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Free-riders please disembark: Supreme Court renders unfair competition decision in Hermès bag case

Is it unfair competition to add a newly created image to a bag similar in appearance to a bag well-known among consumers as being produced by luxury brand Hermès? Summary In a July 9, 2020 decision (case 2017da217847), the Korean Supreme Court considered whether the defendant’s acts of manufacturing/selling a bag of which the front, side, handle, cover, leather strap (belt design), and clasp were similar in appearance to those of the well-known luxury-brand Hermès’ bag (shown on the left below), but to which the defendant had added a large image of cartoon-style eyes (shown on the right below), fall under the provisions of the Unfair Competition Prevention and Trade Secret Protection Act (hereunder “Unfair Competition Act”). Hermès bag Defendant’s bag   As Hermès did not have registered design or trademark rights in the bags relevant to this matter (namely the Birkin/Kelly bags), the complaint was based on unfair competition law. The court ruled that provisions of the Unfair Competition Act relating to causing source confusion (Article 2-1(a)) and tarnishing distinctiveness/reputation (Article 2-1(c)) did not apply, but in contrast with the earlier instance decision did deem that the ‘catch-all’ provision of unfairly appropriating the results of others’ efforts was applicable (Article 2-1(j) in the applied version of the law in this case, but Article 2-1(k) in the current Act, shown below). Relevant Law Unfair Competition Act — Article 2-1 The term “act of unfair competition” means any of the following acts: … (k) Any other acts of infringing on other persons’ economic interests by using the outcomes, etc. achieved by them through substantial investment or efforts, for one’s own business without permission, in a manner contrary to fair commercial practices or competition order Decision In the earlier instance decision, the High Court stated that the defendant’s bag, which was marketed under the slogan “Fake for fun”, included the defendant’s original image covering most of the front of the bag, with the unfamiliar combination of various mixed images expressing creativity and realizing a new aesthetic. Giving general consideration to the creativity and cultural value of the defendant’s product, as well as the defendant’s promotion/sales activity and marketing strategy, the High Court went on to state that the defendant’s actions were not deemed to entail free-riding on the fame of Hermès’ products, and did not violate fair commercial practices or competition order. Further, the High Court stated that as the defendant’s products used shiny, inexpensive artificial leather and sparkly sequins which Hermès does not use, and the price of the goods, sales locations/methods and main customer base were also distinctly different, there was little chance of the defendant’s products being confused for Hermès’ products. For this reason, there was seen to be little concern that the defendant’s manufacture and sales activities would cause economic harm to Hermès or reduce Hermès’ market advantage, and so the defendant’s actions were not deemed to be infringing on other persons’ economic interests as required by Article 2-1(j) of the applied version of the Unfair Competition Act. However, the Supreme Court reached a different conclusion, stating that despite the ‘Fake for fun’ slogan, the form of the defendant’s bag was similar to Hermès’ and the intent to free-ride on the fame and awareness of Hermès’ bags is apparent; commercially selling a product by adding a new image to an item already widely known among consumers as that of another party cannot be seen as being in keeping with fair commercial practices or competition order. The Supreme Court noted that in order to utilize an item widely known among consumers as that of another party, an example of fair commercial practice would be cooperation/collaboration under a contract. The Supreme Court went on to state that Hermès limits the supply of their bags relevant to this case (the Birkin/Kelly bags), and the defendant’s sales of similar products could be an obstacle to maintaining their scarcity. Further, if the defendant was to continue manufacturing and selling their bag domestically, it could have an effect on the demand for Hermès products or result in potential consumers not purchasing Hermès products due to their scarcity or depreciation in value. Based on the above, the Supreme Court quashed the earlier decision and remanded the matter to the High Court, stating that the law was incorrectly applied when determining that the defendant’s actions did not come under the definition of unfair competition. Take-aways The Supreme Court exemplified cooperation/collaboration under a contract as being fair commercial practice, while having an intention to free-ride is not. As to how an intention to free-ride may be determined, it appears that the level of fame and awareness of the other party’s goods are important. As to whether economic interests are infringed, practical factors such as scarcity and depreciation (dilution) were considered. In the absence of practically any other remedy, the Supreme Court applied the general/supplemental ‘catch-all’ clause of the Unfair Competition Act, and in consideration of all of the above factors, I think that the Supreme Court’s determination that the defendant’s actions constitute unfair competition is appropriate. Based on this decision we must keep in mind that even for unregistered IP rights, if the original product is the result of substantial investment or efforts, any non-authorized commercial use could be considered an act of unfair competition, even if there is recognized to be separate creativity in the resulting product. Author Recent Posts Jae-sang LIM Latest posts by Jae-sang LIM (see all) Author Recent Posts Ben YUU Latest posts by Ben YUU (see all)

2020-07-29
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Practice Notes

Re-organization and pro-patent tendency of the Korean IP Trial & Appeal Board

In Korea, the Intellectual Property Trial & Appeal Board (IPTAB), the administrative tribunal of the Korean Intellectual Property Office (KIPO), handles appeals of final rejections from KIPO, as well as invalidation trials, cancellation (opposition) actions, etc. for patent, utility model, trademark and design rights. This article focuses on patents. The rate of patent invalidity in Korea is 40-50%, a relatively high figure compared to a rate of around 20% in the US and Japan. For this reason there has been somewhat of a lack of trust in patents, with difficulties in patent-based investment, technology finance, IP commercialization etc. being a knock-on effect. Recognizing these issues, the IPTAB has recently re-organized their trial boards, increasing the number from 11 to 36. The IPTAB president commented that this change is intended to reduce the rate of patent invalidity and subsequently promote a greater trust in patents. One particular limitation of the former 11-board system was a limited capacity to conduct oral hearings. In 2019, of a total 5,282 inter-partes trials, oral hearings were held for only 497 cases — 9% of the total. The increase to a 36-board system will mean more time available for review, allowing for the three trial judges to reach a reliable consensus, and for in-depth oral hearings to be held for inter-partes trials. Thus, in patent invalidation trials, judges will be better placed to construct logical reasons to exhaustively refute grounds or evidence presented to support a claim of invalidity, leading to an improvement (reduction) in the invalidity rate. KIPO has recently beefed up provisions to protect patent holders, such as allowing for up to treble damages in cases of intentional patent infringement, and for method of manufacture patents it has been made obligatory for alleged infringers to disclose their actual method of manufacture if a patent holder alleges a specific method is being used. However, if the rate of patent invalidity remains high, the practical effectiveness of such provisions will be limited, and so these efforts by the IPTAB to lower the patent invalidity rate are expected to be beneficial to patent holders. Author Recent Posts Young-min KIM Latest posts by Young-min KIM (see all)

2020-07-24
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Practice Notes

South Korea – Recognition of Digital (Electronic) Signatures

The Korean Intellectual Property Office (“KIPO”) has recently published amended guidelines concerning digital identification, according to which digital signatures and digital notarization are deemed to have the same force as original handwritten versions of the same. This change stems from the recent revision of the Korean Digital Signature Act which prescribes deleting the requirements for certificates for digital signatures, and which will be effective from December 10, 2020. Effective immediately it is now possible to file any documents containing a digital signature and/or notarization with KIPO. Such documents include, but are not limited to, Powers of Attorney (POA; both specific and general), Deeds of Assignment, and Declarations. The new guidelines include some examples/requirements of acceptable digital signatures: 1. Digital signature (with appearance of handwritten signature) Signed using pad display Signature + Digital format Signature + Digital format properties Signed using computer mouse Image signature 2. Digital format (without appearance of handwritten signature) Text + Digital format properties Signature + Digital format properties Digital format       For these kinds of digital formats, it is necessary to provide additional information to verify the validity of signature properties. The following screenshots are examples provided by KIPO:   Q&A 1. Is it possible to utilize a copied image of a signature? No, it is not permitted to copy an image of a signature and insert it into a document. 2. If not accepted, what is the next step? KIPO will issue a formality office action (Notice to File an Amendment) if not convinced of the validity of the digital signature. The applicant may respond to the Notice by explaining the properties of the digital signature or filing supplementary materials. The response to the Notice should generally be filed within one or two months from its date of receipt, and this deadline can be extended on a monthly basis upon request with payment of the requisite extension fees. 3. Is it necessary to file an Assignment of Rights signed by the Inventor? A patent assignment from the inventor is not a requirement during prosecution, or in litigation such as a patent infringement suit. 4. What documents must be notarized? Is digital notarization acceptable? Documents relating to ownership changes (assignment etc.) and declarations are required to be signed and notarized. In principle, digital notarization is acceptable, if it verifies the validity of the signature property information. However, since KIPO has maintained a very strict standard for such documents, it is expected that additional explanation or evidence may be requested (e.g. original handwritten document). 5. Is government legalization required? No. It is sufficient for documents relating to ownership changes (assignment etc.) and declarations to be signed and notarized, without government legalization. However, in some exceptional cases where official documents issued by foreign governments are necessary, legalization is necessary to prove their effectiveness. 6. What is the governing law for digital signature? The main governing law is the Korean Digital Signature Act. 7. Is a digital signature legal, admissible, and enforceable? Yes. According to the revised Korean Digital Signature Act, digital identity itself should not be a reason to deny the validity of digital signatures/seals/stamps. * This update is also available as a PDF-format download: South Korea – Recognition of Digital/Electronic Signatures | 420.54 KB Download

2020-06-24
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Practice Notes

Supreme Court reaffirms criteria used to judge source confusion with “renowned” marks

The Supreme Court has recently dismissed an appeal in a trademark invalidation action under Article 7(1)(10) of the old Trademark Act (before promulgation of the current Act on February 29, 2016), which provided a relative ground for refusal based on potential consumer confusion with another party’s mark which is already “remarkably recognized” in Korea. The decision we are discussing (case 2019Hu12179; April 29, 2020) reaffirms the consistently applied criteria for judgement in such cases, that is, whether there is concern that consumers would readily associate a trademark in question with the existing renowned trademark, goods or business of another party, thereby bringing about source confusion. As the judgement relating to similarity of trademarks and overlap in consumers at the Patent Court (earlier instance) differed to that of the Supreme Court, the earlier judgement has been quashed and the matter remanded to the Patent Court. In the Supreme Court decision, the prior-registered mark “” was considered to be a renowned trademark at the time an application for “ ” (hereafter, “the subject mark”) was filed in class 18, and the “” part of the subject mark — said to be strongly distinctive — was considered to differ from the prior-registered mark only in the addition of the final “C” in terms of sound. Further, it was judged that the designated goods of both marks were similar and the consumer groups substantially overlap, and thus Article 7(1)(10) of the old Trademark Act applies to the subject mark. Whereas, in the Patent Court, the two marks were considered to be dissimilar, with the court recognizing that the plaintiff had operated with their trade name pronounced as “MICMAC Lab”, in accordance with the lower “” portion of the subject mark, and that consumers also used this name for the business. Further, given that the upper part of the subject mark contains dots between the English letters, it was considered probable that consumers would refer to the lower part of the mark, and thus be more likely to read the mark as “MICMAC” or “MICMAC LAB” rather than the individual letters “M – C – M – C”. However, the Supreme Court did not readily accept that consumers would widely consider the pronunciation of the subject mark to be “MICMAC” or “MICMAC LAB” based only on the fact the trade name “MICMAC LAB” was used by the defendant (= plaintiff in the earlier instance). It was also judged in the Patent Court that the overlap in consumers of “bags for snowboards” — which are used under the subject mark — and “bags” (recognized to indicate “fashion bags”) of the prior-registered mark would not be significant, while the Supreme Court conversely found that there is similarity in the designated goods and overlap in consumers of the two marks, and thus consumers would readily associate the subject mark with the prior-registered mark, bringing about source confusion. The conclusions as to trademark similarity in the two decisions differ depending on whether the subject mark was considered to be pronounced as per the defendant’s trade name in the lower “” part, and in my opinion the reason the Supreme Court did not admit that most consumers would pronounce the subject mark as per the defendant’s trade name is because the assertion that most consumers would be aware of the trade name was not sufficiently and objectively proven. Further, in the Patent Court, the goods on which the subject mark was actually used (bags for snowboards) — which were not a designated goods description covered by the trademark registration — were used when comparing the overlap in consumers with the prior-registered mark. However, as this case (an invalidation trial) was for determining ineligibility for trademark registration, I believe that it would be fairer to make comparison based on the designated goods listed under the registration of the subject mark, rather than other goods on which the mark is actually used. In such case, as the designated goods were not limited to “bags for snowboards” but did include “bags”, it would be natural to conclude that not only are the goods similar to the prior-registered mark, but there is also overlap in consumers. (A comparison was actually made considering the designated goods of both marks, but as the other party’s renowned mark was a registered trademark and the designated goods of the prior-registered mark also included “bags”, it did not affect the conclusion.) In this decision, judgements relating to Articles 7(1)(7) (ineligibility for trademark registration due to similarity with an earlier registered mark) and 7(1)(11)+7(1)(12) (ineligibility for trademark registration due to similarity with an earlier used mark) of the old Trademark Act — which were among the grounds for invalidation of the subject mark — were omitted. Reading between the lines, this can be understood to mean the Supreme Court presupposed that the prior-registered mark is a “renowned trademark” — the highest degree of fame accorded to prior-used trademarks — and as it was judged that the potential for consumer confusion with respect to such a renowned trademark did exist, saw no need to pass separate judgement on these grounds. Author Recent Posts Sung-yeon CHO Latest posts by Sung-yeon CHO (see all)

2020-06-15
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Practice Notes

Unfair Competition: Putting unauthorized use of another person’s investment/efforts out to grass

The Supreme Court has recently ruled on a case in which the plaintiff, the owner of a golf course, complained about the unauthorized use of computer graphics by the defendant, who provided screen golf operators with digital reproductions of the golf course (case 2016Da276467; March 26, 2020). What might be the legal repercussions for using a reproduction of a golf course for commercial purposes in a screen golf establishment without the permission of the golf course owner? Article 2(1) of the Unfair Competition Prevention and Trade Secret Protection Act (hereafter “Unfair Competition Act”) enumerates various specific acts deemed to be unfair competition, with item 2(1)(k) — known as the “catch-all” clause — providing that an act of “infringing on other persons’ economic interests by using the outcomes, etc. achieved by them through substantial investment or efforts, for one’s own business without permission, in a manner contrary to fair commercial practices or competition order” is also considered unfair competition. The Supreme Court does not limit the interpretation of “outcomes, etc.” mentioned in the above provision to tangible property, meaning that certain forms of intangible property which were previously difficult to protect under existing IP laws may also be included. When such “outcomes, etc.” are judged, the Supreme Court has stated that their reputation and economic value, consumer attraction, and importance/competitiveness in the relevant commercial area must be considered in a comprehensive manner. Whether such “outcomes, etc.” were achieved “through substantial investment or efforts” is judged concretely and specifically with respect to the content and the extent of the investment or effort expended, in light of the practices and realities of the relevant business area. In using such “outcomes etc.” without permission, it must be possible to assess whether the infringed economic interests belong to the public domain and are thus freely available for anyone to use. Further, whether an act is deemed to be “for one’s own business without permission, in a manner contrary to fair commercial practices or competition order” will require comprehensive consideration of whether the owner and potential infringer are competitors or there is a likelihood of competition in the near future; the business practices and competitive order in the business area to which the “outcomes, etc.” claimed by the owner belong, and whether such practices and competition are fair; whether such “outcomes, etc.” can be replaced by the potential infringer’s goods or services in the marketplace; and the extent to which the “outcomes, etc.” are known to consumers and traders, as well as the likelihood of confusion among consumers and traders. The Supreme Court handed down a judgment on this case based on the aforementioned standards, determining that while the course itself is a copyright work of the designer, the comprehensive image of the course including externally expressed terrain, landscape, landscape components, facilities etc. which make up the actual golf course is separate to the design of the course alone, and is an outcome achieved through substantial investment or efforts of the plaintiff, who constructed and now operates the golf course. Accordingly, the defendant’s act of creating and using a 3D image of the golf course for use in screen golf simulation systems without the permission of the plaintiff — in which the golf course was reproduced almost identically — was deemed to be an infringement of the plaintiff’s economic interests by using the plaintiff’s “outcomes, etc.” for the defendant’s business without permission, in a manner contrary to fair commercial practices or competition order, thus falling under Article 2(1)(k) of the Unfair Competition Act. The takeaway from this case is that in infringement situations where the facts of the case make a claim for damage compensation under the Copyright Act or other IP laws challenging, if the infringed intangible/tangible property was achieved through substantial investment or efforts, and the actions of another party can be considered as being for their own business without permission, in a manner contrary to fair commercial practices or competition order, it may be possible to rely on Article 2(1)(k) of the Unfair Competition Act when seeking compensation for damages. Author Recent Posts Jae-sang LIM Latest posts by Jae-sang LIM (see all)

2020-06-03
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Practice Notes

KIPO Examination Guidelines on Artificial Intelligence

With the fourth industrial revolution, applications of artificial intelligence (AI) are appearing in various fields and the technology is a hot topic of discussion. The Patent Examination Guidelines of the Korean Intellectual Property Office (KIPO) provide principles and examples related to patent eligibility and inventive step of AI related inventions, and KIPO has provided some AI-related patent examination cases in a recently-issued case book. Although the definition of an AI-related invention is not explicitly specified, KIPO defines it as a computer/software-related invention for performing specific functions using AI training. Thus, the general Korean patent rules related to computer/software inventions can still apply to AI-related inventions. However, due to the AI-specific details involved in the various aspects of components, additional AI-specific guidelines are also provided by KIPO. For example, the recent case book generally states that AI-related inventions may involve generating trained models based on training data and a learning model (AI learning modeling invention), or performing specific functions by applying the training data and/or the trained model to various technical fields (AI application invention). Patent Eligibility Article 2 of the Korean Patent Act defines an “invention” as “the highly advanced creation of a technical idea utilizing the laws of nature”. Although software inventions (including AI inventions) are not considered to wholly utilize the laws of nature, the Patent Examination Guidelines prescribe requirements under which computer-related inventions are considered to be patent-eligible where information processing by software is implemented in detail using hardware. More specifically, the Guidelines state that computation or processing of unique information according to the purpose of use should be implemented by specific means or methods in which software and hardware co-operate, and thereby a unique information processing apparatus or an operating method thereof according to the purpose of use should be established. In addition, with regard to AI-related inventions, the Guidelines further require that the same effect must be repeatedly achievable without intervention based on human mental activity. Accordingly, if an algorithm corresponding to an AI invention is implemented using hardware, the invention may be recognized to be patent-eligible under these requirements. Description Requirements  Like inventions in other technical fields, AI inventions should follow the Korean patent rules which provide that a detailed description of an application should be clearly and concretely described such that a person skilled in the art can easily practice the invention, and the invention of claims should be supported by the detailed description. The recently issued AI invention case book includes a case that did not meet the requirements with regard to AI inventions, explaining that if a claim recites features related to a correlation between input training data and output data of a trained model, if the detailed description merely lists a plurality of items of training data and does not concretely describe the correlation, the detailed description is not clearly described. Furthermore, in this case, the claim may not be considered to be supported by the detailed description. Although these conclusions were based on general Korean patent rules, the examination result shows an example of explicit standards for determining whether an AI-related invention meets the description requirements. Assessment of Inventive Step As the Patent Act and Examination Guidelines related to inventive step are quite inclusive, neither the relevant parts of the Act nor the Guidelines have been majorly affected by the appearance of new concepts of invention. Although it seems that KIPO tends to maintain a high threshold when judging inventive step for AI-related inventions, the conventional general standard related to inventive step has not itself changed due to AI inventions. Nevertheless, the Patent Examination Guidelines and the case book provide some additional guidance related to the AI-specific characteristics. As a general rule prescribed in the Guidelines, simply implementing a previously or generally known technology with artificial intelligence technology without specifying unique information processing performed via a learning model is not considered to involve an inventive step. Additionally, as mentioned above, AI-related inventions may involve components corresponding to the training data and the learning model. The cases introduced by KIPO fall into several categories based on the components: Case 1 is where a claimed invention and a cited invention are substantially the same in terms of technical field and training data, but are different in terms of a learning model. If an improved effect can be achieved by the difference, inventive step can be recognized. Case 2 is the same as case 1 except that the difference in the learning model is merely a simple design modification. In this case, inventive step is not recognized. However, if there are differences in specific features other than the training data and the learning model and the differences exhibit an improved effect, inventive step can be recognized. Case 3 is where a claimed invention and a 1st cited invention are substantially the same in terms of technical field and learning model, but are different in terms of training data. If a 2nd cited invention has the feature corresponding to the training data, and there is no difficulty in combining the cited inventions, inventive step is not recognized. Case 4 is where a claimed invention and a 1st cited invention are substantially the same in terms of technical field and training data, but are different in terms of learning model. If a 2nd cited invention has the feature corresponding to the learning model, and there is no difficulty in combining the cited inventions, inventive step is not recognized. It seems that KIPO tends to apply a higher threshold when assessing inventive step concerning a difference in training data compared to that of a learning model. Conclusion Under Korean patent law, it currently appears that AI-related inventions are still considered to come under computer/software inventions, albeit with some unique additional aspects. Although there remains some doubt as to whether the Korean Patent Examination Guidelines sufficiently reflect the characteristics of AI-related inventions, such details or characteristics of AI-related invention are gradually being reflected more clearly. Accordingly, while complying with the current guidelines, it will be necessary to keep an eye on future developments in the Guidelines as well as related trends. Author Recent Posts Byung-kyu KIM Latest posts by Byung-kyu KIM (see all)

2020-05-29
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Practice Notes

Timing of Double Jeopardy Judgement in Patent Trials

Article 163 of the Korean Patent Act (‘Non bis in idem’) relates to double jeopardy, and provides that no person may demand a re-trial based on the same facts and evidence once a trial ruling on the same becomes final and conclusive. In the case of an invalidation trial, for instance, “the same facts and evidence” may refer to the grounds for invalidation (e.g. inventive step) and evidence (e.g. prior art). Accordingly, once a decision on the merits of such a trial (hereafter the ‘earlier trial’) has become final and conclusive, a subsequent trial filed based on the same facts and evidence (the ‘later trial’) is not permissible. Invalidation trials in Korea are inter partes actions, but as a ruling on validity/invalidity has a general effect, the manner in which double jeopardy is applied is important. In particular, the point in time at which it is determined whether there is an earlier final and conclusive judgement on the merits in an earlier trial and the point in time at which it is determined whether “the same facts and evidence” exist with respect to a later trial can be problematic. Before, the existence of an earlier final and conclusive trial ruling was determined at the time of ruling in a later trial. However, this was changed according to a January 19, 2012 en banc Supreme Court decision (case 2009Hu2234), following which the timing of such determination was brought forward to when the later trial is filed. Based on this, if the ruling in an earlier trial only became final and conclusive after the later trial had been filed, the provisions relating to double jeopardy would not apply. On April 9, 2020 another Supreme Court decision relating to the timing for determining the existence of “the same facts and evidence” was handed down (case 2018Hu11360). This decision clarifies that for patent invalidation trials, the point in time at which it is determined whether the “same facts and evidence” exist in an earlier trial is when the trial decision is issued by the Intellectual Property Trial and Appeal Board (IPTAB) in the later trial. The history of this recent case is as follows: an invalidation action filed by Party C concerning Party B’s registered patent was dismissed (i.e. the patent was deemed to be valid) and such decision became final and conclusive; Party A subsequently filed an invalidation action based on the same facts and evidence, and the IPTAB dismissed the action based on double jeopardy; Party A then appealed this decision to the Korean Patent Court and raised a new ground for invalidation which was not dealt with in the earlier instance; the appeal was dismissed by the Patent Court, and Party A further appealed up to the Supreme Court. In dismissing Party A’s appeal, the Supreme Court ruled that “when determining if the provisions of double jeopardy apply, the IPTAB must consider all of the amended facts and evidence from the time the trial was filed until the time of ruling and, on the basis of the time of ruling, determine whether the filed trial is based on the same facts and evidence as an earlier final and conclusive ruling”, going on to conclude that “the trial-requesting party is not permitted to present new grounds for invalidation [in a Patent Court action] which were not dealt with during the trial”. In short, when making a determination on double jeopardy, the existence of an earlier final and conclusive trial ruling is determined at the time of filing of a later trial, and whether the case relates to the same facts and evidence is determined at the time of ruling in the later trial. Practically speaking this means that before a ruling in an earlier invalidation trial becomes final and conclusive, a third party may file a separate invalidation trial based on the same facts and evidence, and during the course of this separate trial may present new invalidation grounds or evidence (e.g. new prior art) in the knowledge that when the determination is made as to whether the facts and evidence in the two trials are the same — i.e. at the time of ruling of the later trial — if the facts and evidence have since become different, the matter will not be deemed to fall within the definition of double jeopardy. Author Recent Posts Young-min KIM Latest posts by Young-min KIM (see all)

2020-05-26
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Practice Notes

Sharp Increase in Design Applications for Masks

The 2019 novel Coronavirus (COVID-19) has now spread to nearly every country in the world since it first emerged from Wuhan, China in December 2019, and is now having a massive impact on the daily lives of millions upon millions of people worldwide. It has been suggested that wearing face masks could help contain the virus, and in many countries donning a mask has become part of the daily routine. On March 4, 2020, the Korean Intellectual Property Office released interesting statistics related to masks. It shows that the number of design applications for masks has increased 11-fold, from 73 cases in 2010 to 815 cases in 2019, with the year-on-year design application growth rate standing at 212.3 percent. [No. of Design Applications Per Year & Application Growth Rate Based on Previous Year] Since 2013, the number of design registration applications has been steadily rising in line with the growing awareness of the harm of fine dust particles, as well as the outbreak of respiratory diseases such as MERS in May 2015. As ultrafine dust levels continued to hit record highs of 144μg/m3 in March 2019 and 149μg/m3 in November in 2019, the number of design applications seems to have surged. Masks of various designs have been registered, as shown below:   Registration No. (Registration Date) Title Drawing 30-1023486 (2019.09.09) Yellow dust mask   30-0975385 (2018.09.28) Sanitary Mask   30-0959755 (2018.06.04) Nasal Mask IR DM/093853 (2017.08.29) Breathing mask   [Examples of Registered Mask Designs] Most design applications for masks are subject only to partial examination*, and from December 2019, the examination pendency for partial examinations has been shortened to 10 days (discussed here in further detail). Furthermore, KIPO also announced that it will do its best to quickly examine design applications for masks, and thus applicants are expected to be able to secure design rights for masks relatively quickly. While it is interesting to look at application trends for masks, on a more serious note we sincerely hope that the pandemic subsides as soon as possible, and we wish all of those reading, as well as their colleagues, friends and families well in these unpredictable times. * Partial examination: Designs which have a short life-cycle and are sensitive to trends, such as clothing and fashion items, fabrics, etc., are subject only to “partial examination” comprising a formality check and limited industrial applicability/novelty requirements. Author Recent Posts Yujin JUNG Latest posts by Yujin JUNG (see all)

2020-03-30
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Practice Notes

Keep an eye on your licensees! Korean Supreme Court renders trademark cancellation decision

Trademark owners are able to license others to use their registered trademark, either on an exclusive or non-exclusive basis. Once a license has been concluded, is the collection of royalties all that’s left to worry about? Absolutely not! Trademark owners have an obligation to monitor licensees using their trademarks. This is not simply to preserve the integrity of the trademark or to maintain some kind of moral responsibility — the trademark rights themselves are at risk if this obligation is neglected. A recent Supreme Court case illustrates this point clearly. Relevant Law The Korean Trademark Act allows for registered trademarks to be revoked for a handful of reasons, including the following (emphasis added): Where a trademark right holder causes the misunderstanding of the quality of goods or confusion with goods related to another person’s business among consumers by wilfully 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 — Article 119(1)1 Where an exclusive or non-exclusive licensee causes the misunderstanding of the quality of goods or confusion with goods related to another person‘s business by using a registered trademark or a trademark similar to the registered trademark on the designated goods, or goods similar to the designated goods: Provided, That the foregoing shall not apply where the trademark right holder pays considerable attention — Article 119(1)2 For this article we are mainly concerned with the latter provision relating to use by licensees, but it is important to remember that the same applies to trademark owners, too. Decision The recent decision we will be looking at (2017hu2178; Supreme Court, Feb 13 2020) is a case where the trademark owner lost their registered mark due to improper use by a licensee. In summary, the original trademark owner had registrations for trademark “A” (covering class 29 goods), as well as the same trademark with an added part “α” in the form “A+α” (covering class 35 services). The designated goods/services of each mark relate to seaweed. The “A” trademark was transferred to the defendant in this matter, and the original trademark owner used the “A+α” mark in the course of their own business. The defendant subsequently licensed the “A” mark to a third party, but the licensee changed the form of the mark and actually used it in a manner similar to “A+α”, thereby causing confusion with respect to the original trademark owner as to the source of goods. According to the Supreme Court’s decision, the registration of trademark “A” is to be cancelled. Analysis The case raises some interesting questions: (1) Who is the “another person” indicated in the provision of the Trademark Act shown above? In an earlier-instance trial decision, use of the trademark “A+α” by the licensee of trademark “A” was not deemed to justify cancellation of trademark “A”. The reasoning for this was that when a trademark right is transferred, a certain amount of source confusion between the former and current owners of the mark is to be expected, and so even if such source confusion does occur it cannot be deemed improper use of the mark. However, the Supreme Court took a different stance. Noting that there is a great potential for source confusion with respect to the original owner when a trademark is used by a licensee following the transfer of a trademark right, the Supreme Court stated that in such a situation there is an obligation for trademark owner to monitor the licensee’s use in order to prevent them from illegally using the registered trademark beyond the scope of the license. Accordingly, if a trademark right has been transferred then “another person” includes both the original trademark owner and the licensee who has been permitted by the trademark owner to use the mark. (2) Does the trademark used by the “another person” have to be the registered trademark?  In short, no. However, it is required that the mark actually used at least be considered by domestic consumers/traders as being the mark of a particular person. In this case, the “A+α” trademark has been used by the original owner since 2006 and so was known to some extent. (3) If the “A+α” trademark used by the original owner fell within the scope of trademark “A”, would the outcome be different? Again, no. The purpose of trademark law is to protect consumers, and so the law does not differentiate between these cases. (4) What exactly does the “considerable attention” exception entail? It is not sufficient for a trademark owner to simply warn a licensee not to cause confusion, and the trademark owner must instead be able to show that they can assess that the licensee’s use of the trademark is under their control — for example by regularly monitoring the actual use by the licensee. This may include distribution of operation manuals, requesting sample products and approving the use of the mark, etc. The trademark owner has a responsibility to prove this fact, and in the case being discussed no such evidence was submitted. (5) How is confusion with another person’s goods assessed? According to the Supreme Court, when assessing whether or not there is confusion, the focus should be on the degree to which the trademark in actual use differs from the registered trademark, much like in a normal assessment of similar trademarks. Take-aways This case once again emphasizes the need for trademark owners to monitor their licensee’s usage of a registered trademark. For trademark owners, the necessary measures are to either: (1) put practical arrangements in place to ensure the licensee does not cause confusion; or (2) at the very least make sure that the use of the mark is under the trademark owner’s control so that such problems can be avoided. In either case it would be wise for trademark owners to keep records or evidence which can prove their monitoring efforts. Author Recent Posts Ben YUU Latest posts by Ben YUU (see all)

2020-02-24
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Practice Notes

Changes to Korean Trademark & Design Examination Guidelines (from January/March 2020)

The Korean IP Office (KIPO) has amended the examination guidelines for trademark and design with effect from January 1, 2020 and March 1, 2020 respectively. The most noteworthy changes are summarized below: TRADEMARK (from January 2020) 1. Amended guidelines for acquired distinctiveness The content previously detailed in an earlier post relating to acquired distinctiveness (see here) has now been incorporated into the examination guidelines. The major considerations are: (1) Period of trademark use The fact that a trademark has been used non-competitively and continuously for more than five years will be considered an important ground for recognition of acquired distinctiveness, with the specific product and market conditions also considered. (2) Consumer awareness surveys KIPO has specified criteria to be used when evaluating the credibility of consumer awareness surveys. Surveys must be conducted by a reputable organization with the necessary personnel and material requirements in place, and the location, gender, age etc. of actual or potential consumers of the same kind of product must be represented. When the number of survey respondents is over 500 and more than 50% of respondents consider the mark in question to belong to a specific entity, the survey results may be viewed as reliable. (3) Evaluation process An applicant’s claim of acquired distinctiveness will be evaluated by a three-examiner team including a team leader. If this initial evaluation is positive, a special committee for judging acquired distinctiveness will make a final assessment before the decision is rendered. 2. New guidelines for collective marks with geographical indication related to processed goods Going forward, when examining applications for registration of collective marks with a geographical indication which relate to processed goods, the history and fame of the goods attributable to the geographic environment will be considered when evaluating the correlations between particular qualities of the goods and the geographic environment. This reflects the reality that the characteristics of processed food are often more closely associated with human factors such as the historical nature of the goods and traditional methods of production, rather than the natural conditions of the climate and soil, etc. 3. New guidelines for applications related to medicines As interest in medication safety management increases, new guidelines have been added concerning applications for medicine name trademarks: When an application is filed for a mark identical to a third party’s pharmaceutical name already registered with the Ministry of Food and Drug Safety (MFDS) for manufacture/sale/importation, a refusal will be issued based on suspected lack of intention to use the mark. When an application is filed for (i) a mark identical or similar to an existing famous pharmaceutical name of the same applicant which covers different types of pharmaceutical products, or (ii) a mark identical or similar to a third party’s pharmaceutical name, a refusal will be issued based on the potential to mislead consumers with respect to the quality of the goods. 4. Expansion of applications eligible for accelerated examination An update to the Enforcement Decree of the Trademark Act in July 2019 expanded an already-existing provision based on third-party warnings, and added a new provision based on submission of prior mark search results from an authorized agency (a similar provision already existed for patent and design prior art searches). This has now been reflected in the examination guidelines: If a third party trademark owner objects to a trademark application, the following may be considered when deciding whether the application is eligible for preferential examination: (i) evidence of objection (copy of received warning letter, materials showing that the applicant has received a verbal warning or warning via SNS, or information brief filed by the third party); and (ii) the prior-filed application number on which the third party trademark owner’s objected is based. If a specialized agency (designated by KIPO) has been requested to perform a search for prior marks, the applicant can apply for preferential examination indicating the relevant facts on the application for preferential examination. For reference, when applying for accelerated examination of a trademark application, the applicant may expect confirmation of whether the request has been accepted within approximately 10 days (may take longer in some cases), with actual examination to start within 45 days of such confirmation. This contrasts with the 6+ months average time until first official action for regular-examination track applications (see here for more information on examination times). International (Madrid) applications are not eligible for accelerated examination. DESIGN (from March 2020) 1. Relaxed guidelines for English article names The guidelines relating to article names described in English will be relaxed for new applications, and even names entirely represented in English will be accepted if they are the ordinary name for the article or a name in common use. For example, “smart watch”, “MP3 player”, “cellular phone” etc. This contrasts with the previous requirement that article names be provided in Korean-language, with a foreign-language description following in brackets. 2. Examples of confusion-causing designs The updated guidelines include the following new examples of design applications that would be refused due to causing confusion with respect to another party’s business (specifically, similarity to well-known trademarks). Example 1 Example 2 Filed Design Famous 3D Trademark Filed Design Famous Trademark 3. Relaxed requirements for repeating design drawings For 3D products with a continuous form, or flat products with a repeating or continuous pattern, it was previously necessary for the repeating unit to be indicated at least 1.5 times in the drawings. Under the relaxed requirements, the repeating unit need only be indicated once so long as an explanation of the nature of repetition is provided separately in the application. Example: a textile design with vertically continuous/repeating pattern Before Amendment (Acceptable) After Amendment (Acceptable) (Explanation of vertical repetition should be provided separately) Author Recent Posts Yujin JUNG Latest posts by Yujin JUNG (see all) Author Recent Posts Jonathan MASTERS Latest posts by Jonathan MASTERS (see all)

2020-02-17
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