Korean Supreme Court confirms supremacy of registered exclusive trademark license agreement over earlier unregistered license
In a 27 March 2025 decision (No. 2024Da306691), the Korean Supreme Court ruled on a case concerning competing license rights granted by a trademark owner. In short, the Court confirmed that an unregistered non-exclusive license is not enforceable against a subsequently registered exclusive licensee, even where the non-exclusive license predates the grant of the exclusive license.
The case is likely to have an impact on licensing practice in South Korea, and highlights the value of timely registration with the Korean Intellectual Property Office (KIPO), a step which to date has not always been routinely carried out.
▒ CASE BACKGROUND
The matter involved a trademark owner who first granted a non-exclusive license to one company in July 2021, allowing use of a registered trademark throughout Korea. The parties had planned a joint business venture involving the production and sale of branded food products, but the business relationship deteriorated by late 2021. This non-exclusive license was not registered at KIPO. According to the trademark owner, the non-exclusive license was conditional on successful joint business formation and became void when such cooperation failed to materialize.
In March 2022, the trademark owner granted an exclusive license for the same trademark to another company, and this license was registered with KIPO.
When the non-exclusive licensee continued using the mark, the trademark owner and exclusive licensee asserted infringement under the Korean Trademark Act. A summary of the lower court decisions leading to the recent Supreme Court ruling is as follows:
1st Instance (Busan District Court | 7 June 2023)
The Court decided in favor of the plaintiffs, ruling that:
• The non-exclusive license was implicitly conditional on joint venture success.
• That condition failed, so the license was void.
• The non-exclusive licensee’s use of the mark infringed the trademark and exclusive license.
2nd Instance (IP High Court | 24 October 2024)
Upon appeal by the non-exclusive licensee, the IP High Court reversed the lower court’s findings, ruling that:
• There is no evidence that the license was conditional.
• The non-exclusive license remained valid.
• Use of the trademark by the non-exclusive licensee was authorized and not infringing.
▒ SUPREME COURT RULING
On appeal by the trademark owner and exclusive licensee, the main issue considered by the Supreme Court was whether the unregistered non-exclusive license granted to the defendant could override the rights of the exclusive licensee who had registered their license at KIPO.
With respect to the trademark owner, the Court ruled as follows:
• The IP High Court’s finding concerning the validity of the non-exclusive license is affirmed.
• The trademark owner’s claim that the license had terminated due to business failure is rejected for lack of clear contractual conditions or evidence.
However, with respect to the exclusive licensee, the Court ruled as follows:
• An exclusive licensee has the exclusive right to use the mark within the licensed scope (Article 95(3) of the Trademark Act).
• A non-exclusive license which is not registered cannot be asserted against an exclusive licensee (Article 100(1)-1 of the Trademark Act).
• Thus, the non-exclusive licensee cannot rely on its unregistered license to defend against a claim of infringement.
The Court remanded the case to the IP High Court to determine whether the defendant’s use constituted an infringement and whether damages or an injunction are warranted.
The relevant provisions from the Korean Trademark Act are produced below for reference:
Article 95 (Exclusive License)
(1) A trademark right holder may establish an exclusive license on others in relation to his or her trademark rights.
…
(3) An exclusive licensee who has obtained establishment of the exclusive license under paragraph (1) shall exclusively possess the license of the registered trademark on designated goods to the extent determined by the establishment of the exclusive license.
Article 100 (Effect of Registration of Exclusive License or Non-Exclusive License)
(1) None of the following matters shall be effective against third parties unless they are registered:
1. Establishment, transfer (excluding transfer by inheritance or other general succession), amendment, extinguishment by abandonment or restrictions on disposition of the exclusive license or the non-exclusive license;
(2) Where the exclusive license or the non-exclusive license is registered, it shall also have the effect on any person who acquires the trademark rights or the exclusive license after registration thereof.
▒ TAKEAWAYS AND PRACTICAL GUIDANCE
This decision is a clear reminder that the registration of licenses can be beneficial — and in certain cases, critical.
Formally registering non-exclusive licenses at KIPO has not been considered mandatory as the license relationship can usually be proven if and when required (e.g. to defend against a non-use cancellation action based on licensee use). However, as unregistered licenses cannot be asserted against third parties, licensees may in future wish to request that their rights are recorded in the trademark register to safeguard against future problems. From the perspective of a non-exclusive licensee, registration is also beneficial in that rights are preserved even if the trademark rights are assigned to another party (per Article 100(2) of the Trademark Act).
Concurrent exclusive and non-exclusive licenses for the same trademark may co-exist in the register provided they differ in scope, i.e. cover different goods/services and/or different regions. Presumably, had the non-exclusive license in the subject case been registered at KIPO and remained valid, the later registration of the exclusive license (covering the same goods and territory) would have been refused on the ground of conflicting rights.
This case does not discuss the issue of a trademark owner granting conflicting or overlapping licenses to different parties. As this scenario is not explicitly addressed in the Trademark Act, an affected licensee would likely have to rely on other means such as a contractual claim if they wished to pursue recourse against a licensor.
With this in mind, to protect interests and also provide a basis for a legal claim should a dispute arise, licensees may be wise to request the inclusion of registration obligations and non-compete licensing clauses in future Korean license agreements, and IP-owning licensors should be aware of the increased likelihood of licensees making such requests.
Once a trademark license is registered at KIPO, it remains valid on the register until the date of expiry stated in the license agreement (which cannot exceed the term of protection of the trademark right being licensed), unless the registration is cancelled upon agreement of both parties. Practically, such cancellation requires a mutual termination agreement executed by both the licensor and licensee. Should there be a dispute between the parties and mutual agreement cannot be reached, a court decision rendering the license void or invalid may be required before KIPO will cancel the registration. (In other words, a registered license cannot be cancelled based on unilateral assertions of one party absent such evidence.)
Thus, it is imperative to conduct due diligence before entering into an agreement, including verification of the existence/non-existence of any earlier licenses, and the scope of any license being granted — goods/services, territory, and duration — must be carefully considered and defined.
Written by Jonathan Masters and Sang-eun Shin
