[Edaily Reporter Kim Seung-kwon ] The outcome of the nine-year-long dispute over botulinum toxin strains between Medy-Tox Inc.(086900)and DAEWOONGPHARMACEUTICAL(069620)will be announced in January of next year.

Industry observers expect that, regardless of which side wins, the case will proceed to the Supreme Court. However, January 14 of next year is expected to be a de facto turning point, as the weight of the bargaining chips held by both companies will vary significantly depending on the verdict.

From 1.1 billion to 500.1 billion… The trajectory of a 9-year lawsuit

According to court records on the 13th, the 5-3 Civil Division of the Seoul High Court concluded oral arguments on the 8th for the appeal in the lawsuit filed by Medy-Tox Inc. against DAEWOONGPHARMACEUTICAL and others, seeking an injunction against trade secret infringement and damages. The verdict is scheduled to be handed down at 2:00 p.m. on January 14, 2027. This comes 3 years and 11 months after the first-instance ruling in February 2023.

The court proceeded with the case by holding consecutive hearings on June 18 and September 17 of this year, and concluded the proceedings at the hearing on October 8. The September 17 hearing was the first to be held after Medy-Tox Inc. amended its claims.

A notable point is the length of time between the conclusion of arguments and the verdict. Typically, in civil appeals, a verdict is handed down 3 to 4 weeks after arguments conclude. In this case, however, the period has been set at over three months. This is interpreted to mean that the court has a significant number of issues to review. It is believed to be due to the added burden of calculating damages after Medy-Tox Inc. increased its claim for damages tenfold.

Tracing the roots of this long-standing dispute, Medy-Tox Inc. became the first company in South Korea to commercialize the botulinum toxin product “Medytoxin” in 2006. Subsequently, a competitive landscape emerged when Hugel, Inc. received marketing approval for “Botulax” in 2010 and DAEWOONGPHARMACEUTICAL received approval for “Nabota” in 2013.

The conflict came to the surface in 2016 when Jeong Hyun-ho, CEO of Medy-Tox Inc., proposed a public debate, demanding that DAEWOONGPHARMACEUTICAL and Hugel, Inc. disclose the origin of their bacterial strains. In January 2017, Medy-Tox Inc. filed a criminal complaint against DAEWOONGPHARMACEUTICAL, and in October of the same year, it filed a civil lawsuit. At the time, the claim for damages amounted to 1.1 billion won.

The litigation unfolded simultaneously in South Korea and the United States. In January 2019, Medy-Tox Inc. and Allergan (now AbbVie) filed a complaint against DAEWOONGPHARMACEUTICAL with the ITC, and in December 2020, the ITC ruled in Medy-Tox Inc.’s favor. However, in February 2021, Medy-Tox Inc. reached a three-party settlement with Allergan (now AbbVie) and DAEWOONGPHARMACEUTICAL’s U.S. partner, Evolus. The U.S. dispute was provisionally resolved when Medy-Tox Inc. also reached a settlement with another partner, Ion Biopharma, in June of the same year.

Domestic criminal proceedings took a different turn. In February 2022, the Seoul Central District Prosecutors’ Office dismissed the case, stating that, based on a comprehensive review of search and seizure results, digital forensics, and employee statements, there was no evidence to support the claim that Medy-Tox Inc.’s proprietary bacterial strains and manufacturing technology had been leaked to DAEWOONGPHARMACEUTICAL.

However, the ruling in the first-instance civil trial was different. On February 10, 2023, the 61st Civil Division of the Seoul Central District Court ruled in favor of Medy-Tox Inc. in part. The court held that the bacterial strain DAEWOONGPHARMACEUTICAL had been using was derived from Medy-Tox Inc.’s strain, and that the claim that it had been isolated and identified from domestic soil was implausible in light of various pieces of evidence. The court also found that the manufacturing process was developed based on an illegally obtained process, and that Daewoong Pharmaceutical’s claim of independent development was implausible given the excessively short development period and the lack of development records.

The first-instance ruling consisted of four orders: 40 billion won in damages; the surrender of the bacterial strain; a ban on the manufacture and sale of toxin preparations using that strain; and the destruction of finished and semi-finished products. DAEWOONGPHARMACEUTICAL immediately filed an appeal and applied for a stay of execution, which was granted. This is why Nabota has continued to be sold normally to this day.

There was also a twist in the criminal proceedings. In June 2023, the Seoul High Prosecutors’ Office accepted Medy-Tox Inc.’s appeal and ordered a reinvestigation into DAEWOONGPHARMACEUTICAL’s alleged violations of the Industrial Technology Protection Act and the Unfair Competition Prevention Act.

The appellate trial began with a pretrial conference in May 2024, followed by the first hearing in September of the same year. The proceedings were conducted under strict confidentiality, with both sides filing a total of nine motions for confidentiality orders. Then, on August 31 of this year, Medy-Tox Inc. submitted a motion to amend the scope and grounds of its claim, increasing the claimed damages to 500.1 billion won.

A Medy-Tox Inc. official stated at the time, “This court ruling is a clear decision based on irrefutable scientific evidence, such as genomic sequence analysis,” adding, “Based on this ruling, we will expand Medy-Tox Inc.’s efforts to protect its legitimate rights.”

In contrast, a DAEWOONGPHARMACEUTICAL spokesperson countered, “We will immediately file for a stay of execution and an appeal; this will have no impact on the Nabota business, and we will continue to target the global market,” adding, “Through a thorough investigation of the facts, we will correct this miscarriage of justice in the appellate court and do our utmost to ensure the global success of K-Bio.”

Three months until the verdict… Three key issues the court will examine

It is anticipated that three major issues will be decisive in this ruling. First, the court will likely determine whether to uphold the first-instance court’s finding of infringement. Whether the first-instance court’s findings of fact—regarding the origin of the bacterial strain and the misappropriation of the manufacturing process—are upheld will serve as the starting point for all judgments.

DAEWOONGPHARMACEUTICAL has maintained its position that the origin of the strains cannot be definitively determined based solely on genetic analysis. A DAEWOONGPHARMACEUTICAL official stated, “We were already cleared of all charges in the criminal proceedings,” adding, “We will respond resolutely and thoroughly in accordance with legal procedures, in collaboration with a specialized law firm, to ensure that shareholder value is not compromised.”

Second, the level of damages to be awarded is expected to emerge as a key issue. While the first-instance court broadly acknowledged the infringement, it narrowly assessed the profits derived from the infringement, based on the fact that DAEWOONGPHARMACEUTICAL shortened its development period by three months. In the appellate proceedings, Medy-Tox Inc. recalculated its claim by incorporating the sales volume and revenue from 2014 through July 31, 2025—which were additionally confirmed—as well as the provisions for increased damages under the Unfair Competition Prevention Act. Under the law, damages for intentional trade secret infringement may be increased up to three times for losses incurred after July 9, 2019, and up to five times for losses incurred after August 21, 2024. Depending on the chosen starting point for application, the awarded amount is expected to vary by hundreds of billions of won.

A Medy-Tox Inc. official stated, “This revision to the claim amount reflects the additional sales volume and revenue confirmed during the appellate proceedings, as well as the extended period for calculating damages and relevant laws, thereby realigning the scope of the claim with reality.” The official added, “Since the bacterial strain and manufacturing process are Medy-Tox Inc.’s core technological assets accumulated through long-term research, development, and investment, we have diligently presented the necessary arguments and evidence to protect the rights and interests of the company and its shareholders.”

In response, a DAEWOONGPHARMACEUTICAL official drew a clear line, stating, “The amount claimed for damages is merely the figure put forward by Medy-Tox Inc. and has no relation to the actual damages as determined by the court,” and added, “Since the verdict will be handed down in court, we plan to focus on the appellate proceedings.”

Finally, the scope of the injunction and order to recall the product appears to be the ultimate deciding factor. Since the stay of execution expires simultaneously with the ruling, some observers suggest that the practical repercussions of this may be greater than those of the damages award. While the litigation has continued, Nabota’s sales grew from 147 billion won in 2023 to 228.9 billion won last year, and in the first half of this year, it recorded 153.7 billion won, accounting for 21% of DAEWOONGPHARMACEUTICAL’s total revenue. Cumulative sales also surpassed 1 trillion won at the end of June.

However, DAEWOONGPHARMACEUTICAL maintains that the impact on its business will be limited. A DAEWOONGPHARMACEUTICAL official stated, “The change in the claimed amount is merely a unilateral claim by the opposing party and does not represent a finalized compensation amount; therefore, it has absolutely no practical impact on our financial soundness or business operations.” The official added, “Legal risks related to our business with major global partners have already been resolved through separate agreements, and our global sales continue to grow.”

Medy-Tox Inc. maintains that this claim is not the end of the matter. A Medy-Tox Inc. official explained, “We have first claimed a portion of the total compensable amount applicable under the law,” adding, “Since additional losses from DAEWOONGPHARMACEUTICAL’s sales incurred after August 1, 2025, were excluded from this calculation, the claimed amount may increase further during future court proceedings.”