Seoul High Court Decision 201Na14488 delivered on May 2, 201

U.S.A. (Law Firm Jungwon, Attorneys Kang-gu et al., Counsel for the defendant-appellant)

May 12, 2011

1. The defendant shall pay to the plaintiff 421,387,868 won with 5% interest per annum from May 17, 2008 to September 15, 201, and 20% interest per annum from the next day to the day of full payment.

2. The plaintiff's remaining claims are dismissed.

3. Of the costs of lawsuit, 90% is assessed against the Plaintiff, and the remainder is assessed against the Defendant, respectively.

4. Paragraph 1 can be provisionally executed.

With respect to the Plaintiff KRW 4,275,189,240 and KRW 500,00,00 among them, the Defendant shall pay to the Plaintiff 50,000,000 as to the delivery day of a duplicate of the complaint of this case, and to the Plaintiff 3,275,189,240 as to the claim of this case as of November 24, 2008 and the delivery day of a duplicate of the application for modification of the cause of the claim of this case as of November 24, 2008, the amount calculated at the rate of 20% per annum from the day following the day of service of a duplicate of the application for modification of the claim and the cause of the claim of this case as of January 20,

1. Basic facts

A. The Plaintiff was a company that manufactures and sells metal products related to windows, such as aluminium, at the main body of the rice flux in Daegu-gun, and registered the trademark on December 13, 1990 (hereinafter “Plaintiff trademark”) as the designated goods “metallic railing, metal materials, metal materials, metal windows, metal windows, knobs for windows, solar heating, and non-metallic metal windows, etc.”

B. The Defendant has manufactured and sold metal products related to the windows, such as Aluminum, in the Changsidong in order to make and sell them, and had been manufactured by marking the abbreviation of the company’s trade name prior to the alteration (Co., Ltd.) prior to October 23, 2004 (hereinafter “Defendant’s trademark”). The Defendant registered the trademark on October 23, 2004 as the designated goods “Defendant’s trademark” the main products of Aluminum aluminium, Aluminum aluminium, Aluminum aluminium, Aluminum yluminum yluminium, Aluminum yluminium, metal materials, metal materials, metal materials, metal materials, metal materials, windows, windows, metal materials, metal rail, etc., as the designated goods, and around that time, the Defendant’s trademark was marked on the product by 2007.

C. On December 26, 2005, the Plaintiff filed a petition for a trial on invalidation of the trademark against the Defendant on the grounds that the trademark is identical or similar to the Plaintiff’s trademark and constitutes Article 7(1)7, 9, and 12 of the Trademark Act. On November 22, 2006, the Intellectual Property Tribunal rendered a trial decision dismissing the Plaintiff’s claim on the grounds that the Plaintiff’s trademark is not well-known, and both trademarks are not identical or similar to the Plaintiff’s trademark. On the ground that the Plaintiff’s appeal against the above trial decision, the Patent Court filed a lawsuit seeking revocation of the said trial decision with the Patent Court. Examining the similarity of the name of the original and the Defendant’s two trademarks compared to the original and the two trademarks, the Defendant’s trademark is referred to as “nives” or “nives”, and the Plaintiff’s trademark is referred to as “nives and similar to the two trademarks,” and both of which are identical or similar to that of the Defendant’s two identical or similar trademarks, and thus, the lower court’s judgment was cancelled.

[Evidence] Facts without dispute, Gap evidence Nos. 1 to 8, Eul evidence Nos. 1 to 5 (including paper numbers), the purport of the whole pleadings

2. Judgment on the plaintiff's claim

A. The plaintiff's assertion

The plaintiff, while the defendant was not allowed to use a trademark identical or similar to the registered trademark of another person for goods identical or similar to the designated goods, the act of manufacturing and selling the defendant's trademark similar to the registered plaintiff's trademark or the goods indicating the defendant's trade name constitutes an infringement of trademark rights under Article 66 (1) 1 of the Trademark Act, and the plaintiff can claim compensation for damages that can normally be paid to the defendant for the use of the plaintiff's trademark (Article 67 (3) of the Trademark Act). Thus, the defendant is obligated to pay to the plaintiff the sum of the ordinary use fees for the plaintiff's trademark from January 1, 1998 to December 31, 2007 (see the result of the appraiser's appraisal by Nonparty 2), and it is claimed as compensation for damages for infringement of trademark rights, and the profits accrued to the defendant from the conjunctive infringement of trademark rights.

B. Whether the defendant is liable

(1) Whether the trademark right has been infringed

(A) Determination on the part on which the Defendant’s trade name is indicated in the product (transfer of the Defendant’s trademark registration)

The fact that the defendant had produced the abbreviation of the company's trade name on the product of metal windows, such as Aluminium before 198, is similar to the title of the plaintiff's trademark and the defendant's trade name, and the products produced and sold by the plaintiff and the defendant are identical and similar.

However, in order to recognize infringement of trademark rights under Article 66 (1) 1 of the Trademark Act, the use of a trademark that infringes on trademark rights should be premised. The defendant's use of an abbreviation of company's trade name to this effect does not infringe on trademark rights as his trade name (Article 51 (1) 1 of the Trademark Act). Thus, the trademark that usually uses his trade name does not have the effect of trademark rights unless it is used for unfair competition after the establishment of trademark rights is registered, unless it is used for the purpose of unfair competition. Here, "the use of a trade name in common" means the use of a trademark without a special distinctive character such as a unique letter, color, or dial character, and it is assumed that the defendant's use of the trademark is not a trade name and thus, it is difficult for ordinary consumers to recognize that it is a trade name in Korean. According to the main sentence of Article 51 (1) 1 of the Trademark Act, the defendant's use of the trademark is not a trade name, and it is difficult for general consumers to recognize that it is a trade name or aluminium.

The plaintiff alleged that the defendant's use of the trade name as above constitutes an unfair competition since it was intended to cause confusion with the plaintiff's goods by using similar properties to the plaintiff's trademark widely known in Korea. However, according to the evidence Nos. 1, 2, 7, and 8 as to the defendant's case, a male aluminium industry was established on July 20, 197, and converted into a corporation with male aluminium Co., Ltd. on December 17, 1985, and the plaintiff's case was established on July 20, 1947. The defendant's use of the trade name as above was converted into a corporation with the Southern Metal Industries Co., Ltd. on January 4, 197, and changed into a trade name as of February 28, 190, the plaintiff's use of the trade name as above was not sufficient to recognize that the defendant's use of the products constitutes an unfair competition No. 2, 27, and 4, respectively.

Therefore, since the Defendant’s production of the product by indicating the Defendant’s trade name prior to the registration of the Defendant’s trademark does not constitute an act infringing the Plaintiff’s trademark, which is the right to registered trademark, the Defendant’s primary and conjunctive claims are without merit, premised on the Defendant’s infringement against the Plaintiff.

(B) Determination as to the part indicated in Defendant’s trademark products (after Defendant’s trademark registration)

As seen earlier, the name of the Plaintiff’s trademark and its designated goods are similar to those of the Defendant’s trademark. Thus, the Defendant’s act of manufacturing and selling goods with the Defendant’s trademark similar to the Plaintiff’s trademark, which is well known to the Defendant, constitutes an act of infringing the Plaintiff’s trademark, which is the right to registered trademark.

On the other hand, the defendant argues that the possibility of confusion in a claim for prohibition due to trademark right infringement is evaluated as conceptual and abstractly, while the possibility of confusion in the claim for compensation for damages due to trademark right infringement is assessed in a concrete and realistic manner, so it is difficult to recognize the defendant's liability for damages in this case where the general consumers' goods different from the market share and the regional main market are unlikely to confuse with the goods of the plaintiff and the defendant, but the specific and realistic confusion is about the scope of damages, and it does not change the criteria for determining the possibility of mistake and confusion in the claim for prohibition due to trademark right infringement and the claim for damages (the scope of damages is examined in the following 3.c.), and the above argument by the defendant is without merit.

(2) The defendant's intentional or negligent act

In order to claim compensation for damages (or return of unjust enrichment premised on a tort) based on a tort caused by infringement of trademark rights, the infringer must have intention or negligence (the elements for establishing a tort do not need to distinguish between intention or negligence and there is only difference between intention and negligence, but there is no difference between the reduction of compensation without intention or gross negligence. See the latter part of Article 67(4) of the Trademark Act)

In light of the fact that the existence of a trademark right is published in the Trademark Gazette or the original register, etc. and that any person investigates the existence and content of the trademark right in common with due care, and that the infringement of the trademark right constitutes only an act done as a business, the defendant could have sufficiently known the details of the trademark right through the Trademark Gazette, etc., and the defendant is at least negligent in the infringement of the trademark right (Article 68 of the Trademark Act applies only to the case where the trademark is used with the indication that it is a registered trademark, and in this case, there is no evidence to prove that the plaintiff used the trademark by marking that it is a registered trademark in the trademark itself in order to indicate that the trademark has been registered).

The defendant asserts to the effect that the defendant had no intention or negligence on the infringement of the plaintiff's trademark during the period from October 23, 2004 where the defendant registered the defendant's trademark to August 23, 2007, during the period from October 23, 2004, until August 23, 2007, that the trademark registration is legitimate through the examination of the Korean Intellectual Property Office, which is a reliable state agency.

However, in order for a person who infringed another person's trademark to be not negligent, there are circumstances that justify the fact that he/she was unaware of the existence of another person's trademark right, or that his/her technology does not have the effect of another person's trademark right. The fact that the plaintiff filed a registration invalidation trial on the defendant's trademark and issued a trial decision that invalidated the registration of the above trademark is the same as mentioned above. Accordingly, even if the defendant's trademark was registered, the trademark right is deemed not to have existed from the beginning. Thus, even if the defendant believed that he/she used the trademark as the above registered right, such fact alone does not constitute a circumstance that justify the fact that he/she believed that the effect of the plaintiff's trademark does not reach the defendant's trademark (see Supreme Court Decision 2007Da65245, Jan. 30, 2009). Therefore, the defendant's above argument is not reasonable (see Supreme Court Decision 2007Da652

(3) Therefore, the defendant is obligated to compensate the plaintiff for the damages suffered by the plaintiff due to the defendant's infringement of the plaintiff's trademark from October 23, 2004 to December 31, 2007, which is the date of registration of the defendant's trademark.

C. Scope of damages

The Plaintiff claims the amount equivalent to the ordinary royalty under Article 67(3) of the Trademark Act as damages. Generally, it is common to calculate the royalty by means of multiplying the rate of royalty calculated appropriately by taking account of the individual circumstances of the transaction in the industry, such as the ordinary royalty of the industry, etc. in the absence of a contract to use the trademark.

According to the result of the correction of the appraiser non-party 1's appraisal, the ordinary user fee for the plaintiff's trademark that the plaintiff could have received from the defendant from 2004 to 2007 is as follows (the appraiser non-party 2's appraisal result is calculated on the premise that the defendant's profit amount and the ordinary user fee are identical in accordance with the profit access Act, and it is not believed.)

Of 207 sales (a) 23,613,00,000 won in 2006, 24,36,000,000 won in 20,248,248,000,000 won in 25,179,000,000 won in the table contained in the main sentence (b)(b)(1) of 0.50.50 0.50 0.50.50 121,680,00 won in ordinary usage fees (a xb) 118,050,000 won in 206.151,240,000 won in 125,890,000 won in the table(b)

Note 1) Ordinary royalty rate (b)

As seen earlier, the Defendant is obligated to compensate the Plaintiff for damages arising from the infringement of trademark rights from October 23, 2004, and the Defendant, barring any special circumstance, is obligated to pay the Plaintiff the amount of KRW 22,577,868 calculated on the ordinary use fee in 2004 (i.e., KRW 118,050,00 in the ordinary use fee in 2004 x 70/366 in the ordinary use fee in 2004 x KRW 421,387,868 in the ordinary use fee in the year 205 to 2007 (= KRW 22,577,868 in the ordinary use fee in the year 2007 + KRW 121,680,000 in the +151,240,890,000 in the ordinary use fee in the year 204) and delay damages therefor.

[Now, the Plaintiff may claim damages even in cases where the actual amount of damages exceeds ordinary usage fees (Article 67(4) of the Trademark Act); however, considering the overall purport of the arguments in each of the statements in Articles 67(6) and 14 of the Trademark Act, there are special circumstances where, among the Defendant’s net profits, there is a benefit regardless of the infringement of the Plaintiff’s trademark due to the quality, technology, credit, sales policies, propaganda of goods, etc., the Defendant’s net profits. Accordingly, it is difficult to apply Article 67(2) of the Trademark Act, which is a presumption provision, since the Defendant’s whole net profits cannot be recognized as the benefit obtained from infringement of the Plaintiff’s trademark. Therefore, in principle, the Plaintiff must directly prove the “amount of damages arising from the infringement act and the causal relation,” which is the element of tort pursuant to Article 67(1) of the Trademark Act. However, there is no evidence that the damages actually suffered by the Plaintiff exceed the above ordinary usage

3. Judgment on the defendant's defense

(a) Defenses of invalidation;

The defendant raises a defense to the effect that the plaintiff's claim for damages should be limited since the plaintiff did not raise an objection for a long time as to the use of the defendant's trademark. The defendant registered the defendant's trademark on October 23, 2004, and the plaintiff filed a trial for invalidation of trademark registration against the defendant on December 26, 2005 as mentioned above. Thus, it is difficult to view that the defendant had a legitimate expectation to believe that the plaintiff would not exercise his/her right any longer, and there is no other evidence to acknowledge it (as seen in the above, insofar as the effect of the registered trademark right does not extend to the use of the defendant's trade name, it cannot be deemed that the plaintiff granted trust as to the use of the defendant's trademark merely because the plaintiff did not raise any objection to the use of the trademark right). Accordingly, the defendant's defense is groundless

B. Determination on the statute of limitations defense

In accordance with Article 766 of the Civil Act, the defendant asserts that the statute of limitations has expired when the victim did not exercise his/her right to claim compensation for damages due to a tort for three years from the date on which he/she became aware of such damages and the identity of the perpetrator. Thus, the defendant's right to claim compensation for damages arising from the period from May 8, 2008 when three years elapsed since the plaintiff filed the lawsuit of this case until May 8, 2005

On the other hand, the "date when the victim knew of the damage and the perpetrator", which is the starting point of the short-term extinctive prescription of the claim for damages due to a tort, means the time when the victim actually and specifically recognized the facts of the requirements of the tort, such as the occurrence of damage, the existence of the illegal harmful act, and the proximate causal relation between the harmful act and the occurrence of the damage. Whether the victim should be deemed to have actually and specifically recognized the facts of the requirements of the tort should be reasonably recognized in consideration of various individual circumstances and the situation where the claim for damages is practically possible. The plaintiff filed a lawsuit for nullification of the registration and cancellation of the trial decision on August 23, 2007, which became final and conclusive on August 23, 2007. Thus, it is reasonable to view that the period of extinctive prescription of the defendant's trademark is around August 23, 2007 when the plaintiff knew of the defendant's claim for damages as a tort (see Supreme Court Decision 2007Da65245, Jan. 30, 2009).

(c) Defenses of offsetting negligence;

The defendant's assertion that the amount of damages increased is due to the plaintiff's negligence as a legitimate owner of a trademark right, and the plaintiff's negligence should be considered in calculating the specific amount of damages of the defendant.

On the other hand, the latter part of Article 67 (4) of the Trademark Act provides that "if a person who has infringed the trademark right intentionally or by gross negligence has no intention or gross negligence, the court may take this into account in determining the amount of damages, but even in such a case, the court may not reduce the amount of damages below the ordinary usage fees of the trademark right, which is the minimum statutory damages. In light of the purport and limit of the provision on discretionary reduction, even if there is negligence on the part of the plaintiff as alleged by the defendant, the scope of the defendant's compensation for damages against the plaintiff cannot be reduced below the amount of damages in this case where the court judged the scope of the defendant's compensation for damages equivalent to the ordinary usage fees of the trademark right, as alleged by the defendant. (The above provision on reduction is a provision that considers the degree of negligence on the part of the infringer, the degree of negligence on the part of the right holder, and the degree of negligence on the part of the right holder, as seen earlier, is different, and in light of the response to the plaintiff's trademark and the degree of exercise of right.

4. Conclusion

Therefore, the defendant is obligated to pay to the plaintiff 421,387,868 won and damages for delay calculated at the rate of 5% per annum under the Civil Act and 20% per annum under the Act on Special Cases Concerning the Promotion, etc. of Legal Proceedings from May 17, 2008 to September 15, 201, which is the date following the delivery date of a copy of the complaint in this case, which is the day of May 17, 2008, on which the defendant delivered the copy of the complaint in this case to the plaintiff. Thus, the plaintiff's claim in this case is justified within the above recognition scope, and the remainder is dismissed as it is so decided as per Disposition.

Judges Kim Jong-sik (Presiding Judge)

Note 1) Ordinary royalty rate = Corporate value 】 trademark contribution/ gross sales