■ In a patent infringement lawsuit appeal, the judge ruled that the “LG H&H diaper does not infringe on the patent of a leakage prevention flap.”

■ The initial ruling in favor of the plaintiff was reversed in a court of appeal; extraordinary profit of 30 billion won expected.

▣ On November 23, in an appeal hearing related to a lawsuit filed by Yuhan-Kimberly against LG H&H demanding over 59.2 billion won in compensation for the infringement of a diaper patent, Seoul Supreme Court Civil Affairs Division 4 (Chief Judge Young-tae Kim) ruled against the plaintiff.

▣ This ruling was handed down in an intermediary appeal hearing for a lawsuit filed by Yuhan-Kimberly against LG H&H. Yuhan-Kimberly claimed that LG H&H infringed on the patent for “a leakage prevention flap” attached inside a disposable diaper to prevent leakage, developed by Yuhan-Kimberly in 2001.

▣ The first trial in 2003 was ruled in favor of the complainant. However, the ruling was reversed in the appeal hearing.

▣ LG H&H is expected to have extraordinary profits of about 30 billion won since the contingency reserve for compensation (35.6 billion won), which was set aside in response to the first trial ruling, can be returned.

▣ LG H&H plans to use this returned reserve for financing the streamlining of overseas businesses, the divestiture of unprofitable business and to accelerate restructuring for the improvement of the business structure.

▣ Meanwhile, with the favorable appeal ruling, LG H&H can now actively pursue the development of new diaper products, which had been limited during the litigation period, and gain momentum in developing products with improved quality. [Key issues in the lawsuit]

▣ Regarding the “fluid permeability” of the patented leakage prevention flap, Yuhan-Kimberly defines it as the permeation of fluid when a certain amount of pressure is applied and claims that the LG H&H product has infringed on this patent.

▣ However, the concept of “fluid permeability” is not clearly defined in the patent obtained by Yuhan-Kimberly. The industry does not generally perceive LG H&H products as having “fluid permeability.”

▣ According to tests results conducted using a waterproofing measuring method and a liquid permeability measuring method, which are test methods accredited in Korea and abroad, fluid did not permeate products manufactured by LG H&H.

[Key milestones]

■ 2001. 7. 9 – Yuhan-Kimberly files a lawsuit against LG H&H

■ 2003. 2. 14 – Ruling in the first trial; Plaintiff Yuhan-Kimberly wins the case

■ 2005. 11. 23 – Ruling in the intermediate appeal hearing; Defendant LG H&H wins the case