1. Summary of the facts charged in this case

The Defendant is the actual representative of online sunset sales chain (trade name omitted) (English trade name omitted). From September 2012 to April 8, 2016, the Defendant violated the trademark right of the victim by selling online sunset or open market, etc., supplied by Nonindicted Co. 1 (hereinafter “victim Co. 2”) to the victim Nonindicted Co. 2 (hereinafter “the victim Co. 2”) in this case (hereinafter “Nonindicted Co. 2”) who is the trademark right holder, for sale at the store agreed with the victim company, on condition that the trademark can be used.

2. Judgment on the exhaustion of trademark rights

A. Where a trademark right holder or a person who has obtained his/her consent transfers goods bearing a registered trademark in Korea, trademark rights on the goods concerned are so advanced as to achieve its purpose, and trademark rights are not effective against the use, transfer, or lending of the goods concerned (see Supreme Court Decision 2002Do3445, Apr. 11, 2003). Meanwhile, since the scope of ordinary right to use such goods, including designated goods, duration, and area, is granted under a non-exclusive license agreement, the non-exclusive licensee’s act of using a trademark beyond the scope of ordinary right to use can be deemed as not having obtained the consent of the trademark right holder. However, in cases where a non-exclusive licensee transfers goods in violation of the contractual incidental conditions, the principle of exhaustion of right cannot be seen as excluding the principle of exhaustion of right as a transfer without the consent of the trademark right holder. The decision should be made by taking into account the details of the contract, whether the trademark origin mark and quality assurance function, which is the main function of the trademark, damaged the trademark right holder’s main function, and necessity to protect consumers purchasing goods, etc.

B. The reasoning of the lower judgment and the record reveal the following. (1) The victim company is operating an OOO ○ (△△△△△△△△△△△△△△) as a trademark right holder, such as trademark registration number omitted. (2) On July 1, 2010, the victim company entered into a trademark use agreement with Nonindicted Co. 2 on the condition that the trademark user fees would be paid for the development of the goods, such as selling and selling orders, which are the designated goods of the above registered trademark, and the right to sell the goods until June 30, 2015. The above agreement states that “Nonindicted Co. 2 shall sell goods at the victim company’s specialty stores, department stores, duty-free shops, etc. agreed with the victim company and sell goods at the Internet shopping mall, the victim company’s prior consent should be obtained, and goods shall not be sold in conventional markets.

3) On June 30, 2015, when the contract was terminated, the victim company drafted a written agreement with the non-indicted company 2, and agreed to receive trademark usage fees from the non-indicted 2 to December 31, 2015 instead of allowing the non-indicted 2 to dispose of the remaining stocks by December 31, 2015. From among the existing sales stores and Internet shopping malls designated by the victim company, sales are allowed at least six direct shopping malls and department stores shopping malls designated by the victim company, but the contract was invalid and the compensation for damages was added.

4) The Defendant, as an operator of (trade name omitted) (English trade name omitted), has sold online visibility supplied by the public prosecution and two companies, as described in the facts charged.

C. We examine the above facts and relevant legal principles in light of the following facts. 1) The so-called genuine goods produced by Nonindicted Company 2 by legally attaching a trademark with the permission of the victim company, which is a trademark right holder, and the distribution of goods in the Internet shopping mall by violating the contract restricting the place of sale is difficult to view that the function of indicating the source of the trademark or the function of quality assurance has been infringed.

2) In addition, under the trademark use agreement, Nonindicted Company 2 is granted the right to manufacture and sell visual products. Unlike the conventional markets where sales are completely prohibited, sales at discount stores and Internet shopping mallss were possible with the consent of the trademark right right right holder and their distribution is not entirely prohibited. In fact, the agreement for the disposal of inventory products was also allowed to sell in some Internet shopping mallss, such as sunset by the victim company and department stores shopping malls.

3) In the instant case, the Defendant’s Internet shopping mall does not seem to have a fundamental difference from other Internet shopping malls permitted to sell. It is difficult to view that the reputation of the victim company’s trademark or image of the trademark right established by the victim company is damaged solely on the sole basis of the fact that the Internet shopping malls are sold in the Internet shopping malls.

4) The victim company was paid a trademark fee from Nonindicted Company 2 in accordance with the trademark use agreement, and Nonindicted Company 2 supplied goods in return for payment from the defendant, and thus monetary compensation has been made to the trademark right holder upon the sale of goods. While it is difficult for the trademark right holder in this case to deem that there is a great profit to prohibit additional distribution, the necessity to protect consumers who purchased the goods through transaction is recognized. 5) Ultimately, by supplying goods to the defendant by Nonindicted Company 2, the trademark right for the goods concerned is so advanced as to achieve its purpose, and the trademark right is not effective against the use, transfer, or lending of the goods concerned.

D. Nevertheless, the lower court determined that Nonindicted Co. 2’s act of selling visual visibility to the Defendant in violation of the agreement on the restriction of place of sale with the trademark right holder constitutes infringement of trademark rights, and that there is no room for the Defendant to apply the doctrine of exhaustion of trademark rights. In so determining, the lower court erred by misapprehending the legal doctrine on the exhaustion of trademark rights, thereby adversely affecting

3. Judgment on the defendant's intentional act

A. In a criminal trial, the conviction in a criminal trial ought to be based on evidence having probative value, which leads to the judge’s conviction that the facts charged are true beyond a reasonable doubt. In a case where the prosecutor’s conviction was not sufficiently satisfied, the determination should be made on the part of the defendant even if there was suspicion of guilt. In this case, the defendant should have been aware that the terms and conditions of a contract between the victim company and Nonindicted Company 2 were breached and the supply of the goods was made in order to ask the defendant for a crime of trademark infringement. In light of the following circumstances revealed by the record, the evidence submitted by the prosecutor alone cannot be deemed as having been proven beyond a reasonable doubt.

1) The Defendant consistently asserted to the effect that he was unaware of the sales place restriction agreement by denying the infringement of trademark rights, and there is no evidence that Nonindicted Company 2 or the victim company informed the Defendant of the sales place restriction agreement in advance.

2) On September 11, 2012, the victim company's accusation statement states that the Defendant sent a warning to the Defendant on or around September 1, 2012, but the Defendant did not receive it, and the above warning statement does not appear to have violated the sales place restriction agreement. Rather, according to the evidence submitted by the Defendant, the non-indicted 2 company prepared the "OOOOO's certificate of confirmation of handout of handout of the Defendant and the ○○○○○○○○○○'s production confirmation document on March 2, 2016" on the following: (a) the product that was supplied to the Defendant was made by the non-indicted 2 company with the regular license, and that it was possible to distribute the product, and that it was a forged product and a product that violated trademark rights.

B. Nevertheless, in light of the Defendant’s visual sales business experience and the Defendant’s experience and knowledge as to the trademark right, the lower court convicted the Defendant of the facts charged on the ground that at least dolusent intent as to the instant trademark infringement was recognized. In so doing, the lower court erred by failing to exhaust all necessary deliberations, exceeding the bounds of the principle of free evaluation of evidence in violation of logical and empirical rules, or by misapprehending the legal doctrine on the intent of the crime of violating the Trademark

4. Conclusion

Therefore, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Ansan-chul

Jeju High Court Decision 201No. 50

Justices Kim Jong-hwan