[1] Criteria to determine whether an act constitutes an act of unfair competition under Article 2 subparagraph 1 (k) of the Unfair Competition Prevention and Trade Secret Protection Act

[2] In a case where Company A, a corporation that produces and sells magazines mainly containing celebrity pictures and articles, etc., filed an application for provisional disposition seeking prohibition of production, distribution, etc. of the above special Appendix on the grounds that Company B’s act constitutes an unfair competition act under Article 2 subparag. 1(k) of the Unfair Competition Prevention and Trade Secret Protection Act, and that Company B’s act of producing and selling the above special Appendix constitutes an unfair competition act under Article 2 subparag. 1(k) of the Unfair Competition Prevention and Trade Secret Protection Act and constitutes an unfair competition act under Article 2 subparag. 1(k), the case holding that Company A’s act of producing and selling the above special Appendix is an act of using the outcome, etc. of Company B without permission for its own business without permission in a manner contrary to fair commercial practices or competition order

[1] The Supreme Court determined that “an act of using the outcome of a competitor’s considerable effort and investment without permission for one’s own business against business ethics or the order of fair competition, thereby obtaining unjust profits by taking advantage of the competitor’s efforts and investment, and infringing on competitor’s legal interests worth protecting, constitutes an act of unfair competition, which constitutes a tort under the Civil Act.”

After that, Article 2 subparag. 1 (j) of the Unfair Competition Prevention and Trade Secret Protection Act (amended by Act No. 11963, Jul. 30, 2013) added “other acts of infringing on other persons’ economic interests by using the outcomes, etc. achieved by considerable investment or effort of other persons for one’s own business without permission in a manner contrary to fair commercial practices or competition order” as one of the unfair competition acts, reflecting the purport of the above Supreme Court’s decision, and the said Item (j) was modified into Item (k) under the Unfair Competition Prevention and Trade Secret Protection Act (amended by Act No. 15580, Apr. 17, 2018).

The foregoing Item (k) newly established a provision concerning a new type of unfair competition act that was not included in the scope of the application of the former Unfair Competition Prevention and Trade Secret Protection Act (amended by Act No. 11963, Jul. 30, 2013), thereby protecting the newly emerging intangible outcome with economic value and supplementing the lack of the legislators to prescribe all the unfair competition acts, thereby enabling the court to decide more clearly the new type of unfair competition act by reflecting the changing trade concept in the timely manner.

In full view of the aforementioned legal provisions and legislative developments, (k) does not impose restrictions on the type of “performance, etc.” subject to the said protection. As such, not only tangible objects but also intangibles may be included therein, but also new forms of outcomes that were difficult to be protected by the former Intellectual Property Act may be included. The determination of “performance, etc.” should comprehensively take into account the reputation and economic value obtained by the said outcome, customer attraction factors embodied in the outcome of the said project, and the importance and competitiveness of the outcome in the relevant project field.

Whether such outcome, etc. has been made by considerable investment or effort should be determined individually and individually in light of the practice or actual state in the industrial sector to which the outcome, etc. belongs, but it should be determined that the economic benefits infringed upon by using the outcome, etc. without permission do not belong to the public sector where anyone can freely use them. In addition, in order to constitute a case where “unauthorized use for one’s own business without permission in a manner contrary to fair commercial practices or competition order” as referred to in subparagraph (k), whether the infringer and the infringer are likely to compete or be in competition in the near future, whether the contents and contents of the commercial practices or competition order in the industrial sector that includes the outcome, etc. claimed by the right holder are fair, whether such outcome, etc. are likely to be replaced in the market by the goods or services of the infringer, whether consumers or traders have become known to some extent, and the possibility of confusion between consumers and traders should be considered comprehensively.

[2] In a case where Company A, which produces and sells magazines, the main contents of which are celebers’ photographs, articles, etc.,,, made efforts to produce paintings, etc. as to the members of Company B, who conduct entertainment business, such as entertainment, production of music records, planning of performances, etc., and sell them as a special supplement to the above magazines without permission, and Party B’s act constitutes an unfair competition act under Article 2 subparag. 1(k) of the Unfair Competition Prevention and Trade Secret Protection Act, and Party B filed an application for provisional disposition seeking prohibition, etc. of production and distribution of the above special supplement, the case holding that Company B’s act of producing and selling the above celebers’ pictures or magazines constitutes an unfair competition act under Article 2 subparag. 1(k) of the Unfair Competition Prevention and Trade Secret Protection Act, which is an act of producing and selling the above celebers’ pictures, public performances, and production and distribution of contents of celebers or videos, etc., which are not subject to permission or unfair competition practices of the above ce.

[1] Article 2 subparagraph 1 (k) of the Unfair Competition Prevention and Trade Secret Protection Act / [2] Article 2 subparagraph 1 (k) of the Unfair Competition Prevention and Trade Secret Protection Act

[1] Supreme Court Order 2008Ma1541 dated August 25, 2010 (Gong2010Ha, 1855)

Bigart Entertainment Co., Ltd. (Law Firm LLC, Attorneys Kim Dong-ho et al., Counsel for the plaintiff-appellant)

MM media Co., Ltd. (Attorneys Lee Sung-soo et al., Counsel for the plaintiff-appellant)

Seoul High Court Order 2019Ra20535 dated September 18, 2019

All reappeals are dismissed. The costs of reappeals are borne by each party.

The grounds of reappeal are examined.

1. Legal principles applicable to the instant case

The Supreme Court held that "an act of taking advantage of the competitor's efforts and investment without permission for one's own business in violation of business ethics or the order of fair competition, thereby obtaining unjust profits and infringing on competitors' legal interests worth protecting, constitutes a tort under civil law, as an act of unfair competition (Supreme Court Order 2008Ma1541 Decided August 25, 2010)."

Article 2 Subparag. 1(j) of the Unfair Competition Prevention and Trade Secret Protection Act (amended by Act No. 11963, Jul. 30, 2013; hereinafter “Unfair Competition Prevention and Trade Secret Protection Act”) added “other acts of infringing on other persons’ economic interests by using the outcomes, etc. achieved by considerable investment or effort from other persons for their own business without permission in a manner contrary to fair commercial practices or competition order” as one of the unfair competition acts, reflecting the purport of the said Supreme Court’s decision, and the said subparagraph(j) was amended from the Unfair Competition Prevention and Trade Secret Protection Act (amended by Act No. 15580, Apr. 17, 2018; hereinafter “Unfair Competition Prevention and Trade Secret Protection Act”).

The foregoing Item (k) newly established a provision concerning a new type of unfair competition act, which was not included in the scope of the application of the former Unfair Competition Prevention and Trade Secret Protection Act (amended by Act No. 11963, Jul. 30, 2013), thereby protecting the newly emerging intangible outcome with economic value and supplementing the lack of the legislators to prescribe all the acts of unfair competition, thereby enabling the court to decide more clearly the new type of unfair competition act by reflecting the changing transaction concept in the timely manner.

In full view of the aforementioned legal provisions and legislative developments, (k) does not impose restrictions on the type of “performance, etc.” subject to the said protection. As such, not only tangible objects but also intangibles may be included therein, but also new forms of outcomes that were difficult to be protected by the former Intellectual Property Act may be included. The determination of “performance, etc.” ought to comprehensively take into account the reputation or economic value obtained by the said outcome, customer attraction factors embodied in the outcome, and the importance and competitiveness of the outcome in the relevant business sector.

Whether such outcome, etc. has been made by considerable investment or effort should be determined individually and individually in light of the practice or actual state in the industrial sector to which the outcome, etc. belongs, but it should be determined that the economic benefits infringed upon by using the outcome, etc. without permission do not belong to the public sector in which anyone can freely use. In addition, the following should be comprehensively considered: (k) whether the infringer and the infringer are likely to compete with the right holder or to be in competition in the near future; (e) whether the content and substance of the trade practice or competition order in the industrial sector including the outcome claimed by the right holder are fair; (g) whether the outcome, etc., can be replaced by the market by the goods or services of the infringer; and (g) the possibility of consumers or traders' confusion with the consumers or traders.

2. Review of the instant case

A. The details of the instant case and the judgment of the court below

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

1) Since its establishment in 2005, the creditor is a company running entertainment business, such as artist management, music record production, performance planning, etc., and the debtor is a company producing and selling a magazine, including “(magazine omitted)”, the main contents of which include artist’s pictures, news articles, etc.

2) On November 24, 2018, an obligee abutting on the news book with the name of “○○○ Limited Mazine” and the news card containing pictures of the members of △△△△△△△△△ (○○○○○) (hereinafter referred to as “the instant special attachment”). On November 30, 2018, the obligee filed an application for provisional disposition, such as prohibiting publication of books, against the obligor on November 24, 2018, and received the instant provisional disposition order on November 30, 2018. During the continuation of the obligor’s objection against the provisional disposition, the obligor sold “(magazine omitted) Special (magazine omitted)” from January 17, 2019, and included a news card (hereinafter referred to as “the instant special attachment”).

3) The instant provisional disposition order ordering the prohibition of production, sale, etc. of the title “○○○ Mazine” and the production, distribution, etc. of the title “○○○○ History In-In-depth Judgment” as well as the prohibition of production, sale, etc. of the title “○○○○○○○○○○○○○○ members’ portraits, and the instant provisional disposition order ordering the prohibition of production, sale, etc. of the title, DVD, ethyl photographs, and brode, etc. using the portraits of the members of the ○○○○○○○○○○○○○○○○○○○ members, was approved. The instant special attachment, which was provided by the debtor as a supplement to “(maga omitted omitted), is executed without deleting the relevant parts of the members of the △△△△△△△△△△△△△△△△△△△△△ members, and the part ordering indirect compulsory enforcement thereof was dismissed in the future, with respect to the goods’ portraits name, title, title, English name, English name, English name, and title, and title of △△△△△△△△△△.

B. Judgment on the grounds for reappeal by the debtor

1) Review of the reasoning of the lower judgment and the record reveals the following circumstances.

A) A creditor selected seven members through an office in 2011 and formed △△△△△△△△ (○○○○). Around June 12, 2012, a creditor entered into the instant exclusive agreement with the said members, which contains the contents that the said members shall be granted exclusive rights to use the names, photographs, portraits, penmatics, voice, and all other things indicating the identity of the members, and has planned overall activities as popular culture artists including the performance, advertisement pictures, and broadcasting contributions of all the members. In addition, a creditor is in charge of planning, production, distribution, and sale of contents concerning △△△△△△△ (○○○) and produces and sells paintings, including photographs of the members of △△△△△△△ (○○○○).

B) △△△△△△△ (○○○) sold a total of approximately KRW 7.3 million by May 2018, and recorded the same as one in the order of major music records inside and outside Korea. The music video has been widely known to consumers inside and outside Korea, such as the reproduction of 100,000,000 won from the tubee.com.

C) A creditor is engaged in commercial production and sale of △△△△△△△ (○○○○) as well as official files, and DVDs. Based on the figures of △△△△△△△ (○○○○), multiple companies and △△△△△△△△ (○○○○) made an advertisement contract with which they make a contribution.

D) The sales price of the (magazine omitted) magazine published by the debtor on January 2019 is 15,000 won that is similar to the ordinary sales price at ordinary times. The sales price of the “(magazine omitted) special editions” included in the instant special Appendix is 43,000 won.

2) We examine these circumstances in light of the legal principles as seen earlier.

A) The creditor decided to form a group with the name of △△△△△△△ (○○○) and concluded an exclusive agreement with the members, and improved the ability of the members through training. The creditor planned music, performances, broadcasts, and contributions of △△△△△△△ (○○○○) in accordance with the instant exclusive agreement, and made considerable investment and efforts in the activities of △△△△△△ (○○○) by producing and distributing contents such as sound sources and videos. Accordingly, the reputation, credit, and customer smoking personnel accumulated in relation to △△△△△△△△△△ (○○○○) have reached a considerable level. This can be evaluated as “the performance, etc. made by considerable investment or efforts,” and since it cannot be deemed as belonging to the public sector freely available to anyone, if another person uses the above mark without permission, it would infringe on the economic interest of the creditor.

B) Considering the fact that it is a commercial practice in the field of the entertainment industry to obtain permission from, or pay a certain amount of consideration to, an artist’s name and photograph in order to use the artist’s name and photograph for goods or advertisement, if it is a separate book or DVD that contains a large volume of articles or pictures of a specific artist beyond the scope of ordinary information provision, and if it does not obtain permission from, or does not pay fees to, an artist or his/her affiliates, it is contrary to commercial practices or fair trade order. The instant special supplement issued by the debtor is relatively low in price in relation to the △△△△△△△ (○○○)’s book issued by the creditor, which overlaps with the demand for the said book, and there is sufficient possibility to replace the demand for the said book. Accordingly, the obligor’s act of producing and selling the instant special supplement constitutes an act of using the creditor’s outcome, etc. for his/her own business without permission in a manner contrary to the fair commercial practices or competition order.

C) The lower court’s decision that partially approved the instant provisional disposition is justifiable in its conclusion, and the lower court did not err by misapprehending the legal doctrine on the interpretation of the provisional disposition in violation of Article 2 subparag. 1(k) of the Unfair Competition Prevention Act, contrary to what is alleged in the grounds of reappeal

C. Judgment as to the creditor's grounds of reappeal

The lower court determined that, in addition to the instant special attachment, it is difficult to readily conclude that all the goods to be produced and sold by the debtor exceed the scope of the above ordinary information provision, and that, insofar as the provisional disposition on the instant special attachment was authorized, the parts of the paintings in the Schedule No. 1 as indicated in the same judgment of the lower court do not

Examining the reasoning of the lower judgment in light of the relevant legal doctrine, the lower court did not err in its judgment by misapprehending the legal doctrine regarding freedom of speech and publication and the necessity of preservation, or by failing to exhaust all necessary deliberations, etc., contrary to what is alleged in the grounds of reappeal.

3. Conclusion

Therefore, all reappeals are dismissed, and the costs of reappeals are borne by each party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Noh Tae-tae (Presiding Justice)