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ReimbursementWinning the case (favorable judgment)

Corporate Litigation Assistance Case | Favorable Judgment in a Product Liability Reimbursement Suit

The client who requested assistance with corporate litigation was sued for reimbursement by a pharmaceutical company and, to respond to it, entrusted the case to a corporate attorney.

1. The Story of the Client Caught Up in Corporate Litigation

Daeryun corporate litigation client case circumstances

This is a case in which a client who requested corporate litigation assistance faced a reimbursement claim lawsuit related to the detection of pollutants, but prevailed with the assistance of a corporate attorney.

Client Facing a Reimbursement Claim Lawsuit

The client who requested assistance with corporate litigation was a pharmaceutical company that had manufactured and supplied medicines over a long period.

In the meantime, there was an announcement by the Ministry of Food and Drug Safety that a certain contaminant had been detected in some of the products supplied by the client in excess of the standard level.

Accordingly, measures for the recall, re-prescription, and re-manufacturing of the medicines were carried out.

As a result, the National Health Insurance Service came to bear medical expenses such as consultation fees and dispensing fees, and on this ground it filed a reimbursement claim against the client.

Faced with the sudden lawsuit, the client entrusted the corporate litigation response to a corporate attorney who had handled numerous product liability cases.

2. The Issues in the Corporate Litigation and the Grounds for Product Liability Exemption

The issues in this corporate lawsuit were as follows.

▷ Was the detection of contaminants a ‘manufacturing defect’?
▷ Is that recognized as loss under the Product Liability Act?

The National Health Insurance Service, regarding the medicine as having a manufacturing defect, had filed a reimbursement claim lawsuit based on the Product Liability Act.

▶ Product Liability Act, Article 3 (Product Liability)

① A manufacturer shall compensate a person who has suffered loss to life, body, or property due to a defect in a product for such loss.

② Notwithstanding paragraph (1), where a manufacturer, knowing of a defect in a product, fails to take the measures necessary with respect to the defect, and a person consequently suffers serious harm to life or body, the manufacturer shall be liable to compensate that person within a range not exceeding three times the loss incurred by that person.

※ Here, a “manufacturing defect” refers to a state in which, regardless of whether the manufacturer exercised care, the product was manufactured or processed differently from its original design and consequently failed to attain safety.

Grounds for Exemption from Product Liability

However, a person who must bear liability for damages may be exempted from liability if the person proves certain facts stipulated in the Product Liability Act.

▶ Product Liability Act, Article 4 (Grounds for Exemption)

① Where a person liable for damages under Article 3 proves that any of the following facts applies, the person is exempted from liability for damages under this Act.

1. The fact that the manufacturer did not supply the relevant product

2. The fact that the existence of the defect could not be discovered with the scientific and technical level at the time the manufacturer supplied the relevant product

3. The fact that the defect in the product occurred because the manufacturer complied with the standards prescribed by the statutes in force at the time the manufacturer supplied the relevant product

4. In the case of raw materials or components, the fact that the defect occurred due to the instructions regarding the design or manufacture of the manufacturer of the product that used those raw materials or components

▶ Related Precedent

- Supreme Court, Decided March 26, 2015, 2012Da4824 Judgment
Whether damages arising from business losses caused by a defect in a product are subject to the Product Liability Act


Product liability is the liability for damages imposed on a manufacturer and others where a defect that lacks the safety ordinarily expected of a product causes damage to life, body, or property, and "property damage occurring only to the product itself" is excluded here.

In addition, "property damage occurring only to the product itself" is reasonably understood to include not only the property damage occurring to the product itself but also the damage arising from business losses caused by the defect in the product, so such damage is not subject to the Product Liability Act.

3. The Corporate Litigation Response Strategy

Daeryun corporate attorney corporate litigation response strategy

In this corporate litigation, Daeryun focused on securing supporting materials that could provide an objective basis for determining whether the regulations had been violated, by analyzing the components of the contaminant contained in the medicine in question and the regulatory standards applicable at each period.

Thereafter, it responded to the corporate litigation with the following strategy.

Document Analysis and Establishment of a Defense Strategy

The corporate law specialist attorney first closely analyzed various regulatory documents related to the case, such as the quality control guidelines and the test methods.

Through this, the attorney specified the scope of the duty of care that the client had to fulfill in light of the regulatory environment and technical level at the time of the case.

The attorney then systematically established a defense strategy to prove that there was no manufacturing liability within that standard.

Addressing Deficiencies and Demonstrating Regulatory Compliance

The corporate specialist attorney focused on the situation in which, at the time, no testing method or management standard for the pollutant in question had been established.

The attorney organized the related technical limitations and regulatory gaps and then argued that the client had no duty to recognize or manage the existence of the impurity in advance.

Moreover, through expert opinions and materials, the attorney emphasized that at that point developing and applying a testing method was in practice impossible, and that the client had complied with the relevant regulatory standards.

Review of Whether the Loss Is Recognized

As to whether the re-prescription and re-dispensing costs claimed by the corporation constituted a "loss" caused by a product defect, the attorney emphasized that those costs were in substance the result of an administrative measure for preventive purposes.

Through this, the corporate attorney clearly distinguished the nature of the loss and the legal requirements, and logically argued that it fell within a scope difficult to recognize as a loss under the Product Liability Act.

4. Result of the Corporate Litigation: “Favorable Judgment”

Daeryun Corporate Litigation Outcome: Client Wins the Case

Based on thorough analysis of materials and precise review of the legal principles, the corporate attorney was able to reduce the scope of the client’s legal liability.

Having had the court recognize that the costs of re-prescription and re-compounding did not constitute loss under the Product Liability Act, the client received a favorable judgment in the reimbursement claim and won the corporate litigation.

If a Product Liability Dispute Has Arisen

As with this corporate litigation, product liability disputes are complex and sensitive, and because an understanding of the relevant regulations and technology is critical, an even more specialized response is required.

When involved in a product liability dispute, it is therefore very important to consult promptly with a specialized attorney to accurately identify the key issues of the case and establish a systematic defense strategy.

Law Firm Daeryun provides clients with optimized assistance through the collaboration of specialists from various fields for each case.

In addition, based on case-handling data and experience, the firm analyzes the characteristics suited to the matter to establish an appropriate strategy and, where necessary, provides systematic evidence collection and a comprehensive response plan.

If you are involved in a product liability corporate dispute and need legal assistance, please request support at any time through a 🔗legal consultation booking.

This content is based on actual cases handled by Daeryun Law LLC and has been partially adapted. All copyrights belong to Daeryun Law LLC.
Unauthorized reproduction, copying or distribution may result in legal action under applicable laws.

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