Convoyed Sales and Damage Calculation in Patent-Infringement Litigation

This study focused on the lost sales of ancillary products or services (hereinafter, “ancillary products”) in damage calculation. The precedent and practice that excludes the lost sales of ancillary products from the application of Article 128 of the Patent Act should be reconsidered; if the sales of ancillary products could have been attributed to the holder of the patent rights “but for” the infringement, lost profits of the ancillary products should be included in the calculation of the full damage. If it is reasonably foreseen that the sales of ancillary products are concomitant to the sales of patented products, Article 128 shall be applied as if both products are analogous to “whole part v. component part.” Meanwhile, the burden of proof in overturning this assumption shall be on the infringer who is disputing the damage amount. The study discussed the legal consequences of applying Article 128 (2), (4), and (5) to various potential case types, as well as the comparative situations of some other countries in terms of this issue. Considering the recent trend of various online business models offering clients patented primary services for free and pursuing secondary profits from paid ancillary services or advertisements, this study also proposed the analogical application of Article 128 to the patent infringement of these online businesses, including the associated lost profits of ancillary services.