Most Read Contributor in South Korea, January 2017
[Seoul High Court Decision No. 2015Na2044777, rendered
May 12, 2016 (final due to the Supreme Court's refusal to grant
Plaintiff, an owner of a red bean bread bakery, created a unique
atmosphere in its store by differentiating various elements therein
from other stores, such as its trademark, exterior sign, and store
layout. Defendant, a former baker in the plaintiff's bakery,
opened a red bean bread bakery in a nearby area merely four months
after leaving the plaintiff's bakery. The defendant hired the
plaintiff's interior designer to take photographs of the
plaintiff's store, which the defendant used to copy the
trademark, signs, store layout, and structure of the
plaintiff's bakery. General consumers could not differentiate
between the plaintiff's bakery and the defendant's bakery
because they had a similar store atmosphere, sold the same products
and were similarly conveniently located. As a result, the plaintiff
filed a suit to enjoin the defendant from using the signage and
design of the store interior and sought compensation for damages.
The plaintiff's claim was that the defendant's conduct
constituted acts of unfair competition under Article 2(1) (j) of
the Unfair Competition Prevention and Trade Secret Protection Act
("Unfair Competition Act").
The Manual lists detailed requirements for various case
management related matters, including (i) required items in written
submissions (including complaints, answers, etc.), (ii) video
conferences for receiving comments from the parties to separate out
the issues and set a trial plan, (iii) management and planning of
hearings for major legal issues, sub-issues and procedural issues,
as well as due dates for submitting briefs, (iv) investigation of
evidence and determining the need for expert testimony, and (v)
preparation of various documents and submission of documentary
evidence. Unlike in the United States, where only one hearing or
trial is held, Korean cases on appeal may have several hearings or
trials, each addressing specific issues.
The Seoul High Court substantively held as follows: (i) in a
given type of business, the exterior of the store, its interior
design, decorations, signs, or any combination thereof that creates
an overall image of the store constitutes "outcomes, etc.
achieved by [others] through substantial investment or
efforts," which subparagraph (j) of Article 2(1) of the Unfair
Competition Act was enacted to protect; (ii) although the plaintiff
did not register the design of the interior elements of its store,
the defendant's operation of its store is an unauthorized use
by the defendant's business of the outcomes achieved by the
plaintiff, through means that contradict industry custom and
competitive order; and (iii) defendant's unauthorized use of
the consumer appeal of the plaintiff's store image for the
defendant's business constitutes infringement of the
plaintiff's economic interest related to the sale of red bean
bread. Therefore, the Court ordered the defendant to cease using
the infringing store signs and store design and awarded the
plaintiff compensation in the amount of KRW50 Million
Lessons and Implications
This is a case of first impression recognizing the applicability
of Article 2(1)(j) of the Unfair Competition Act, which is a
catch-all provision intended to confer protection despite
non-registration of a trademark or design so that protection can be
obtained against novel and various types of unfair competition that
may arise from technological and other advances. As the decision
provides the applicable scope and requirements of the legal
principles applicable to subparagraph (j), it is expected to have a
substantial impact on similar cases in the future. In particular,
this case opened the possibility that the "overall image"
of a business — namely, a combination of the exterior,
interior design, decorations, and signs — will be protected
despite not having registered these elements as a trademark. Such
protection was not available under the Unfair Competition Act
before enactment of subparagraph (j). The decision is also
important because the Court held that designs are protected not
only by the Design Protection Act, but also by subparagraph
Originally published in the Winter 2016 Newsletter.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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