You open your closet and notice an old luxury bag with frayed edges. It's old and a bit tattered, but as it's an expensive item from a prestigious label, you haven’t been able to find it in your heart to throw it away. However, if you can transform the old bag — that has certainly seen better days — into something new, wouldn't it be a novel idea to have a leather craftsperson turn it into a purse? That is, so long as the artisan is not breaking the law by doing so. Trademark law generally recognizes the right of the owner of a trademarked product, whether it be a handbag or a luxury car, to resell the item without permission from the manufacturer. Resale by the first purchaser of the original article under the manufacturer’s trademark is neither trademark infringement nor unfair competition. Trademark rights exhaustion, often referred to as the “first sale doctrine”, is a concept whereby once a trademark owner has sold a product bearing their trademark or granted permission for its sale, they are unable to prevent downstream owners from subsequently selling or reselling the same product. However, complications arise when a trademarked product is altered or dressed up in some way before being resold, or even when the product is reformed or transformed into an entirely different product for its owner. There was recently an interesting case in Korea dealing with this issue, which we will look at below. Seoul Central District Court: Case 2022GaHap513476 (October 2023) In this case, the plaintiff alleged that the defendant’s “reforming” of (genuine) goods bearing the Louis Vuitton trademark into different products constituted trademark infringement and/or an act of unfair competition. Specifically, the defendant offered a “reform” service of taking old or damaged goods and turning them into a new product — for example, taking a bag and transforming it into a different bag, or into wallets, card cases etc. The following example pictures are taken from the court decision: Before After The plaintiff’s claims were as follows: The defendant’s actions constituted “use” of the plaintiff’s trademark, specifically, producing the items corresponded to “[d]isplaying a trademark on goods or packages of goods” per Article 2(2)-11(a) of the Trademark Act, and returning the reformed product to the owner of the bag corresponded to “[t]ransferring or delivering goods or packages of goods on which a trademark is displayed” per Article 2(2)-11(b) of the same Act. The defendant’s sale of “reformed” products constituted “an act of doing damage to distinctiveness or reputation attached to another person's mark” per Article 2-1(c) of the Unfair Competition Prevention and Trade Secret Protection Act. The defendant’s rebuttals were as follows: The trademark owner’s rights were exhausted when the bags in question were first sold to consumers. The “reformed” bags were made per individual customers’ specifications and were returned to the same customer, with no intention of selling to third parties, and thus do not fall under the exception to trademark exhaustion (i.e. “processing or repair to the extent of damaging the identity of the original product”). Thus, no new products bearing the trademark were produced. The products in question cannot be considered “goods” for the purpose of “use of a trademark” under the Trademark Act, as the products are individually received from and subsequently returned to the same customer, so are not mass produced or distributed. Further, the marks are not used “as a trademark” as the bag owner would have no confusion concerning the source of the reformed product. While the court did not consider the unfair competition claim, it decided that the defendant’s actions were “trademark use” that infringed the plaintiff’s registered trademarks for identical/similar designated goods. In reaching this decision, several interesting points were discussed. The court confirmed that “reforming” of the products was beyond the scope of simple processing/repair; namely, as the reforming was of an extent where the identity of the original product was damaged, it was akin to an act of production and thus the trademark owner should still be permitted to claim the effect of trademark rights. In reaching this conclusion it was not considered relevant that the “reformed” products were only produced for the owner of the original product, and were not sold to third parties. Addressing the defendant’s rebuttals, the court decided that the products in question are able to be considered “goods” under the Trademark Act as they have inherent exchange value and are capable of being the object of independent commercial transactions. The scale of an infringer’s production capabilities were not considered relevant in protecting the source indication function of a trademark. While acknowledging that the products in question were not intended to be sold to anyone other than the original bag owner, and thus the recipient of the reformed goods would be unlikely to mistakenly believe they were manufactured and sold by the plaintiff, the court stated that general consumers could still be confused as to the source of the goods if the reformed products are viewed by or transferred to a third party. As a result, the defendant was ordered to cease production of “reformed” products using fabric/materials indicating the plaintiff’s trademark, and was ordered to pay compensatory damages of 15 million KRW (approx. $11,600 USD). In calculating damages, the court considered the defendant’s revenue attributed to the reformed products (23.8 million KRW, approx. $18,400 USD) but in the absence of data showing profit, and considering the lack of any evidence suggesting the reformed products were sold as used products, settled on a “reasonable amount of damages on the basis of the meaning of all pleadings and the result of the examination of evidence” per Article 110(6) of the Trademark Act. The decision is currently on appeal to the IP High Court. Comments While some have criticized the decision, arguing that the exhaustion of trademark rights should apply equally to the contractor carrying out “reform” work strictly upon request of the product owner, others have welcomed the judgement as it reduces the risk of consumer confusion and damage to the trademark owner’s reputation due to the creation of products that do not meet their quality control standards. In pursuing this claim, rather than seeking a sizable damages payout it is understood that Louis Vuitton wishes to protect the strong reputation its trademark enjoys by discouraging “reforming” by private contractors. If ultimately confirmed, this decision will be welcomed by brand owners as it would somewhat extend their ability to control use of trademarks beyond the first sale doctrine, and would likely result in a number of infringement lawsuits brought by luxury brand owners against other companies involved in similar “reform” practices. It is possible such a decision, if confirmed, would also extend to repair/refurbishment services in other consumer sectors such as automobile tuning, upgrading of electronic devices etc. which are typically carried out for the sole benefit of the owner of the product in question, and not for sale to third parties. Further clarification on this point, hopefully with specific criteria for determining at what point processing of an item results in damage to the identity of the original product, will be necessary to avoid consumer and business confusion. For the meantime, contractors offering aftermarket repair or refurbishment services will need to be more careful about crossing the line between “repair” and “reform” when carrying out customer’s requests. Any further updates on this issue following the appeal will be reported when available.
Following news shared earlier in the year about the likely introduction of a letter of consent system in Korea, the relevant bill passed the National Assembly in early October and the revised Trademark Act has recently been promulgated, with an effective date of May 1, 2024. The Act also contains several other amendments of note. Please refer to the following: Letters of consent In response to a refusal based on citation of a senior mark, a letter of consent from the owner of the senior mark may be submitted to KIPO in order to overcome the refusal ground. Further, the supplementary provisions to the amended Act clarify that letters of consent will be accepted even for applications filed before the effective date of the amendment, with the new rules applying at the time a decision on trademark registration is made by the examiner. In other words, from May 1, 2024 onwards a letter of consent may be submitted to overcome a refusal ground regardless of the filing date of the application. However, an exception is that letters of consent will not be accepted when the two marks in question are identical and both marks cover identical goods/services. A new cancellation ground applying to trademarks registered based on a letter of consent will also be available, and may be utilized in situations where anti-competitive use of the mark causes consumer confusion or deception. Division of International Registrations It is fairly common practice for applicants whose trademark application has been partially refused to divide out the problematic goods/services in order to register the remaining goods/services first. While such an option has been available for national applications in Korea, it has not been possible to do so for International Registrations unless the divided goods were being partially assigned to another party. This limitation has now been removed in the amended Act, so owners of International Registrations designating South Korea will also be able to divide their applications. Other The amended Act will further allow for: Extinguishment of rights following death of TM Owner: Currently, if the heir of a deceased trademark owner does not record the transfer of rights within three years of the date of death, the trademark rights expire. The amended Act further prescribes that if there is no known heir at the time of death, the trademark rights expire immediately. Automatic recognition of priority claim for converted applications: Where an application is converted from one type to another (e.g. additional goods registration to standard application, standard application to collective mark etc.), where the original application had a valid priority claim, the same will be recognized for the converted application. (This removes the current need to make the same priority claim for the converted application.) Easier replacement of national registration with International Registration: In cases where the Korean designation of an International Registration (IR) is for a mark identical to a national registered mark, is owned by the same party as said national registered mark, and the Korean designation of the IR mark was made after the registration date of the national mark, the application date of the IR mark will be deemed to be the application date of the national registration, with respect to any goods/services that overlap with those of the national registered mark. (This removes the current need for all goods/services of the national registered mark to be included in the specification of the IR mark.)
On September 14, 2023, the Director of KIPO’s Intellectual Property Protection & International Cooperation Bureau announced that an SNS fashion influencer had been arrested in connection with the manufacture and sale of counterfeit luxury-brand items. The influencer, referred to as “Miss A”, was the CEO of a company which was established in 2021 and had six other employees involved in marketing, finance, order management, product packaging, shipping, and customer management. Miss A used her position as a prominent fashion influencer to promote products and sell to buyers via a secret membership system limited to customers with high purchasing power. In an attempt to avoid detection, the sales were invite-only and limited to a short time frame on weekends. Starting from November 2020, the enterprise achieved a total of 2.43 billion won (approx. $1.8 million USD) in criminal profits, with an equivalent genuine item price of around $25 million USD. All together 58 brands were counterfeited, including both Korean and foreign brands, with over 20,000 items of clothing, shoes and jewelry produced. It was revealed that Miss A already had previous convictions relating to the sale of counterfeit products, based on violations of trademark law. However, as these earlier offences only resulted in fines of between 2-4 million won (approx. $1,500-3,000 USD), far less than the profit illegally obtained, it is clear that they did not act as an effective deterrent. To avoid infringing trademark laws, Miss A re-created the designs of luxury goods but attached her own labels to the imitation products. The imitation products were often based on new designs which had not yet been released in Korea, but which Miss A had early access to as a VIP luxury brand customer. Comparison of counterfeit (L) vs genuine (R) products, and display of confiscated items. (Source: Korean Intellectual Property Office) (For reference, designs are protectable for up to 20 years in Korea if formally applied for and registered at KIPO, while unregistered designs are afforded protection against “dead copy” knockoffs for a period of three years following their realization under unfair competition laws. Design applications for fashion items such as clothing and footwear are subject to “partial examination” in Korea, with registration usually granted in around two weeks. More information available here.) The enterprise did not produce the products themselves but utilized a network involving Korean clothing manufacturers, jewelry manufacturers and shoe manufacturers, as well as Korean clothing wholesalers based in Shenzen, China. These other entities — a total of 14 manufacturers — are also currently being investigated and indictment is expected soon. Following a complaint in December 2022, the Technology & Design division of the KIPO Special Judicial Police (SJP) began an investigation, revealing the systematic and large-scale nature of the operation. In addition to a search and seizure warrant executed on the residence and corporate office of Miss A, the court, in cooperation with the Daejeon District Prosecutors' Office Patent Crime Investigation Department and Crime Proceeds Recovery Team, collected and preserved assets including financial accounts, bonds and real estate property following an asset investigation. A preliminary arrest warrant was issued for Miss A during the investigation and a total of eight people, including the other six employees involved in the enterprise, have been referred to the Prosecution. From a legal perspective the result is significant in that it is the first case where criminal proceeds have been preserved based on a violation of design or unfair competition laws. It is also the largest amount which has been recovered in a single operation by the KIPO SJP since its creation. This was possible due to a January 2022 amendment of the Act On Regulation And Punishment Of Criminal Proceeds Concealment — a law which inter alia deals with the confiscation and collection of criminal proceeds, but which previously only applied to violations of a set of specific laws. While the Trademark Act was included in this earlier list, the law now more broadly covers crimes that carry a criminal penalty of three or more years’ imprisonment, thus extending to design and unfair competition laws which were previously not included. NOTES:  The term Special Judicial Police (SJP) refers to judicial police with investigative powers limited to a specific area requiring specialized knowledge. The KIPO Special Judicial Police, which has the authority to conduct criminal investigations and raids, is organized under KIPO’s Intellectual Property Protection & International Cooperation Bureau and is composed of officers with expert knowledge of IP laws, including PhD holders, patent attorneys, lawyers and forensic experts. When founded in 2010 the KIPO SJP’s jurisdiction was limited to the investigation of trademark infringements, but has since grown to encompass design, patent, and trade secret violations. The KIPO SJP are commonly referred to as the “Trademark Police” or “Technology Police”, depending on the relevant division.
The Korean IP Office (KIPO) recently introduced revisions to certain official fees, with effect as of August 1, 2023. A summary of the revisions is below. PATENTS/ Reduction of registration fees for patents: Registration fees for patents have been reduced (by 10% on average). This includes both annual basic fees and annual additional fees for each claim. PATENTS/ Increase in examination fees for patents: The fees for requests for examination for patents have been increased (by 16 percent on average; basic fee and additional fee per claim). PATENTS/ Increase in divisional application fees (introduction of progressive fee system): A progressive fee system has been introduced for divisional applications, in which the official fee progressively increases with the number of divisional applications. Previously, the fee remained constant regardless of the number of divisional applications made. TRADEMARKS/ Reduction in threshold number of designated goods subject to additional charge (20 items → 10 items): Previously, if the number of goods in any class was in excess of 20 items, an additional fee of KRW2,000 was charged per excess item. The revision reduces this threshold number of goods: an additional charge is now applied per item in excess of 10 items in any class. TRADEMARKS/ Reduction of application, registration, renewal fees: Trademark application, registration and renewal fees have been uniformly reduced by KRW 10,000. OTHER REVISIONS/ Revision to fees for recordation of transfer of rights: uniform for each type of right: Previously, fees for recordation of transfer were different for patents, utility models designs, and trademarks. The revision introduces a uniform rate of KRW 40,000 for each type of right.
My Invention or Our Invention? - Intellectual Property High Court of South Korea Deliberates on the Joint Application Rule According to Article 44 the Korean Patent Act, where the right to obtain a patent is jointly owned, the owners must apply for the patent jointly (referred to in this article as the “joint application rule”). One co-owner filing an independent application in violation of this rule constitutes a ground for invalidating the patent under Article 133(1)(2). The Intellectual Property High Court of South Korea recently applied this provision to invalidate a granted patent, in a dispute arising from a contractual research arrangement. This article addresses this thought-provoking result. Facts The case involved outsourced research: a university (“the University”) and a corporation (“the Corporation”) had entered into a research service contract according to which the Corporation was to conduct experiments using its own microorganisms and samples but with funding from the University, and submit a final research report at the end of the contract period. Importantly, the parties expressly agreed in the contract that any patent applications based on the results of the research would be made jointly by both parties. However, after the final research report was submitted and the research service contract had ended, the Corporation went ahead and independently filed a patent application based on the subject matter of the research. The patent was granted, and the University objected, asserting before the Intellectual Property Trial and Appeal Board (IPTAB) that, due to the contract, they at least co-owned the right to obtain a patent for the invention. The IPTAB agreed, and invalidated the patent as violating the joint application rule of Article 44. The Corporation appealed to the Intellectual Property High Court. Faced with the unambiguous language of the contract, the Corporation’s assertion was that the invention in their application was in fact a new, independent invention, and was thus outside the ambit of the contract and the joint application rule. The gist of their assertion was as follows: After the contract ended, they took an additional research step, adding a new ‘food’ for the microorganisms that had not been used during the contract period. This addition resulted in an unexpected effect. This effect was only confirmed – and the invention thus only completed – after the contract had ended. The addition was the result of their independent efforts The invention was thus their own independent invention, for which they alone held the right to obtain a patent. Decision The court disagreed with the Corporation and upheld the IPTAB’s judgment, holding that the invention was in fact completed during the contract period, and the invention was identical to the result of the contract. Thus, the invention fell within the scope of the contract, and the right to obtain a patent for the invention was jointly owned. The Corporation’s independent application thus violated the joint application rule, and the patent was invalidated. Commentary When is the invention a new invention? Due to the cumulative and often collaborative nature of modern scientific research, the question of when an invention that builds on previous collaborative research is new and independently patentable, and when it is not, is an important one in the research field. A key takeaway from the present case is thus how the court addressed this question. In finding that the Corporation’s invention was the same as the result of the research, the court based its opinion on the following factual and legal grounds: An alleged new effect must in fact be demonstrated with objective evidence, and must not have already been confirmed by the collaborative research The court found that the Corporation’s alleged new effect was in fact already detailed in the final research report, and the result of the research service contract can be said to be a completed invention. The alleged new features and effects must be adequately claimed The Corporation’s alleged addition and the effect thereof were not explicitly recited in the claims or the specification. The invention must be inventive over the findings of the collaborative research The court found that the Corporation’s addition was an obvious step that would normally be adopted by a person skilled in the art, and it thus cannot be regarded that the addition resulted in a separate invention different from the result of the research. Thus, for the invention to be a new invention, beyond the obvious requirements that the new features and effects must actually be demonstrated and must be adequately claimed, they must also involve an inventive step. Rather than a novelty standard of sameness or substantial sameness, the court here applied the inventiveness standard of obviousness; a more onerous standard for parties in the Corporation’s position. While the court quickly disposed of this question in the present case, the inventiveness inquiry can be expected to be the key area of contention in less clear-cut cases. For example, even in a case where a later novel addition involving substantial independent efforts is clearly made, the court may still find that the invention is not new and independent if it lacks an inventive step. Questions of strategy While the University in this case was seeking the invalidation of the patent, it should be noted that this is not the only remedy for a violation of Article 44. Under Article 99-2 of the Korean Patent Act, a party co-owning the right to obtain a patent can also request the court to transfer their share in the granted patent. As such, rather than taking the destructive step of invalidating the patent entirely, a party in the University’s position could instead take the more constructive step of claiming their share in the patent. Furthermore, invalidation actions here can only be brought by a party claiming to be a joint owner, thus affording the parties the leeway to resolve their dispute between themselves without the possibility of a third-party invalidation action. The University in this case opted, so to speak, for the ‘nuclear option,’ when a more cooperative approach could have kept the patent alive and allowed both parties to share in its benefits. Finally, this case highlights the importance of the contract. It was the research contract itself that created the joint right to obtain the patent and brought this dispute into the ambit of Article 44. Parties to research contracts should thus be keenly aware of terms dealing with future patent application rights, and carefully draft them in such a way as to anticipate future disputes. Written by Ben YUU and Simon VOGET Endnotes Case 2022Heo4949, June 16, 2023
One useful feature of Korean design practice is the “related design” system, which currently allows a one-year period for filing designs similar to an existing “principal design” that would otherwise be refused protection based on similarity to said existing design. This one-year period starts from the filing date of the principal design. By utilizing this system, the scope of protection of the principal design can effectively be expanded. A practical use case is when incremental improvements/changes are made to an earlier design — by securing design protection for these changes, it becomes more difficult for other parties to circumvent the design rights and produce copycat designs. Applicants can indicate that their designs are a “related design” at the time of filing, or, if a later-filed application is refused based on similarity to a senior design owned by the same applicant, it can be designated as a related design of the principal design to overcome such a refusal ground. This principle also applies to embodiments within the same multiple-design application; if several embodiments are deemed to be similar, the applicant must select one as the principal design, and the others as related designs. Aside from the fact that related designs expire at the same time as the principal design on which they are based (i.e. a maximum of 20 years from the filing date of the principal design), related designs are effectively treated as separate and independent rights. For example, invalidation of the principal design does not result in automatic invalidation of any related designs. Some important considerations are that related designs cannot be “daisy-chained”, and must always be similar to the principal design. In other words, once a design is designated as a related design, it cannot subsequently act as a principal design for other later-filed designs. Further, if an exclusive license is recorded against a principal design, it cannot form the basis for any later-filed related designs. While this system is useful, there has been criticism that the one-year period for filing related designs was too short. To rectify this, an amendment to the Design Protection Act extending this period from one year to three years will come into effect from December 21, 2023. The new provisions will apply to related designs filed on or after December 21, 2023, but will not apply retroactively to designs for which the previous one-year deadline had already passed. Practically speaking, this means that designs with a filing date of December 22, 2022 or later will be able to act as a principal design for any related designs which are filed up to three years afterwards. The revision also clarifies that the principal design must be valid and in force at the time the design rights in a related design are established. This development will be of keen interest to applicants in all fields who wish to protect their designs in Korea, and we anticipate the longer window for filing related designs to be widely utilized once in effect. Written by Jonathan MASTERS
All trademark applications in Korea are examined for both absolute and relative refusal grounds, and refusals based on similarity with another party’s conflicting senior mark are commonplace. In fact, KIPO statistics indicate that approx. 40% of office actions issued against trademark applications in 2022 included a refusal ground due to conflict with a senior mark. In such situations, if the conflicting goods/services of the pending application are important to the applicant and cannot be deleted, trademark practitioners in Korea are often asked whether it is possible to obtain and submit a letter of consent from the owner of the senior mark, expressing their agreement to the co-existence of both marks on the register. This is a topic which has been considered by the IP office in the past, but to date the answer has always been negative, with letters of consent, co-existence agreements etc. not accepted by KIPO examiners. However, recent developments indicate that change is on the horizon. Current situation At present, the only practical way to achieve co-existence of conflicting marks on the register is to unify the ownership of the marks via assignment (with all relevant marks being owned by the same party) until the refusal ground is withdrawn and the junior application is granted registration. At this time, the original ownership can be restored via an assignment in the reverse direction. This is often referred to as a “temporary assignment” or “assign-back” procedure. However, even if both parties are cooperative, the additional complexity in securing agreements and the documentary requirements (notarized deeds of assignment being necessary at each stage, for example) make it significantly more time- and effort-intensive than simply obtaining a letter of consent. The complexity escalates even further if there are multiple senior marks owned by different parties, in which case unification of ownership may be a practical impossibility. Brand owners are also often unwilling to cooperate in such a procedure if it means relinquishing ownership of their marks — albeit temporarily — even in cases where they do not oppose the registration of the junior application. Possible changes In her New Year’s address, KIPO Commissioner Insil Lee specifically mentioned the need for a letter of consent system to enable easier coexistence of trademarks. Following this, a bill with amendments to the Trademark Act was submitted before the National Assembly on March 20, 2023 (link in Korean). The bill proposes the following changes: Allow a refusal ground based on conflict with a senior mark to be withdrawn if consent from the owner of the senior mark is obtained, except in cases where the respective marks and goods/services are identical. Allow for cancellation of a mark registered based on such consent, should the mark be used anti-competitively and cause consumer confusion. What's next? While the pending bill is still at the committee review stage and several more steps must be completed before its promulgation into law, considering the current context and opinion surrounding this issue we are optimistic that the proposed changes will pass through the legislative process and eventually come into effect. We will be monitoring the progress of the bill and will report on any noticeable developments. Written by Jonathan MASTERS
Introduction With the entry into force of the 14th edition of the Locarno Classification from 1 January 2023 (which applies to designs filed on or after this date), a number of design articles have moved to different classes. Some examples are set out in the following table. Previous class New class Article name 21-02 02-01 Waist supports for exercise 28-02 09-05 Lipstick tubes [packaging containers] 03-03 24-05 Crutches 02-03 29-02 Disposable face masks This is particularly relevant in South Korea as design applications follow one of two examination tracks — partial examination or full examination — based on the Locarno class of the design article.(1) At the time of writing, designs that fall under the following seven Locarno classes are subject to partial examination: class 01 – foodstuffs; class 02 – articles of clothing and haberdashery; class 03 – travel goods, cases, parasols and personal belongings, not elsewhere specified; class 05 – textile piece goods, artificial and natural sheet material; class 09 – packages and containers for the transport or handling of goods; class 11 – articles of adornment; and class 19 – stationery and office equipment, artists' and teaching materials. Designs in all other Locarno classes are subject to full examination. Looking at the examples in the above table, the first two articles will now be subject to partial examination in Korea, while the latter two will go through full examination. So, what is the difference? Partial examination This is a fast-track examination process for designs typically sensitive to trends or that have a short life cycle. The examination stage comprises a check of the following, but does not include a substantive examination of novelty or creativity: application formalities (eg, applicant details and suitability of drawings); basic formalities (eg, design cannot be similar to national flag or emblem, morally unsound, liable to cause confusion with another party or purely functional); industrial applicability; and limited novelty requirements (cannot be a "widely known" design or a combination of widely known shapes, patterns or colours). The examination timeframe for partial examination designs is typically around two to three weeks, so protection can be obtained rapidly. Another feature unique to partial examination designs is the existence of an opposition period following publication (laying open) of the design in the Design Gazette. Due to the limited novelty search carried out during examination, this provides an opportunity for any other parties to oppose the registration. The opposition period is three months from the date of publication. After this time, it is still possible for interested parties to bring an invalidation action. Most official fees are also lower for partial examination designs, including the application fee (currently ₩45,000 per design) and annuity payments, which are a fixed cost (currently ₩17,000 per year) for the lifetime of the design. Full examination As the name implies, this is a substantive examination process that, in addition to the partial examination details above, also includes a comprehensive prior art novelty search. Reflecting the more involved process, the examination timeframe for full examination designs is considerably longer — currently around six to 12 months. After registration and publication (laying open) in the Design Gazette, there is no opposition period. To contest the registration, an invalidation action must be brought. The official application fee for full examination designs is more than double that of partial examination designs (currently ₩94,000 per design) and, as with patents, the annuity fee payments increase over the lifetime of the design. Currently, they rise from ₩17,500 per year for years four to six to ₩105,000 per year for years 13 to 20. Written by Jonathan MASTERS
On November 25, 2022, the Korean Patent Court ruled on a case concerning limitations on the effect of registered trademark rights, specifically dealing with the question of whether one party’s use of a mark containing their own name, title, trade name etc. was “in accordance with generally accepted business practices” and thus outside the scope of rights of a similar registered trademark owned by another party. THE LAW Article 90 of the Korean Trademark Act (“Extent on Which Trademark Rights Do Not Have Effect”) provides that trademark rights do not extend to “[a]ny trademark using [another party’s] own name, title, or trade name, portrait, signature, seal, or well-known pseudonym, stage name, pen name, and the well-known abbreviated title thereof, in accordance with generally accepted business practices”, so long as such usage is not “for the purpose of unfair competition after registration and establishment of trademark rights”. (This wording was amended in 2016; in the old Trademark Act the restriction was applied to trade names etc. used “in a common way”.) The broad purpose of this clause is effectively to limit the effects of trademark rights in view of the intended spirit of the law and public interest. This does not equate to a limitation on the trademark holder’s right to exclusive use of the mark, but rather establishes the conditions under which another party’s use would be acceptable and non-infringing. According to Supreme Court precedent, using a trade name “in accordance with generally accepted business practices” means the name should be used in a way that does not create any special distinctiveness, for example by displaying in a unique font, color, stylization etc., and the location, arrangement, size of the name, combination with other elements, etc. are also considered. Overall, general consumers must be able to recognize that it is a trade name just by looking at the mark in question. Further, a “purpose of unfair competition” is understood as being an intention to obtain unfair profits by freeriding on the goodwill/credit of the registered trademark holder. In deciding on this point, subjective criteria such as the party’s motivation for selecting the mark, awareness of the registered trademark etc., and objective criteria such as similarity between the marks, fame of the registered trademark, similarity in business type and geographical proximity of business activities, as well as the actual use of the allegedly infringing party must be considered. THE CASE Aside from the specifics of the two parties’ respective marks, the complainant argued that the Court should apply the old Trademark Act in hearing this case; several grounds were put forward to support this argument, such as the complainant’s trademark being applied-for and registered before the amended Act came into force, as well as an argument that the wording of the revised Act suggests it should not apply to scope confirmation trials. However, the Court dismissed these arguments, deciding to apply the current (amended) Trademark Act. This meant that the respondent had to show their usage was “in accordance with generally accepted business practices”, rather than “in a common way”. The basic facts of the case are as follows: The complainant is the operator of “HASLLA ART WORLD”, a facility including a museum, gallery, hotel, restaurant and coffee shop (“HASLLA CAFE”), and is the owner of a trademark registration for “하슬라” [“HASLLA”] covering café and restaurant services in Class 43. The respondent is the operator of a café called “하슬라 가배” [“HASLLA GABAE”, where “GABAE” is an old-fashioned way of expressing the word “coffee”]. Both businesses are located in Gangneung City on the east coast of Korea. This case was an appeal from a scope confirmation trial heard by the IP Trial & Appeal Board (IPTAB) in which the complainant sought to show that the respondent’s use fell within the scope of their registered trademark rights. The specific usage in question was the respondent’s store signage shown below, where the smaller sign on the left reads “하슬라” [HASLLA”] written vertically, and the larger sign reads “하슬라 가배” [“HASLLA GABAE”], together with “Café” in English. [Respondent’s store signage] Note: Scope confirmation trials are inter-partes administrative procedures used to determine whether or not a specific usage of a mark falls within the scope of rights of another party’s registered trademark. Such trials are often filed alongside a civil infringement suit in which an injunction, compensatory damages etc. may be sought. As scope confirmation trials are heard by IPTAB subject matter experts, the decision — while not legally binding — may be submitted and carry weight in the civil suit. The Patent Court ultimately dismissed the appeal in favor of the respondent, upholding the IPTAB decision. This means that the defendant’s usage of their trade name “HASLLA GABAE” (in Korean) on signage for a café in Gangneung City is not considered an infringement of the registered “HASLLA” (in Korean) trademark. In reaching this decision, the Court considered the following, among other factors: Use in accordance with generally accepted business practices: The respondent’s trade name is “HASLLA GABAE”, which corresponds to the name used on the sign. The text is not expressed in a way that creates any special distinctiveness, and the addition of the English term “Café” is descriptive of the services offered. “Haslla” itself is the old name of Gangneung City used during the Goguryeo period (37BC – 668AD) of Korean history, and this is common knowledge among residents of the city. “Gabae” is a transliteration of the Chinese characters for coffee, and the term was widely used to refer to coffee during Korea’s period of enlightenment. The respondent seems to have conceived of the name by combining the old name for Gangneung City with the old term for coffee. Signboards with text surrounded by bulbs are commonly found across the country. Purpose of unfair competition: The complainant began operating a coffee shop in 2013, but has referred to it using various names over the years. An internet search for “Haslla Café” (in Korean) reveals posts predominantly concerning the complainant’s coffee shop, but results also contain the respondent’s store. While in the same city, the complainant’s and respondent’s stores are not in close proximity (approximately 17km apart). The concept and interior decoration of the stores are respectively different, with the respondent’s café being based on the theme of the Korean enlightenment period. The name “Haslla” is used in Gangneung City in road names, school and library names, festivals etc. Survey results show a high awareness of the meaning of “Haslla” among Gangneung City residents, and a reasonable awareness among residents of other areas in the same province. COMMENT This case provides some further clarification on how exceptions to registered trademark rights are considered under Article 90 of the Trademark Act. While the respondent’s trade name in this case included the registered trademark in its entirety and both parties operate similar businesses, this naturally does not mean that usage of a trade name provides blanket protection against trademark infringement in all cases. On the contrary, the way in which the trade name is used was considered in detail in the context of the specific location of the business, and in this case it was not considered that consumers would be confused. Ultimately, trademark owners do not need to be alarmed by this decision as the exception clause does not apply to bad faith usage — in cases of intentional infringement, trademark rights can still be enforced, regardless of whether the infringer is using a trade name. Written by Jonathan MASTERS and Sang-Eun SHIN
Following an MOU between the Korean Intellectual Property Office (KIPO) and France’s National Institute of Industrial Property (INPI) signed during the World Intellectual Property Organization General Assembly held in Geneva, Switzerland in July earlier this year, the Patent Prosecution Highway (PPH) program between Korea and France has become effective as of September 1, 2022. From this date onwards, applicants may request KIPO to conduct preferential examination based on INPI work products provided the normal requirements are met, namely: The KIPO application and the application forming the basis of the PPH request must have the same “earliest date” The INPI application must have one or more claims determined by INPI to be patentable/allowable The claims in the KIPO application must correspond (or be amended to correspond) sufficiently to the claim(s) determined by INPI to be patentable/allowable A request for examination must have been filed with KIPO by the applicant before, or together with, the PPH request There must be no first office action issued against the KIPO application at the time of filing the PPH request According to KIPO’s 2021 statistics France ranked fifth in terms of the number of patent applications filed by foreign applicants in Korea, so this development should be welcomed by French applicants. (For reference Korea already has PPH agreements in place with the four preceding countries in the list, namely the US, Japan, China and Germany). Vice versa, Korean applicants — who rank fourth among INPI applicants from outside of Europe — will also be able to benefit from accelerated examination of their French applications based on KIPO work products. By utilizing the PPH program, applicants can typically expect to receive a first office action from KIPO within 2-5 months of filing the request for preferential examination, instead of the typical 12-15 months for standard applications. The agreement between KIPO and INPI is formally a three-year pilot program ending August 31, 2025, with the offices to decide whether and how to fully implement the program after the trial period based on evaluation of its results. Written by Jonathan MASTERS
Unsurprisingly given the fast-growing awareness of the metaverse and its implications for brand owners, the Korean IP office (KIPO) has seen a sharp hike in the number of trademark applications covering virtual goods, increasing from just 6 in 2020, to 17 in 2021, and 717 filed between January and May 2022. Reacting to this trend, KIPO has issued new examination guidelines for trademark applications covering virtual goods, effective from July 14, 2022, to prevent applicant’s confusion and to increase consistency of examination. Goods descriptions Virtual goods may now be designated under Class 09 in the simple form “virtual + goods name”, for example “virtual clothing”, “virtual shoes” etc. This means that it is no longer necessary to rely on long-winded descriptions such as “computer programs containing virtual clothing (virtual goods)” or “downloadable image files (virtual clothing)” which were previously acceptable. Regardless, it is still necessary to specify the type of virtual goods, since an ambiguous description such as “virtual goods” would be unacceptable on account of it being overly broad. Relationship between virtual goods Previously, all virtual goods were considered to be similar regardless of their type. In theory, this meant that “virtual shoes” would have formally conflicted with diverse goods such as “virtual automobiles” etc. This naturally had the potential to lead to disputes between brand owners operating in wholly different fields. Under the new guidelines, virtual goods will be sub-classified and compared based on their type, just like their physical counterparts. Thus, just as two applications for similar marks respectively covering “clothing” and “footwear” in Class 25 would not be considered conflicting under Korean examination practice, the same would be true for a pair of applications covering “virtual clothing” and “virtual footwear”. However, there would be a conflict between applications respectively covering “virtual pants” and “virtual clothing”, which are formally similar goods. Relationship between physical and virtual goods The new guidelines specify that physical and virtual goods will by default not be considered conflicting for the purposes of examination. By way of example, a new application covering “virtual clothing” in Class 09 would not be blocked by a senior mark covering “clothing” in Class 25. However, if an application covering virtual goods is filed for a mark which is similar to an established well-known/famous mark, the examination regarding physical and virtual goods would also consider whether there is a likelihood of consumer confusion between the later-filed application and the well-known/famous mark, etc. Recommendations While some may have been on the fence before, now that KIPO has clarified its position on the similarity issue regarding physical and virtual goods, it is now important for brand owners to file in Class 09 if they wish to ensure they have protection for the virtual representation of their physical goods. With Korea being a first-to-file jurisdiction, it is recommended that such filing be done as soon as possible. (As discussed above, the new application must specify all of the virtual goods of interest individually, and it would not be sufficient to simply designate “virtual goods”.) It would also be advisable to ensure that Class 09 is included in any trademark watching services set up for marks of importance or interest, especially given the rapid increase in filing activity for virtual goods. Written by Jonathan MASTERS and Alex Hyon CHO
When patent, utility model, trademark and/or design rights (collectively “IP rights”) are invalidated or extinguished following a rights holder’s inability to meet a statutory deadline, in certain circumstances it is possible to “restore” the IP right to its pre-invalidation or pre-extinguishment state and continue prosecution. Comparing with other systems around the world, Korean IP laws have traditionally applied strict standards for the restoration of IP rights. However, recent revisions have relaxed these requirements, shifting the acceptable standard from “unavoidable reasons” to “justifiable reasons”. These changes came into effect from April 20, 2022. The previous “unavoidable reasons” were applicable only in very limited situations such as natural disasters or wars, while “justifiable reasons” are applicable in emergency situations where the applicant cannot undertake the necessary procedures, for example due to hospitalization for Covid-19. The detailed requirements for the restoration of IP rights are as follows: Substantive Requirements: There must be “justifiable reasons” for failing to comply with the relevant deadline in spite of all due care demanded by the circumstances having been taken. The key requirement, therefore, is to prove that “due care” was taken. The obligation to exercise due care must be considered in light of the situation as it stood before the missed deadline expired. “All due care” means all reasonable care, i.e., that which a reasonably competent patentee, applicant, or representative would employ in the relevant circumstances. Procedural Requirements: Under current IP laws, actions to restore IP rights must be filed within two months from the date on which the justifiable reasons for non-compliance with the original deadline cease to exist, and at the latest within one year of the original deadline. In order to achieve the restoration of IP rights, a petition for restoration of IP rights must be filed within the aforementioned periods together with a statement and evidence showing the “justifiable reasons”. The petition will be examined by the KIPO division handling the case in question. While it is certainly a positive development that the Korean IP office (KIPO) is being more lenient in its approach to IP rights restoration, with more varied causes not attributable to the rights holder being accepted as the justification for a missed deadline, the specific standards for the required statement and evidence have not been clearly stipulated and so there still remains some uncertainty about the practical implications. However, we expect that these standards will become established based on precedent in the weeks and months to come. Written by Jonathan MASTERS