2016Da25393 Trademark and Prohibition of Mutual Use

3. A public order corporation (trade name before change): A public order corporation

Hashes)

Law Firm Partners (Law Firm LLC)

[Defendant-Appellant]

1. A person, a debtor, or a debtor;

Attorney Kim Sung-sung, Counsel for the defendant-appellant

Daegu High Court Decision 2014Na803 Decided May 18, 2016

July 15, 2021

Of the judgment of the court below against Defendant 2, the part of the claim for the registration transfer of each domain name as indicated in the attached list of the judgment below against Defendant 2, the part of the claim for prohibition of using each domain name as the Internet web site address and the part of the claim for indirect compulsory performance among the claims for prohibition of use of the domain name and indirect compulsory performance according to Defendant 2's claim for prohibition of use of the domain name as the Internet web site address, and the part of the claim for prohibition of use and indirect compulsory performance according to the claim for prohibition of use of the domain name

All remaining appeals are dismissed.

The grounds of appeal are examined.

1. According to the reasoning of the lower judgment and the record, the following facts are revealed.

A. The Plaintiff is a company established on July 27, 2001 for the purpose of providing information on auction real estate.

B. On August 13, 2007, Nonparty 1, the representative director of the Plaintiff, entered into the instant sales contract with Nonparty 2, as follows: ① 65% of the Plaintiff’s shares owned in the name of Nonparty 1 and Nonparty 3, his spouse, and all of the Plaintiff’s intangible and intangible assets in the name of Nonparty 2,175 million won, shall be sold to Nonparty 2. ② The payment method for the purchase price shall be KRW 1.425 million, and KRW 200 million shall be paid on August 30, 2007, and the balance shall be KRW 550 million shall be paid until August 30, 2007.

C. Around this time, the Plaintiff and Nonparty 1 were under criminal trials on the charges of reproducing and distributing the auction information database of the Plaintiff and Nonparty 1 without permission. However, if the Plaintiff and Nonparty 1 were found guilty in the trial, it was likely that the Plaintiff would claim damages against the Plaintiff.

The non-party 4 (the representative director of the defendant company at the time of the closure of the original trial proceedings), who is the spouse of the non-party 2, made the following proposals to avoid the burden of compensation for damages to the support establishment of the corporation. In other words, the non-party 2 established a new corporation with the same name as the trade name used by the plaintiff under the condition that the plaintiff renounces the purchase of shares among the sales contract of this case and decided to acquire the plaintiff's assets, and entered into a contract to change the plaintiff's trade name to a different one. The non-party 1 accepted the proposal of the non-party 4, and the plaintiff and the non-party 2 concluded the modified contract (hereinafter referred to as the "the modified contract

D. On August 30, 2007, the Plaintiff changed its trade name from 'Mady Trust Co., Ltd.' to 'Mady Trust Co., Ltd.'. On the same day, Nonparty 2 established 'Mady Trust Co., Ltd. (hereinafter "Defendant Co., Ltd.") and became the representative director. The Defendant Co., Ltd started the auction real estate information industry by taking over all of the Plaintiff's lost and intangible assets, including the Internet auction information database, from the Plaintiff around that time. The domain name owned by the Plaintiff was included in the subject of transfer as one of the intangible assets under the instant sales contract and the instant modified contract. A large number of the domain names transferred to the Defendant Co., Ltd. were transferred from August 4, 2010 to 'Mady Trust Co., Ltd.'., Defendant 2, who was Nonparty 4's children over several times.

E. Nonparty 5, who was aware of the fact that Nonparty 1 sold the Plaintiff’s assets without the Plaintiff’s consent, was appointed as the representative director, and then brought an action against the Defendant Company and Nonparty 2 seeking return of the lost or intangible assets transferred to the Defendant Company without a special resolution of the general meeting of shareholders. In the above lawsuit, the lower court determined that the Plaintiff was subject to a special resolution of the general meeting of shareholders to sell the assets in light of the evidence submitted, and rejected the Plaintiff’s claim. However, even if there is doubt about the credibility of evidence, the lower court reversed and remanded the lower judgment on the ground that the lower court found that there was a special resolution of the general meeting of shareholders, which was inconsistent with logical and empirical rules, and did not exhaust all necessary deliberations (see Supreme Court Decision 2012Da5810, May 24, 2012). The lower court reversed and remanded the lower judgment on the ground that the Plaintiff’s instant sales contract and the modified contract concluded without a special resolution of the general meeting of shareholders, thereby having the Plaintiff implement the registration transfer procedure of the domain name held by the Defendant Company (Seoul District Court Decision 201218 or

F. Around August 27, 2012, the above Supreme Court Decision 2012Da5810 rendered a provisional disposition against the Defendants seeking the prohibition of disposal of the assets transferred by the Plaintiff against the Defendants. On August 27, 2012, the court rendered a decision that “the Defendant Company shall not dispose of the trade name, including the domain name that has not yet been transferred to Defendant 2, as well as the intangible and intangible assets that have not yet been transferred to Defendant 2, and Defendant 2 shall not dispose of the domain name that has been transferred to the third party on August 4, 2010 (Seoul District Court Order 2012Kahap279 dated August 27, 2012).”

G. Even in the decision of provisional disposition, the Defendant Company continued to transfer the domain name to Defendant 2, and the Daegu District Court Decision 2012Na11189 Decided February 8, 2013, deemed that the Defendant Company still held the domain name and transferred a part of the domain name that the court ordered the transfer of the registration to the Plaintiff to Defendant 2 before and after the said decision was rendered. Each domain name listed in the attached list of the lower judgment (hereinafter “the domain name of this case”) is registered with the Defendant 2.

H. On November 10, 2015, the Plaintiff re-converted its trade name to “the Housing Corporation”.

2. Requests against Defendant 2 for the registration or transfer of the domain name;

A. Article 12 of the Internet Address Resources Act (hereinafter “Internet Address Act”) prohibits the registration of a domain name, etc. for unlawful purposes as follows and provides remedies therefor. Any person shall not register, possess or use a domain name, etc. for unlawful purposes, such as interfering with the registration of a domain name, etc. by a legitimate holder of a title, or obtaining unjust benefits from a legitimate holder of a title, etc. (Article 12(1)). Any person who has a legitimate title may request the court to cancel or transfer the registration of a domain name, etc. when he/she has registered, possessed or used a domain name, etc. in violation of the aforementioned provision (Article 12(2))

If a person who requests the cancellation or transfer of a domain name intends to have "justifiable title" on the one who requests the cancellation or transfer of a domain name, he/she shall form a close relation between the domain name and the domain name on the grounds that another person has already registered or used the same or similar names, trade names, trademarks, service marks, and other marks (hereinafter referred to as "subject marks") in the Republic of Korea or abroad prior to the registration of the domain name, and that another person has already been registered or used for a considerable period of time. On the other hand, there must be circumstances to deem that the cancellation or transfer of the domain name without the payment of the price is reasonable in light of the concept of justice and that there is sufficient need to protect the domain name (see, e.g., Supreme Court Decision 2011Da57661, Sept. 12, 2013).

In addition, an unlawful act includes not only an act of obtaining unjust benefits from a person with a legitimate title, but also an act that is not directly related to unjust enrichment, such as an act of obstructing the registration of a domain name. Whether such an unlawful purpose exists shall be determined by comprehensively taking into account the following: (a) awareness of the subject mark of a legitimate title or the degree of originality; (b) degree of identity and similarity of the subject mark; (c) whether a person who has registered, possessed, or used a domain name knows the subject mark; (d) whether there was any history of obtaining economic benefits by selling or lending the domain name; (e) whether there was the establishment of a web site under the domain name; (e) whether there was a substantial operation of the web site; (e) whether there was the same or similar economic relation between the goods or services, etc. on the web site; and (e) whether an Internet user is induced to a web site with credit and customer attraction embodied in the subject mark; and (e) other various circumstances surrounding the registration, possession, or use of the domain name (see, e.g., Supreme Court Decision 2016Da1696.

B. Examining the following circumstances revealed in light of the above legal principles, there is room to view that the Plaintiff, the holder of the right of “the exercise of rights” of the domain name of this case, has a legitimate title to the domain name of this case, and Defendant 2 transferred the domain name of this case to his own name for the purpose of denying the Plaintiff from running the business using the domain name of this case.

(1) Since the instant sales contract and the instant amendment contract are null and void, the Plaintiff, who used the trade name, i.e., “a contract for redemption,” can be deemed as a right holder for “a contract for redemption.”

(2) Most of the domain names of this case were registered and transferred by the Plaintiff to the Defendant Company as a modified contract with the instant sales contract. Before the instant sales contract and the amendment contract, the Plaintiff used the domain name for its own business. The instant domain name is identical or similar to the Plaintiff’s mutual acceptance of trust, as it directly used or applied the word “the instant domain name” and “an adequate auction.”

(3) Although Defendant 2 registered the domain name of this case in his future, Defendant 2 had the Defendant Company use the domain name of this case.

(4) From August 4, 2010, Defendant 2 transferred the domain name registration from Defendant Company on several occasions. The instant sales contract and the amendment contract are null and void, and accordingly, the provisional disposition order that the Defendant Company should not dispose of the domain name against the Defendant Company and the return of the domain name to the Plaintiff was continued after the Daegu District Court Decision 2012Na1189 Decided February 8, 2013, Defendant 2 continued to transfer the domain name to Defendant 2.

C. The lower court should have determined the Plaintiff’s claim for the transfer of the domain name to Defendant 2 by sufficiently examining whether the Plaintiff had a legitimate title to the domain name of this case, and whether Defendant 2 had an unlawful purpose in receiving the registration transfer of the domain name of this case.

Nevertheless, the lower court rejected the Plaintiff’s claim for transfer of the domain name to Defendant 2 on the sole basis of the circumstance that the domain name of this case was transferred to Defendant 2 through the instant sales contract and the modification contract, on the premise that Article 12(2) of the Internet Address Act only covers the so-called “cyber bus quota,” which marks the domain name for unlawful purposes. The lower court erred by misapprehending the legal doctrine on Article 12 of the Internet Address Act and failing to exhaust all necessary deliberations, thereby adversely affecting the conclusion of the judgment. The allegation in the grounds of appeal assigning this error is with merit.

3. Claim for reinstatement or claim for prohibition of use of text and indirect compulsory enforcement based on the claim for removal of disturbance;

A. As seen above, according to Article 12 of the Internet Address Act, a person who has a legitimate title to a domain name may interfere with the registration of the domain name, etc. or may request the cancellation or transfer of the registration of the domain name against a person who has registered, possessed or used the domain name for an unlawful purpose.

Furthermore, a person who has a legitimate title to a domain name may file a claim for prohibition or prevention of an act that is likely to infringe on the right to the domain name by directly registering, holding or using the domain name. Whether a claim for prohibition or prevention of an act may be filed against a person who is likely to infringe on the right to the domain name, should be determined by comprehensively taking into account the type of the act of infringement, the nature of the infringed interest, and the degree of such infringement, together with whether the illegality is recognized in light of the nature and degree of the infringed interest, as well as whether it is difficult to expect the effectiveness of restoration of damage solely on the basis of compensation for damage after the infringement was committed, and whether the interest of the holder of the right to the domain is greater than the loss

B. Examining the above facts in light of the above legal principles, since the defendant company actually infringes or is likely to infringe on the plaintiff's right to the domain name of this case, there is considerable room to view that the plaintiff can file a claim against the defendant company for prohibition of using the domain name of this case as Internet web site address and indirect compulsory enforcement. The reasons are as follows.

(1) The Defendant Company received the domain name of this case from the Plaintiff pursuant to the instant sales contract and the amendment contract, and later later transferred the domain name of this case to Defendant 2 and did not have the title of registration of the domain name of this case. Nevertheless, the Defendant Company used the domain name of this case to its Internet web site address.

(2) Although the Defendant Company did not directly register, possess, and use the domain name of this case, it infringes on the Plaintiff’s right to the domain name by using the domain name of this case to its Internet web site address. In addition, where the Plaintiff’s request for transfer of the domain name against Defendant 2 is recognized, the Defendant Company is highly likely to transfer the domain name of this case to itself for the continued use of the domain name of this case for its own business.

(3) If the defendant company did not prohibit the use of the domain name of this case through the defendant 2 or the use of the domain name of this case by the defendant 2 after re-registration, it is likely that the plaintiff could not use the domain name of this case and continue to engage in business activities like the transfer of the contract of this case. The plaintiff's seeking monetary compensation against the defendant company without removal of such state alone is difficult to expect the effectiveness of the plaintiff's damage relief.

(4) The defendant company cannot be viewed as causing unexpected damages to the defendant company, even if it prohibits the use of the domain name because it does not have a legitimate title to the domain name.

C. Nevertheless, the lower court, solely on the ground that the Plaintiff’s right to the domain name is merely a bond with no effect of taxes or a similar right, did not recognize the Defendant Company’s claim for prohibition and indirect compulsory enforcement of the act of using the domain name of this case as an Internet website address. The lower court erred by misapprehending the legal doctrine on the claim against the use prohibition of the domain name of a person who has a legitimate right to the domain name and failing to exhaust all necessary deliberations, thereby adversely affecting the conclusion of the judgment. The allegation in the grounds of appeal

However, since the plaintiff's right to the domain name of this case is related to the registration of the domain name of this case and the user body, it is difficult to regard the act of using the word "the domain name of this case", which is used for the domain name of this case as an Internet web site address, not the Internet web site address, as an infringement of this right. Therefore, it is difficult to recognize that the plaintiff's claim prohibiting the defendant company from using the domain name of this case as an Internet web site address other than the act of using the domain name of this case as an Internet web site address. In addition, the plaintiff also sought the prohibition of the use of the domain name of this case against the defendant 2, but as seen above, the defendant 2 did not actually use the domain name of this case, so it is sufficient to recognize the request for transfer of registration and it is not necessary to recognize the prohibition of use as to the defendant 2.

Therefore, among the judgment below that rejected the claim for restitution or the claim for removal of disturbance, the remaining parts of the judgment excluding the prohibition of using the domain name of this case as the Internet web site address and the claim for indirect compulsory enforcement against the defendant company is somewhat inappropriate, but there is no error in the misapprehension of legal principles as to the claim for restitution and the claim for removal of disturbance, which are contrary to the grounds of appeal, thereby failing to exhaust all necessary deliberations or violating the reasons of the judgment, which affected the conclusion

4. Requests for prohibition of use of letters and indirect compulsory enforcement pursuant to the claims for prohibition of mutual use under Article 23 of the Commercial Act;

A. Article 23(1) of the Commercial Act provides that no person may use a trade name that may be mistaken for another person’s business for an unjust purpose. When determining whether a trade name constitutes “a trade name that may be mistaken for another person’s business,” one shall be determined by comparing and observing two trade names, comprehensively taking into account whether a general public considers that two business entities are closely related to each other in terms of the nature, content, business method, customer floor, etc. of the two business entity, or whether a trade name is considerably widely known and thus has obtained solid trust from the general public in terms of the reputation of the business entity. In addition, “illegal purpose” refers to an unlawful intent by using a trade name in which the name is used to make the general public misunderstand the business of another person whose name is indicated as his/her trade name to obtain unjust profits or to inflict losses on another person. Whether an unlawful purpose exists should be determined by comprehensively taking into account various circumstances, such as the reputation, credit, type, scale, method, and process of mutual use of the name (see, e.g., Supreme Court Decision 2016Da63636365, etc.

B. Examining the aforementioned facts and records in light of the aforementioned legal principles, the Defendant Company did not imitate the Plaintiff’s trade name “the Plaintiff was in use,” but there is room to deem that the instant modified contract was invalid, thereby causing the Plaintiff to misunderstand the Plaintiff’s business and causing loss to the Plaintiff, thereby gaining unjust profits.

(1) The Plaintiff and Nonparty 2 concluded the instant amendment agreement with the Plaintiff’s transfer of business, to transfer the Plaintiff’s trade name, along with the Plaintiff’s transfer of business. According to the mutual transfer agreement of the instant amendment agreement, the Plaintiff changed the Plaintiff’s trade name from the “holder of the right to rescission” to the other trade name, and Nonparty 2 established the Defendant Company with the name of the “holder of the right to rescission”.

(2) Since the instant modified contract is null and void, the Plaintiff, while having mutual rights to “the exercise of rights” from the beginning, should be deemed to have used “the exercise of rights” of each other without any justifiable right.

(3) The defendant company used the term "the exercise of the rights" in the name of the plaintiff company as the name of its own business and caused confusion between the business that must indicate "the exercise of rights" and the business that actually shows that the "the exercise of rights" should be used. Accordingly, the defendant company's business was likely to mislead the plaintiff into the plaintiff's business. Furthermore, the defendant company's business was confirmed to be null and void in the judgment of the court, and the defendant company continued to use the domain name of this case, which indicates "the exercise of rights" of the plaintiff company, as the name of its own business without the intention of return, although it was aware of the circumstances that the "the exercise of rights" of the defendant company should be attributed to the plaintiff.

C. Nevertheless, the lower court did not accept the Plaintiff’s claim for the return of mutual use of money and the claim for indirect compulsory performance under Article 23 of the Commercial Act on the ground that the Defendant Company could not be deemed to have used the Plaintiff’s trade name for the purpose of misleading the Plaintiff’s business with a view to leading the Defendant Company to misunderstanding the Plaintiff’s own business as a business.

The court below erred by misapprehending the legal principles as to Article 23 of the Commercial Act, which affected the conclusion of the judgment, by failing to exhaust all necessary deliberations as to whether the defendant company's use of "the exercise of rights" of each other constitutes a misunderstanding to the business of the plaintiff company, or whether there was an unlawful purpose by using "the exercise of rights" as "the exercise of rights," thereby causing losses to the plaintiff. The ground of appeal assigning this error is with merit. However, since the defendant 2 is not a person using "the exercise of rights," it is not a person using "the exercise of rights," the court below's rejection of the claim for prohibition of mutual use and indirect compulsory performance under

5. Requests for prohibition of use of letters and indirect compulsory enforcement resulting from the claims for prohibition of unfair competitive acts;

The lower court did not recognize the Plaintiff’s claim for prohibition of use and indirect compulsory enforcement based on the claim for prohibition of unfair competition, etc. under the Unfair Competition Prevention and Trade Secret Protection Act (hereinafter “Unfair Competition Prevention Act”) on the ground that it is difficult to view the Plaintiff’s trade name as

Examining the reasoning of the lower judgment in light of the relevant legal principles and records, the lower judgment did not err by misapprehending the legal doctrine regarding “trade name widely known in Korea” under Article 2 subparag. 1 (b) of the Unfair Competition Prevention Act, or by failing to exhaust all necessary deliberations, which

6. Conclusion

Of the judgment of the court below, the part of the claim for the registration transfer of the domain name of this case against the defendant 2, the part of the claim for restitution against the defendant company, the part of the claim for prohibition of using the domain name of this case as the Internet web site address and the part of the claim for indirect compulsory enforcement of prohibition of use and the part of the claim for indirect compulsory enforcement of prohibition of use of the domain name of this case under Article 23 of the Commercial Act are reversed. This part of the case is remanded to the court below for a new trial and determination, and the remaining appeals are all dismissed. It is so decided as per Disposition by the assent

Justices Noh Jeong-hee

Justices Kim Jae-hyung

Justices Ansan-chul

Justices Lee Dong-gu