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

[2] In a case where Gap et al.'s act of selling Gap et al.'s act of attaching a design of snow-shaped shape created by Gap et al. on the front part of handbag and Handbags similar to Eul et al.'s production and sale by Eul et al. constitutes an unfair competition act under Article 2 subparagraph 1 (j) of the former Unfair Competition Prevention and Trade Secret Protection Act, the case holding that Eul et al.'s act of using the form of Nickel Ba and Bag for its own business without permission by using the outcome, etc. created by Eul et al. by considerable investment or effort for its own business in a manner contrary to fair commercial practices or competition order, and contrary to this, the judgment below erred by misapprehending legal principles

[1] Article 2 subparagraph 1 (j) of the former Unfair Competition Prevention and Trade Secret Protection Act (Amended by Act No. 15580, Apr. 17, 2018) [see Article 2 subparagraph 1 (k) of the current Unfair Competition Prevention and Trade Secret Protection Act] / [2] Article 2 subparagraph 1 (j) of the former Unfair Competition Prevention and Trade Secret Protection Act (Amended by Act No. 15580, Apr. 17, 2018; see Article 2 subparagraph 1 (k) of the current Unfair Competition Prevention and Trade Secret Protection Act]

[1] Supreme Court Decision 2016Da276467 decided Mar. 26, 2020 (Gong2020Sang, 809)

에르메스 앵떼르나씨오날(HERMÈS INTERNATIONAL) 외 1인 (소송대리인 변호사 강경태 외 2인)

Defendant 1 and one other (Law Firm LLC et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2016Na2035091 decided February 16, 2017

The judgment below is reversed and the case is remanded to Seoul High Court.

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. Regarding ground of appeal No. 1

For the reasons indicated in its holding, the lower court determined that the Defendants’ products are similar to the Plaintiffs’ Nickelly Bagle and Birkin Bagle (hereinafter “instant product label”) not only the buyers but also the third party’s products and the instant product label are unlikely to be confused with the same source.

Examining the reasoning of the lower judgment in light of the relevant legal doctrine and the record, the lower court did not err in its judgment by exceeding the bounds of the principle of free evaluation of evidence against logical and empirical rules, contrary to what is alleged in the grounds of appeal, or by misapprehending the legal doctrine on the possibility of confusion among the product owners under Article 2 subparagraph 1 (a) of the former Unfair Competition Prevention and Trade Secret Protection Act (amended by Act No. 15580, Apr. 17, 2018; hereinafter “former Unfair Competition Prevention

2. Regarding ground of appeal No. 2

For the reasons indicated in its holding, the lower court determined that it was difficult to view that the discriminatory feature with the instant product label has reached the extent that it was considerably differentiated to the extent that it was the product of a specific source to the general public, in addition to the parties concerned. Therefore, it did not constitute an unfair competition act under Article 2 subparag. 1(c) of the former Unfair Competition Prevention Act.

Examining the reasoning of the lower judgment in light of the relevant legal principles and records, the lower court did not err in its judgment by misapprehending the legal doctrine regarding the requirements for mark recognition in relation to unfair competition as alleged in the grounds of appeal.

3. As to the third ground for appeal

A. Article 2 Subparag. 1(j) of the former Unfair Competition Prevention Act (hereinafter “former Unfair Competition Prevention Act”) newly established the provisions concerning new types of unfair competition acts, which were not included in the scope of the application of the former Unfair Competition Prevention Act, as one of the unfair competition acts added by the Unfair Competition Prevention and Trade Secret Protection Act (amended by Act No. 11963, Jul. 30, 2013). This is a supplementary general provision to regulate unfair competition acts by protecting newly emerging economic value and supplementing the fact that the legislators did not prescribe all the acts of unfair competition, thereby enabling the court to more clearly determine new types of unfair competition acts by reflecting the changing trade norms in a timely manner.

In full view of the aforementioned legal provisions and legislative purport, Item (j) does not impose restrictions on the type of “performance, etc.” subject to the protection, and thus includes not only tangible objects but also intangibles, and also new forms of outcomes that were difficult to be protected under the former Intellectual Property Act may be included. Determination of “performance, etc.” should take into account the reputation or economic value of such outcomes, customer attraction resources embodied in the outcomes, and the importance and competitiveness of the outcomes in the relevant business sector. Whether such outcomes, etc. were made with due investment or effort by the right holder should be determined specifically and individually in light of the practice and status of the industrial sector in which the outcomes, etc. belong, but it should be determined that the economic benefits infringed by using the outcomes, etc. without permission do not belong to the so-called public domain (public domain and the public domain) in which anyone can freely use them.

(j) In addition, the following should be comprehensively taken into account: (i) “Unauthorized use for one’s own business in a manner contrary to fair and commercial practices or competition order” as referred to in the said Item (j) and whether the infringer is in or may be in competition in the near future; (ii) the trade practices in the industrial sector including the outcome claimed by the holder of the right; (iii) the contents and contents of the trade practices or competition order in the industrial sector including the outcome claimed by the holder of the right; (iv) whether the outcome, etc. can be substituted for the market by the infringer’s goods or services; (iv) the consumer or trader’s performance was informed to a certain extent; and (v) the possibility of confusion between consumers and traders (see Supreme Court Decision

B. According to the evidence duly admitted by the lower court, the following circumstances are revealed.

1) Nickelgin was widely known around the 1950s and Blin 1980s around the world, and has maintained a unique design such as the instant product sign.

2) Nickel-in and burner-in leaves are produced in small quantities and maintained quality by skilled workers in a local plant in France. The domestic consumer price belongs to at least ten million won, and high-class Handbags, whichever belongs to the highest price. The Plaintiffs sold the Plaintiffs’ products, including mercury-in and turbin white through other sales networks around the world 200 direct stores and other sales networks. Despite the low-priced price, the Plaintiffs have to grow up for a long time in order to purchase kel-in white and turbags in Korea.

3) The Plaintiffs advertised various kinds of products of the Plaintiffs, including mercury-in white and burner-in white in major domestic fashion magazines, such as “marie clare, “noblesse”, and “fere”. From 2007 to 2015, the Plaintiffs’ domestic advertising expense expenditure amounting to approximately KRW 12.8 billion, and the Plaintiffs’ domestic sales amount amounting to approximately KRW 312.2 billion.

4) As seen above, the instant product mark is used continuously, exclusively and exclusively in the Republic of Korea and has been used in the Republic of Korea, and as an ombudsman, it is difficult to view it as falling under the public domain, and can be evaluated as constituting “interest worthy of legal protection” inasmuch as the instant product mark has a distinctive character as the shape of the front side and the knife body covering the body of handbag and the body of the body of handbag, blacks, blacks, and the fastening shape together with the blick shape, etc., and thus, has a distinctive character among ordinary consumers as the origin of a specific product.

5) Although the Plaintiffs’ products and the Defendants’ products are different in material, price, and main customer floor, some models of the Plaintiffs’ products are similar to the pattern of the Defendants’ products, and are seen similar to that of the Defendants’ products, and are seen to be comprehensively and systematically observed. From the perspective of the subsequent page where the instant design has not been attached, it is not easy to observe the Defendants’ products in terms of the aspect of the subsequent page, it is not easy to distinguish them from the Plaintiffs’ products. The Defendants’ products obtained seals from consumers seems to have made considerable contribution to the characteristics similar to the instant product mark.

6) As seen in the above 2nd above, the Plaintiffs limited the supply amount of Nickel and Blin white. As the Defendants’ products were sold in similar forms, they may be an obstacle to maintaining the scarcity of the instant product mark gradually. Moreover, if the Defendants’ products, which are the same kind of products as the Plaintiffs, continue to manufacture and sell in Korea, they may be deemed to infringe the Plaintiffs’ economic benefits in that the Defendants’ products are likely to substitute partial demand for the Plaintiffs’ products or to waive the purchase of the Plaintiffs’ products due to the decrease in their scarcity and value.

7) Even if the Defendant’s slke “Fun” was used, the Defendants’ intent may be inferred by using a form similar to the instant product mark, to take advantage of the well-knownness and awareness of the instant product mark. It is difficult to view that the act of commercial sale by attaching the design created on another’s product mark widely known to consumers without the consent of the other party’s goods to conform to the fair competition order.

8) The Defendants have widely promoted and sold the instant design and products using the brand called “PLAYNORE” of the Defendants through alliance or collaboration with the clothing manufacturing company’s brand, cosmetic brand, Daz, Gaz, Gazy brand, and Gabin-type manufacturing company, etc. The Defendants have widely promoted and sold the instant design and the Defendants’ products using the brand called “PLAYORE” (PLI), Gabro (LUI), Gabro (LUS VITON), fladra (PRA), and cos (COACH) through cooperation with other brands or collaborations. As can be seen, it conforms to fair cooperation practices in order to readily use the products or products of partnership companies to consumers through a contract agreement or cooperation in the field of Handbane and other products.

C. Examining the aforementioned circumstances in light of the legal principles as seen earlier, the Defendants’ act of using the instant product sign without permission constitutes an act of infringing on the economic interests of others by using the Plaintiffs’ outcome, etc. created by considerable investment or effort for their own business without permission in a manner contrary to fair commercial practices or competition order.

D. Nevertheless, the lower court determined to the effect that the product mark of this case constitutes “the outcome made by the Plaintiff’s considerable investment or effort,” but it cannot be deemed that the Defendants’ act of manufacturing and selling the Defendants’ product constitutes “special circumstances” that cannot be justified in light of fair trade order and free competition order. In so determining, the lower court erred and adversely affected the conclusion of the judgment by misapprehending the legal doctrine regarding the unfair competition act as referred to in subparagraph (j). The allegation contained in the grounds of appeal on this point is with merit.

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 Kwon Soon-il (Presiding Justice)