Attorney Jeong Jae-kwon of Hwaeum Law Office successfully defended a defendant in a criminal case concerning trademark infringement, securing an acquittal on the issue of prior user rights to a trademark.
The case concerned a situation in which a party that had previously used a trade name was alleged to have infringed a subsequently registered trademark that was identical or similar to the mark it had been using. The primary issue was whether the defendant had prior user rights under Article 99(2) of the Trademark Act, a provision first introduced through the 2007 amendment to the Trademark Act.
To establish prior user rights under the Trademark Act, a person must:
- use, in accordance with “commercial practices,” a mark identifying the person’s identity, such as their name or trade name, as a trademark;
- use the mark without an intent to engage in unfair competition; and
- have continuously used the mark in Korea before another person filed an application to register the trademark.
However, there have been relatively few court decisions providing specific guidance on what constitutes use of a mark “in accordance with commercial practices” or what constitutes an “intent to engage in unfair competition,” making the precise scope and meaning of these requirements difficult to determine.
In particular, “commercial practices” is necessarily a concept that evolves with changes in society. As commercial transactions have increasingly shifted online, the question arises as to whether the concept of using a trade name in accordance with commercial practices should also encompass online use.
In this case, the defendant operated a sign-making business under the trade name “Cheongnyeon Sign” (청년간판). The defendant proposed a sign design incorporating an image of a young person and obtained a design for the mark from a business-card printing company. The defendant then used the mark on business cards, its website, and keyword advertisements on portal sites.
The complainant, however, established its website only after the defendant had begun using the mark and subsequently registered a trademark similar to the mark at issue.
Because the defendant had used the mark before the application for registration of the registered trademark was filed, the central issue was whether the defendant’s use of the mark incorporating the trade name “Cheongnyeon Sign” on portal sites and its website, as well as on business cards, constituted trademark use “in accordance with commercial practices” and “without an intent to engage in unfair competition.”
Attorney Jeong Jae-kwon successfully established the defendant’s prior user rights, resulting in an acquittal.
The prosecution argued that certain forms of the defendant’s use of “Cheongnyeon Sign” in search results—including repeatedly displaying the term “Cheongnyeon Sign,” using the mark merely to provide information related to the business, and using the mark in a combined form consisting of a device and English lettering, as in the mark at issue—could not be regarded as use of the mark as a trademark in accordance with commercial practices. The prosecution further argued that the defendant had an intent to engage in unfair competition, given the similarity between the marks and the similarity in the purposes of the respective businesses.
Counsel for Hwaeum Law Office pointed out that, in determining whether the defendant’s use was consistent with “commercial practices,” the prosecution had improperly equated the meaning of that concept under Article 99(2) of the Trademark Act with the “ordinary manner” standard under former Article 34 of the Trademark Act, which had a different legislative purpose, or with the corresponding “commercial practices” standard under Article 90(1) of the current Trademark Act. Counsel argued that “commercial practices,” as a requirement for establishing prior user rights, should instead be interpreted in light of the realities of modern commerce, in which trade names are now predominantly used online.
The court accepted the defense’s arguments and held that:
- In light of the purpose of Article 99(2) of the Trademark Act, the requirement that a mark be “used as a trademark in accordance with commercial practices” under that provision may be interpreted more broadly than the concept of a “trademark used in accordance with commercial practices” under Article 90(1)(i) of the Trademark Act;
- The defendant had personally created the mark at issue in consultation with a designer;
- The defendant had used the mark in a manner consistent with the ordinary use of a service mark, including by displaying the mark on business cards and on the defendant’s website; and
- The defendant had been using the mark before the application for registration of the registered trademark was filed, and, considering the manner and form in which the defendant had used the mark, there was no basis to conclude that the defendant had an intent to engage in unfair competition.
Accordingly, the court held that the defendant had prior user rights in the mark pursuant to Articles 99(2) and 99(1)(i) of the Trademark Act.
This decision is significant in that it clarifies the meaning of use of a trademark “in accordance with commercial practices” under Article 99(2) of the Trademark Act, which governs prior user rights. It is also notable as the first—or one of the very few—decisions to confirm that the phrase “used as a trademark in accordance with commercial practices” under Article 99(2) may be interpreted more broadly than the phrase “trademark used in accordance with commercial practices” under Article 90(1)(i) of the Trademark Act.
Written by: Attorney Jeong Jae-kwon, Hwaeum Law Office