 4-ethoxycarbonyl-1-methylpyraxol-5-sulfonylisocyanate ("PSI") and ADMP. Graphically, the two processes can be represented as follows:

Nissan Process:

LG Process:

One of the disputes hotly contested between the parties centered around the identity of the intermediate. LG argued that it is pyridinium adduct; whereas Nissan maintained that the pyridinium adduct in fact exists as PSI and pyridine in equilibrium and further that it is PSI that reacts with ADMP to produce the end product.

In support of its contention, LG produced its NMR analysis data to show the presence of the pyridinium adduct only and no PSI.

In a nutshell, LG made the following two-pronged argument: first, the LG process is different from the Nissan process because the intermediate compound used as the starting material, i.e., pyridinium adduct, differs from PSI employed in the Nissan process; and, furthermore, even if they were identical, the LG process still falls outside the scope of the Nissan patent because the former employs pyridine as the catalyst so as to produce an unexpected result, citing the Chevron decision. According to the court records, Nissan's process attains a 44.47% yield while LG's catalystic process entails a 90.38% yield.

In response, the Supreme Court held that:

In view of the fact that a catalyst in a chemical reaction gets involved during the reaction to influence the reaction speed, the yield and the like but remains as such after the completion of the reaction and does not affect the structure of the end product, it is not viewed that the addition of a catalyst in a chemical process alters the identity of the technical constitution of the chemical process, i.e., the holistic identity of obtaining a certain end product by reacting a starting material with a reactant. Accordingly, even if the addition of a catalyst entails a marked improvement in the yield, in the absence of any unusual circumstances, it is proper to consider such catalytic reaction as an improvement invention [within the meaning of the statute] that utilizes all of the technical elements constituting the senior technology.

As for the first argument relative to the difference between PSI and pyridinium adduct, the Supreme Court remanded the case to the lower court for the determination of the equivalency between the two.

Upshot of the Nissan Decision

The Nissan decision has not only overturned the Chevron decision but in effect has broadened the scope of the improvement invention within the meaning of Article 98 by holding that a junior invention utilizing an equivalent to its corresponding element in a senior patented invention may also fall within the scope of the senior patent.

The content of this article does not constitute legal advice and should not be relied on in that way. Specific advice should be sought about your specific circumstances.

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