[1] Whether the criteria for determining similarity of business marks under Article 2 subparagraph 1 (b) of the Unfair Competition Prevention and Trade Secret Protection Act and the "act of causing confusion with another person's business facilities or activities" include cases where ordinary consumers believe that the user of a mark identical or similar to the subject of business marks is closely related to capital, organization, etc. by using a mark identical or similar to another person's business mark widely known in the Republic of Korea (affirmative)

[2] In a case where an enterprise group with an economic and systematic relationship is separated, whether an act of using a business mark containing a business group mark between the affiliates constitutes an unfair competition act under Article 2 subparagraph 1 (b) of the Unfair Competition Prevention and Trade Secret Protection Act (negative in principle), and the standard for determining whether the above act constitutes "an act of confusion between the business entity"

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

[1] Supreme Court Decision 2011Da9822 Decided December 22, 2011 (Gong2012Sang, 161)

Daesung Industrial Co., Ltd. and 3 others (Law Firm Sejong, Attorneys Kang Shin-op et al., Counsel for the plaintiff-appellant)

Daesung Holdings Co., Ltd. (Attorneys Son Ji-yol et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2013Na44845 decided February 20, 2014

All appeals are dismissed. The costs of appeal are assessed against the plaintiffs.

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

1. Article 2 subparag. 1 (b) of the Unfair Competition Prevention and Trade Secret Protection Act (hereinafter “Unfair Competition Prevention Act”) provides that “an act of causing confusion with another person’s business facilities or activities by using things identical or similar to another person’s name, trade name, emblem, and other marks indicating another person’s business widely known in the Republic of Korea, in order to prevent unjust profit by taking advantage of the other person’s credit or reputation, which form a considerable effort and expense.”

In this context, the similarity of business marks should be determined by examining two business marks used for the same type of business in terms of appearance, name, and concept, etc., and by determining whether consumers in specific transaction rooms are likely to mislead or confuse the source of business. The term “act of causing confusion with another person’s business facilities or activities” includes not only the case where the business marks themselves are mistaken as identical, but also the case where ordinary consumers believe that the use of marks identical or similar to the subject of the pertinent business marks is closely related to capital, organization, etc. between users of marks identical or similar to the subject of the relevant business marks by using marks widely recognized in the Republic of Korea (see Supreme Court Decision 2011Da9822, Dec. 22, 2011, etc.).

In light of the legislative intent, contents, etc. of the Unfair Competition Prevention Act, in a case where a company group having economic and organizational relations is separated, certain affiliate companies play a central role in adopting and using the company group mark, and thus, are perceived as the subject of credit arising from the company group mark to ordinary consumers, and as long as it is not recognized that such affiliate companies succeeded to the company group mark, it is difficult to deem that an act of using a business mark containing the company group mark constitutes an unfair competition act that unfairly gains profits by taking advantage of another’s credit or reputation. In such a case, whether an act of using a business mark containing the company group mark constitutes “act of confusion between the business group” among the affiliate companies should be determined on the basis of similarity of business marks in terms of appearance, name, concept, etc. when comparing the whole business mark, other than the company group mark.

2. A. Review of the reasoning of the lower judgment and the record reveals the following.

(1) An enterprise group originally known as a large group has entered into a mutual relation with the company, as its mother company, by simultaneously conducting the advertisement of recruitment of its members under the name of the large group or exchanging personnel among the affiliated companies. On June 30, 2001, upon the death of Nonparty 1 of the large group’s start-up business owner on February 30, 2001, the company belonging to the large group was divided into three business groups with management rights of Nonparty 1’s three children, respectively (hereinafter “the separation of formal affiliates”).

(2) The Plaintiffs are representative companies belonging to the corporate group (hereinafter “Plaintiff’s corporate group”) in which Nonparty 1’s head of Nonparty 1 and Nonparty 2 had management rights.

(3) On October 1, 2009, the Defendant is a company that belongs to a business group in which Nonparty 3 had management right (hereinafter “Defendant’s business group”) and continues to exist by dividing the company into part of the company. At the time of division, the Defendant added a “branch business” to the business purpose, completed the registration of changing the trade name into a “large Holdings Holdings Company.” On October 4, 2010, the Defendant used the instant mark as its trade name until the date of the registration of correcting the trade name as “Large Holdings Holdings Company (DES UNHDINDINSCO.” LTSD.)” (hereinafter “instant mark”).

(4) Meanwhile, both companies belonging to the Plaintiff Company Group and the Defendant Company Group have used the mark of "largeity" after the separation of affiliation for their own business. Both companies are in a capital-related relationship, and currently belong to the same business group under the Monopoly Regulation and Fair Trade Act.

B. In addition to the above circumstances, in full view of the fact that there is no circumstance to deem that the Defendant succeeded to the business group mark of this case, including the business group mark of this case, that only the Plaintiffs play a central role in adopting and using the business group mark called "largeness", and that there is no circumstance to deem that the Defendant used the business group mark of this case, including the business group mark "largeness", it cannot be deemed that the Defendant committed an unfair competition act that unfairly gains profits by taking advantage of the Plaintiffs' credit or reputation, and since the entire mark of this case does not cause confusion in appearance, name, and concept compared with each business mark of the Plaintiffs, it cannot be deemed that it constitutes a confusion of the business group.

C. Therefore, the court below is just in holding that the defendant's use of the mark of this case does not constitute an unfair competition act under Article 2 subparagraph 1 (b) of the Unfair Competition Prevention Act on the sole ground that the defendant can appear to be the holding company of the plaintiffs by using the mark of this case including the mark of "largeness," which is commonly included in the plaintiffs' trade names, and there is no error in the misapprehension of legal principles as to the act of confusion

3. Therefore, all appeals are dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Jo Hee-de (Presiding Justice)