[Decision on Unfair Competition Acts rendered by the Korean Supreme Court on January 25, 2017] 

1. Unfair Competition Acts Case in Question

A is a Korean corporation which manufactures and sells tools for fire extinguishing (the “Plaintiff”).  B is a Korean corporation which manufactures and sells tools for firefighting (the “Defendant”).

In 2010 and 2011, the Plaintiff manufactured and sold a fire extinguisher to the police (the “Plaintiff Product”).  In 2012, the Defendant also manufactured and sold a fire extinguisher to the police (the “Defendant Product”).  The two products looked very similar to each other in size, shape, and pattern, but were a slightly different color.

On September 13, 2013 the Plaintiff filed a lawsuit against the Defendant with the District Court on the grounds that the Defendant Product is very similar to the Plaintiff Product and thus the Defendant’s sale of the Defendant Product to the police is considered an unfair competition act.

2. DISTRICT COURT (Case No. 2013 GADAN 34640)

The District Court rejected the Plaintiff’s case in a decision dated August 26, 2014.  The grounds for the decision were as follows:

i) The Defendant Product is similar to the Plaintiff Product in size, shape, and pattern, but is a slightly different color.

ii) Products similar to the Plaintiff Product and Defendant Product have been sold by Korea Chemtech Co., Ltd. since 2007 and by Oil Metal since 2009.  These products are generally similar in pattern but differ in gross weight.

iii) Accordingly, the sale of the Defendant Product falls under the assignment as its shape corresponds to what would be considered the ordinary shape of a fire extinguisher.

Against this decision the Plaintiff filed an appeal with the Appellate Court on September 25, 2014.

3. APPELLATE COURT (Case No. 2014 NA 54489)

The Appellate Court rejected the Plaintiff’s appeal on April 23, 2015.  The grounds for the decision were as follows:

i)       The Appellate Court accepted the Plaintiff’s assertion that the Defendant Product is very similar to the Plaintiff Product in size, shape and pattern.

ii) However, the Court rejected the Plaintiff’s other assertions on the following grounds:

(a) The Plaintiff Product and the Defendant Product are similar to other fire extinguishing products shown on the device of the application of utility model in 1984;

(b) fire extinguishers that are similar to the Plaintiff Product and the Defendant Product have been sold by Korea Chemtech Co., Ltd. since 2007 and by Oil Metal since 2009.

iii) Accordingly, the sale of the Defendant Product does not fall under the unfair competition act based on the imitation of shape of another person’s products.

Against this decision the Plaintiff filed an appeal with the Supreme Court on May 26, 2015.

4. SUPREME COURT (Case No. 2015 DA 216758)

The Supreme Court also rejected the Plaintiff’s appeal in a final decision delivered on January 25, 2017.  The grounds of the Supreme Court's decision were as follows:

(A) Legal Principles

Article 2(1)(i) of the Korean Unfair Competition Prevention Act stipulates that any act of assignment and lending of goods which imitate the shape of another person’s goods is considered to be an unfair competition act.  However, in the proviso of the Article, it stipulates that the act of assignment and lending of goods which imitate the shape of another person’s goods, but that is common in such goods is not an act of unfair competition.  In this proviso, the shape that is common in such goods means (i) the shape which is generally used in the same or similar goods, and (ii) the shape which is commonly used and has no characteristics in the same or similar goods.

(B) Judgments

i) The shape of the Plaintiff Product was similar to products sold prior to the sale of the Plaintiff Product (the “Preceding Products”). For example: (a) products illustrated in the drawings of the application of utility model in 1984;  (b) fire extinguishers similar to the Plaintiff Product and the Defendant Product have been sold by Korea Chemtech Co., Ltd. since 2007 and by Oil Metal since 2009.

ii) Although the Plaintiff Product is a little different from the Preceding Products, the difference does not give any characteristics to the Plaintiff Product.

iii) Therefore, the shape of the Plaintiff Product is a common shape to other products on the market, and therefore it is not a shape which is protected under Article 2(1)(i) of the Korean Unfair Competition Prevention Act. 

5. Our Comments

In this case the Plaintiff lost as they did not know that the shape of their product was common when compared to the same or similar products and did not have any distinguishing characteristics.  Therefore, if someone plans to take legal action against a competitor, he should first carefully review whether or not the shape of his product has any distinguishing characteristics from other products in the market that will be protected under the law.

Copyright ⓒ BOOK CHON, 2017