[Decision on Domain Name rendered by the Korean Supreme Court on June 29, 2017] 

1. Domain Name Case in Question

A foreign corporation located in the U.K. which manufactures and sells adhesives, etc. (“Plaintiff”) entered into an agency agreement with a Korean corporation (“Defendant”) in early 2002 to sell their products through the Defendant in Korea.  The Defendant registered a domain name “electrolube.co.kr” (“Subject Domain Name”) at Whois on March 4, 2002.

In June 2014, the Plaintiff terminated the agency agreement with the Defendant, and entered into a second agency agreement with another Korean corporation on July 1, 2014.  At the same time the Plaintiff asked the Defendant not to use the subject domain name and transfer it to them.  However, the Defendant rejected the Plaintiff’s request and used the domain name continuously.  Accordingly, the Plaintiff filed a lawsuit against the Defendant with the District Court on January 27, 2015 requesting a transfer of the domain name.

2. Seoul Central District Court (Case No. 2015 GAHAP 506302) – Plaintiff Won

The Seoul Central District Court accepted the Plaintiff’s claim in a decision dated August 21, 2015.  The Court ruled that this case satisfied two requirements for the claim: (a) the Plaintiff had a legitimate title, and (b) the Defendant had an unjust purpose in using the subject domain name.  The grounds for the decision were as follows:

(a)   With respect to whether or not the Plaintiff had a legitimate title to the claim

i) The Plaintiff was established in 1956.  They registered the domain name “electrolube.com” at Whois and have been using the domain for their website. The part “electrolube” of the domain names of the two parties is same, and the two domain names are actually similar.

ii) The Defendant developed a website and operated it by using the subject domain name in order to market the Plaintiff’s products in Korea.

In view of the above, the Plaintiff had a legitimate title to the claim.

(b)   With respect to whether or not the Defendant had an unjust purpose in using the subject domain name

i) Potential customers would likely be drawn to the Defendant’s website because the Defendant used the subject domain name on its website.

ii) The Defendant operated its website under its own domain name “zungchem.com” as well as under the subject domain name.

iii)Despite the fact that the agency agreement between the Plaintiff and the Defendant was terminated, the Defendant’s website continued to use the subject domain name and stated that the Plaintiff was their foreign business client.     

In view of the above, the Defendant had an unjust purpose in using the subject domain name.  And since the Plaintiff was able to satisfy the two requirements of the claim, the Court held in their favor.

The Defendant filed an appeal with the Appellate Court on September 30, 2015.

3. Seoul High Court (Case No. 2015 NA 2051850) - Plaintiff Won

The Seoul High Court rejected the Defendant’s appeal on February 25, 2016.  The Court cited most of the District Court’s judgment and added the following grounds for dismissing the Defendant’s appeal:

i)     In accepting that the Plaintiff had a legitimate title to the claim, the Court held that to be successful, the Plaintiff did not necessarily need to prove its domain name is well-known domestically in Korea.

ii)   The Plaintiff did not object to the Defendant’s use of the subject domain name for 13 years because the Defendant and Plaintiff were in an agency relationship during that period of time.

iii) The Court held that the Defendant’s continuous use of the subject domain name, even after the agency agreement was terminated, amounted to the Defendant free-riding on the Plaintiff’s goodwill.

The Defendant filed an appeal with the Supreme Court on April 6, 2016.

4. Supreme Court (Case No. 2016 DA 216199) – Plaintiff Finally Won

The Supreme Court rejected the Defendant’s appeal in a final decision delivered on June 29, 2017.  The Supreme Court accepted the lower court’s judgment, stating the following legal principles in relation to the unjust purpose: 

(1)   Although there may not be an unjust purpose when registering a domain name, if there is an unjust purpose in holding and using the domain name, there is unjust purpose.  The judgment on whether or not there was unjust purpose shall be made according to the period of time in which the party was holding and using the domain name. 

(2)   The act of having an unjust purpose includes the act of preventing someone from registering a domain name.  The fact that the purpose of any domain name’s holding and using is not to obtain any profit by leasing or selling the domain name does not prevent the court from declaring that there was unjust purpose. 

5. Our Comments

In our opinion, the Plaintiff’s success in this case hinged on the fact that as soon as the agency agreement between the parties was terminated, the Plaintiff demanded that the Defendant not use the Plaintiff’s domain name and transfer it back to them. 

To avoid litigation, parties entering into an agency agreement should include specific language in their agreement directing the transfer or registration deletion of a domain name upon termination of the agreement.

Copyright ⓒ BOOK CHON, 2017