TRADEMARK CASE:

[Korean company used trademarks similar to ones owned by Discovery Communications, LLC and was free-riding on the fame of the globally recognized company.]

(Korean Supreme Court rendered August 18, 2016; Case No. 2016 HU 663)

1. Facts

Discovery Communications, LLC, located in Silver Spring, Maryland, (the “Petitioner”), began selling outdoor clothing in the Korean market in July, 2012 through its local licensee F & F.  The clothing bore the following three trademarks (the “Petitioner’s Trademarks”):

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By 2014, the Petitioner’s Trademarks had become well-known in the Korean market. 

A Korean individual (the “Respondent”), began using the following four trademarks from January, 2013 on clothing that he was selling in Korea:

, , ,

Several months later, on March 27, 2013, the Respondent filed the following trademark (one of the four identified above) with the Korean Intellectual Property Office (the “KIPO”):

The trademark registered on October 15, 2014 (the “Registered Trademark”).  The Respondent did not register his remaining three trademarks with the KIPO (the “Unregistered Trademarks”).  At the time of registration, the Respondent was aware of the existence of the Petitioner’s Trademarks.  Even after registering the Registered Trademark, the Respondent continued to sell clothing using both the Registered Trademark and the Unregistered Trademarks.

On December 26, 2014, the Petitioner filed a cancellation trial with the Korean Intellectual Property Tribunal (the “KIPT”) against the Respondent pursuant to Article 73(1)(ii) of the Korean Trademark Act (“Article 73”).  Article 73 reads as follows:

1. Where a registered trademark falls under any of the following subparagraphs, a trial for cancellation of trademark registration may be requested:

(ii) Where a trademark rights holder leads to any misconception among consumers about the quality of goods or any confusion between his/her goods with other goods relating to another person’s business by intentionally using a trademark similar to the registered trademark on the designated goods, or using the registered trademark or a similar trademark on goods similar to the designated goods.

The Petitioner claimed that the Respondent’s use of the Registered Trademark amounted to unfair use.

2. Decision of the Korean Intellectual Property Tribunal Case No. 2014 DANG 3346

The KIPT accepted the Petitioner’s argument and in a decision dated November 5, 2015 found as follows:

1. the Unregistered Trademarks were not identical to the Registered Trademark,

2. the Petitioner was a globally-recognized media company,

3. the Petitioner’s Trademarks were well-known in Korea when the Respondent registered his Registered Trademark,

4. the Respondent’s Unregistered Trademarks were similar to the Petitioner’s Trademarks and therefore there was a likelihood that consumers would confuse or misunderstand the source of the goods, and

5. the Respondent knew of the existence of the Petitioner’s Trademarks and he intentionally went ahead and used the Unregistered Trademarks in a way that amounted to unfair use.

    

3. Decision of the Patent Court Case No. 2015 HEO 7940

On December 4, 2015, the Respondent filed an appeal of the KIPT decision with the Patent Court.  The Patent Court rejected the Respondent’s appeal and in a decision dated April 8, 2016, the Court held as follows:

1. the Respondent had been using the Unregistered Trademarks even before he registered the Registered Trademark,

2. the Respondent did not modify the Unregistered Trademarks after he registered the Registered Trademark,

3. the Unregistered Trademarks are similar to the Registered Trademark and, pursuant to Article 73, by using the Unregistered Trademarks, consumers are likely to confuse or misunderstand the source of the goods in relation to the Petitioner’s Trademarks, and

4. Article 73 is applicable despite the fact that the Registered Trademark is not similar to the Petitioner’s Trademarks.

4. Decision of the Korean Supreme Court Case No. 2016 HU 663

On May 2, 2016, the Respondent filed an appeal of the Patent Court decision with the Supreme Court.  The Supreme Court rejected the Respondent’s appeal in a decision dated August 18, 2016.  The decision is summarized as follows:

Legal Principle:

The purpose of Article 73 is to prohibit a trademark owner from unfairly using, or exceeding the use of, its trademark.  The trademark owner may not intentionally mislead or deceive consumers with respect to the quality or origin of the goods.  This Article is designed to:

1. promote the safe trade of goods,

2. prohibit “free-riding” on another person’s reputation or credit, and

3. protect the interests of consumers.

Article 73 can be interpreted to cover the following situation: “A” is using a registered trademark, along with similar unregistered trademarks.  “A”’s registered trademark does not closely resemble “B”’s trademark, however “A”’s unregistered trademarks do closely resemble “B”’s trademark.  Consumers will likely be misled or confused as to the origin of the goods in this case and Article 73 may be used to cancel “A”’s registered trademark.

Judgment:

The Respondent used the Registered Trademark as well as the Unregistered Trademarks on clothing that he was selling in the Korean market.  The Unregistered Trademarks closely resembled the Petitioner’s Trademarks and thus it was likely that consumers would be misled and confused regarding the origins of the goods.  Pursuant to Article 73, the Supreme Court upheld the lower court’s decision and cancelled the Respondent’s Registered Trademark. 

The Supreme Court also noted that it was not necessary for the Respondent’s Registered Trademark to be similar to the Petitioner’s Trademarks in order to trigger the cancellation of trademark registration provision found in Article 73.  It was enough that the Unregistered Trademarks were similar to the Petitioner’s Trademarks.

5. BOOK CHON's Comments

In this case, the Respondent acted in bad faith when he sought to intentionally “free-ride” on the reputation of the Petitioner’s Trademarks.  Upon discovering the activity of the Respondent, the Petitioner promptly filed a cancellation trial and successfully blocked the Respondent. 

When faced with trademark infringement, it is critical for well-known companies doing business in Korea to take swift action to protect their legal interests.

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