Defendant 1 and one other

Both parties

authorized ruptures

Law Firm Daba Law, Attorney Jeong Han-mo

Seoul Southern District Court Decision 2008 High Court Decision 3943 Decided October 12, 2009

The judgment of the court below is reversed.

Defendant 1 shall be punished by a fine for negligence of KRW 4,00,000 and a fine of KRW 1,500,000, respectively.

In the event that the Defendants did not pay the above fine, the Defendants shall be confined in the Labor House for the period of 50,000 won converted into one day.

To order the Defendants to pay an amount equivalent to the above fine.

1. Basic facts

According to the evidence duly adopted and investigated by the court below and the trial court, the following facts are recognized:

A. Status of the Defendants and the victims

(1) The victim DNA corporation (hereinafter referred to as the "victim corporation") operated a "NV" online portal site (www.naver.com; hereinafter the same shall apply) on the Internet with the maximum domestic Internet portal site providing information search, community and entertainment services. The victim corporation used the word "NV" on the top, etc. of the NAV website since 1997, and used the word "NV" as its main source of revenue by providing the users visiting NAV with the service of providing the service of generating priority search results. The victim corporation used the word "NV" at the top, etc. of the NAV website since 1997, but from around 1999, it used the word "NV" with the emblem composed of a green gate as its main source of revenue (hereinafter the above trademark and the trademark of this case) and widely known as the victim's mark in the Republic of Korea.

Things 1, Defendant 1, who operates Nonindicted Company 1, developed the program called “multi language search support service,” which is an advertising business system using the Internet site (hereinafter the program of this case), and distributed the program of this case from May 2006 to March 2, 2008, and made Internet users available the program of this case through the website “△△△.” The Internet homepage of Nonindicted Company 1 (Internet address 1 omitted) and the Internet homepage of the affiliated companies.

Defendant 2 operated Nonindicted Co. 2 (hereinafter “Nonindicted Co. 2”) on July 10, 2007, Defendant 1 purchased the instant program from Defendant 1, and sold the instant program to the advertisers through the △△△ website (Internet address 2 omitted) and the advertiser’s Internet website (Internet address 2 omitted) until January 2008.

B. The process of establishing the instant program

(1) If Internet users access the instant program to the website of Nonindicted Company 1, Nonindicted Company 2, and the affiliates or affiliates recruited by the Defendants (hereinafter referred to as the “instant website”), the instant program is installed on an individual computer of the relevant user by means of an flux X method (which is developed by the Webbrop company and has the function of installing the program on the individual computer of the relevant user at the webbroper).

B. In other words, if Internet users have access to the site of this case, the line automatically indicated to install the instant program under the web slaber’s address display line, and if the line is charactered by e-mail with the “exp-pop-pop-up equipment installation”, the security warning plant called “I see to install the instant program?” and then the program of this case automatically installed on the individual computer of the relevant user, if the type “I see the “establishment” type in the pop-up shop,” and the type “I see the installation terms and conditions and the installation consent.”

C. Action method of the instant program

The action method of the instant program operated when Internet users connect to NAV by using the computer in which the instant program is installed is as follows.

① At the same time, the Defendants’ advertising was connected to the NAV and the advertising was selected by the Defendants, for about 20 seconds at the center of the NAV’s initial screen, covers the exhaust advertising provided by the NAV (patent name omitted). In addition, as a result of the search centered on the KR search, the advertising was exposed only on the screen.

(2) In case of exposure to selective advertising among the advertisements recruited by the Defendants on the margin side of the net screen of the NAV screen by the Defendants (in case of an advertisement reported by the Defendants on the side of the NAV screen, advertising

(3) In cases of searching a specific keyboard at the NAV, the method of immediately opening the website of an advertiser who registered the relevant keyboard on his/her own, among the advertiser recruited by the Defendants, at the NAV. (hereinafter referred to as an “piracy advertisement”).

D. Business method using the instant program

Defendant 1 recruited the advertiser and recruited the advertisement using the instant program, and distributed the instant program to the companies and individuals who have joined Nonindicted Company 1’s Internet homepage, and, in the event that the members become to be exposed to the advertisement by installing the instant program, Defendant 1 operated the business in a way that he pays part of the advertising profits to the members as allowances (235 members who have joined Nonindicted Company 1’s Internet homepage from May 2, 2006 to March 2, 2008, and the allowances paid to the members are approximately KRW 27,425,602 in total). Nonindicted Company 2 operated by Defendant 2, as an advertising agency, purchased the instant program from Defendant 1 on July 10, 207, entered into an advertising agency contract with Defendant 1 to sell the advertising products including the instant program to the advertiser, and received 30% payment from Defendant 1 as an advertising agency expenses.

2. The judgment of the court below, the grounds for appeal and ex officio determination

A. The original facts charged

The gist of the original facts charged is as follows.

(1) Defendant 1

The primary facts charged: from May 2006 to March 2, 2008, the Defendant installed a program of this case on the “△△△ marinecom (Internet address 1 omitted)” and the cooperative website, which is the Nonindicted Company 1’s website, to have an unspecified NAN automatically set up the program of this case and did not recognize the establishment of the program of this case, and caused a confusion as if the Defendant had engaged in the above advertising activities on the portal site, such as NAV, by allowing a large number of unspecified NAN who did not properly recognize the establishment of the program.

Preliminary facts charged: from May 2006 to March 2, 2008, the Defendant: (a) distributed and installed the instant program to many unspecified Internet users via the “△△△△.com (Internet address 1 omitted) site” and the cooperative site, which is the Nonindicted Company 1’s website, and (b) obstructed the victim’s advertising service business by deceptive means by allowing the users who installed the said program to access the victim’s company’s NAV website and search a specific key on the victim’s company’s website to appear on the user’s computer as if the advertisement was provided by the victim company; and (c) by allowing the users who installed the said program to appear on the user’s computer as if the advertisement was provided by the victim company.

Doz. Defendant 2

The primary facts charged: from January 4, 2007 to February 29, 2008, the Defendant posted the portal site, such as NAV, which was not under a contract for business cooperation or cooperation with Nonindicted Company 2, as “cooperative” or “partnership” on the website of Nonindicted Company 2, and had Nonindicted 3, etc., a company advertisement telephone sales employee, sell the company’s advertising products, and on the Internet website and telephone sales, publish or explain the document stating that “Nonindicted Company 2 is on the leave with NAV et al.,” thereby leading NAV to confuse it as if it had engaged in business cooperation or cooperation with Nonindicted Company 2.

Preliminary facts charged: the Defendant recruited the advertiser by the above method and obstructed the victim company's advertising service business by using a deceptive scheme in order to induce users to appear on the user's computer, as if the advertisement conducted by the Defendant company was an advertising service provided by the victim company, if many and unspecified Internet users access the victim company's Internet homepage.

B. The judgment of the court below

Based on the circumstances stated in its reasoning, the lower court found all Defendants not guilty of the primary facts charged, but found Defendant 1 guilty of all of the ancillary facts charged, and sentenced Defendant 1 to a fine of KRW 4 million and a fine of KRW 1.5 million to Defendant 2.

(c) Grounds for appeal;

(1) Defendants (the Defendants’ Preliminary Facts)

① misunderstanding of facts: The Defendants notified the Internet users who downloaded the instant program through pop-up shop in advance of the method of action of the instant program, and made the instant program downloaded only to those who consented to the establishment thereof, and did not interfere with the business of the victim company by fraudulent means, but did not interfere with the business of the victim company.

(2) Legal principles: The facts charged for obstruction of business added in the original judgment constitute an illegal modification of indictment, since it is not identical to the facts charged for violation of the Unfair Competition Prevention and Trade Secret Protection Act.

Belgium prosecutor (main charge): The defendants used the program in this case to confuse their advertising and NAVs' advertising using the NAV website, which is the victim's business mark, and such act constitutes confusion between business entities under Article 2 subparagraph 1 (b) of the Unfair Competition Prevention and Trade Secret Protection Act (hereinafter "the Unfair Competition Prevention Act"), but the court below acquitted the main charge among the facts charged in this case on the ground that such act does not constitute confusion between business entities. Thus, the court below erred by misapprehending the legal principles or misapprehending the legal principles as to the main charge, which affected the conclusion of the judgment.

D. Ex officio determination

However, the prosecutor applied for the amendment of the indictment to which the primary facts charged in the instant case are indicated as follows, and this court permitted the amendment, and the modified primary facts charged, such as the judgment on the grounds of the crime of oil, are found guilty. Thus, the judgment of the court below cannot be maintained any more.

The prosecutor may add, delete, or modify the facts charged or the applicable provisions of law stated in the indictment with the permission of the court within the scope not impairing the identity of the facts charged. The identity of the facts charged is maintained if the social facts, which form the basis of the facts charged, are the same in the basic point of view. In determining the identity of these basic facts, the defendant's act and the social factual relations shall be based in mind with the function of identity of the facts, and normative elements shall also be taken into consideration (Supreme Court Decision 2009Do9593 Decided June 24, 2010). In this case, even if the primary facts charged against the defendant 1 are modified as stated below, it does not change the fact that the Internet user distributed and installed the program of this case and used the Neber website, which is the victim's business mark, after advertising the program of this case using the program of this case. In addition, even if the facts charged against the defendant 2 are modified as stated below, the identity of the facts charged prior to and after the amendment of the indictment is also recognized as having been based on the victim's’s’s act of indictment.

3. Conclusion

Therefore, the judgment of the court below is reversed in accordance with Article 364(2) and (6) of the Criminal Procedure Act, and it is again decided as follows after pleading (as long as the defendant is found guilty of the changed primary facts charged, it is not decided separately on the ancillary facts).

No person may cause confusion with another person's business facilities or activities by using a mark identical or similar to another person's name, trade name, commendation, or any other mark widely known in the Republic of Korea to indicate another person's business;

1. From May 2006 to March 2, 2008, Defendant 1 distributed and installed a program called “multilanguage search support service” (hereinafter the instant program) to unspecified Internet users through the “△△△△△com (Internet address 1 omitted)’s Internet homepage, which is the Internet homepage of Nonindicted Company 1 operated by the said Defendant from May 2, 2006 to March 2, 2008. When the victims who installed the instant program access to the Internet portal site (www.naver.com) operated by the said corporation, the users who installed the instant program used the Internet portal site (www.na.com), which is operated by the said corporation, the victim’s business mark widely recognized in the Republic of Korea, and caused confusion with the victim’s advertising service and business activities using the Internet portal website, which is the business mark of the victim, which appears in the user’s computer.

2. From July 10, 2007 to January 1, 2008, Defendant 2 posted or explained documents on the Internet homepage (Internet address 2 omitted) of Nonindicted Company 2 operated by the said Defendant, which had no business partnership or cooperation contract with the said Defendant, as “cooperative” or “partnership.” While allowing Nonindicted 3, etc., who is an employee of the company’s advertising product telephone sales, to sell the advertising product of Doldong-gu Seoul Metropolitan City, including the instant program, at the Internet site and telephone sales, Defendant 2 posted or explained the advertising product of this case on the Internet homepage (Internet address 2 omitted) of Nonindicted Company 2, which was operated by the said Defendant, to have the victim company cooperate with Nonindicted Company 2 by using the advertising product of this case purchased from the advertiser by the said method, and distributed the advertising product of this case on the Internet homepage (Internet address of the victim, which was operated by the said Defendant, on the Internet homepage (Internet address and online sales) of the said Defendant’s online homepage.

1. The statement of Non-Indicted 4 by the witness of the court below

1. Part of each prosecutor's interrogation protocol against the Defendants

1. Part of the protocol of interrogation of Nonindicted 5 by the police officer

1. Each police statement of Nonindicted 4, 6, 3, 7, 8, 9, 10, 11, 12, and 13

1. Each written statement of Nonindicted 14, 15, 16, 17, 18, 19, 20, 21, 22, 13, 23, 24, 25, and 26

1. Nonindicted 27’s e-mail reply

1. Each report on investigation;

1. Statement of seizure of each police;

1. The printed materials on the Nonindicted Company 2’s website, Nonindicted Company 2’s posts and comments on Nonindicted Company 2’s employees, the business proposal for the employees of Nonindicted Company 2, the business proposal for communications data provision, the business proposal, the Internet civil petition, the case of damage case 7 cases, the list of employees, the list of employees, sales books, three educational materials for business employees, 2 cases of advertising proposal sent by e-mail, the report completion certificate, the advertising contract, the advertising contract, the finium use contract, the statement request letter, the investigative cooperation request letter, the next net user’s printed materials, the next net user’s advertising type exposure, the number of characters circulation and payment allowances, the settlement amount received to the advertiser, the user’s complaint published at the time of entry of Nonindicted Company 1 in the NA search book, the printed materials of the terms and conditions of use of Nonindicted Company 1’s software, and the printed materials on the screen of Nonindicted Company 1’s program installation.

1. Article applicable to criminal facts;

Articles 18(3)1 and 2 subparag. 1(b) of the Unfair Competition Prevention and Trade Secret Protection Act and each fine shall be selected.

1. Detention in a workhouse;

Articles 70 and 69(2) of the Criminal Code

1. Order of provisional payment;

Article 334(1) of the Criminal Procedure Act

1. The premise for the determination

An act of unfair competition provided for in Article 2 subparagraph 1 (b) of the Unfair Competition Prevention and Trade Secret Protection Act refers to any act that causes confusion with another person's business facilities or activities by using the same or similar signs identical or similar to another person's name, trade name, emblem, or any other mark widely known domestically, regardless of whether it is registered. The method and form of using a business mark is not restricted. Thus, in cases where a pop-up advertisement on an Internet web page is recognized as using another person's business mark widely known domestically on the web page as a mark of source for such pop-up advertisement, in light of the existence of a pop-up shop itself, the form and form of a pop-up shop within the web page, the purpose and details of the operation of the web page, the process and method of the appearance of the pop-up shop, etc., and thus, it constitutes an act of unfair competition (see Supreme Court Decision 2009Do1238, Sept. 30, 2010).

2. Determination

A. The following circumstances acknowledged by evidence duly adopted and examined by the lower court: (i) the Defendants distributed the instant program to unspecified Internet users to install the computer; (ii) the Defendants’ access to the computer on which the instant program is installed is not only the victim’s company’s advertising on the NAB screen; (iii) the Defendants’ advertising of the victim’s company is covered by the Defendant’s distribution advertising (patent name omitted); and (iv) the Defendant’s advertising of the instant program was displayed on the screen without any separate display of the Defendant’s display of the program in the NAB screen to the effect that it was displayed on the NAB screen to the effect that the Defendant’s advertising was displayed directly on the part of the Defendant’s company’s source (patent name omitted); and (v) the Defendant’s advertising of the instant program was displayed on the NAB screen without any separate display of the victim’s advertising in the first place.

B. (1) On the other hand, according to the evidence duly adopted and examined by the court below and the trial court, the report (patent name omitted) automatically disappeareds after about 20 seconds occurred at the center of the NV initial screen, and the report (patent name omitted) at the bottom of the right corner of the (patent name omitted), which is small at the bottom of the (patent name omitted x CLOSE x if the user characters it, it is recognized that the advertisement is visible from the screen and the original advertisement of NV is visible, but it does not prevent confusion with the victim's advertising business activity.

B. As seen earlier, even though the Defendants’ advertisements appear only on the computer screen where the instant program is installed, it seems that the Defendants’ advertisements are not necessarily exposed to only the installer of the instant program, and as seen earlier, as long as the Defendants’ advertisements appear in the form of pop-up, without any indication of the form or source attached to the NAV screen, it is difficult for the parties installing the instant program to recognize the Defendants’ advertisements separately from the advertisements provided by the victim company. Therefore, regardless of these circumstances, confusion with the victim company’s advertising activities still exists.

In addition, in the process of establishing the instant program, the instant program shall be downloaded with the item “I consent to the terms and conditions” in the pop-up shop stating the function of the instant program and the content for which the consent is sought. However, the said terms and conditions are not sufficient to explain (patent name omitted) or harmful reporting methods, and even in the case where the screen roll is not confirmed until the end of the said terms and conditions of use, it is rare where users actually confirm the entire terms and conditions of the program while installing the program. The title of the instant program is “multilanguage search support service” and its title alone cannot be easily predicted to have an advertising function such as a double language advertising service in the function of the instant program. In the event the program is installed through the instant program through the security warning window method, users cannot be considered to install the program solely on the basis of the circumstances that the program is installed without any specific confusion in terms of the purpose of preventing the use of the program due to continuous display of the desired service on the site.

C. The Defendants asserted that the instant program was a technology that received patent registration (Defendant 1) and was made public in TB, etc., and that there was no intention that the advertising act using the instant program constitutes an unfair competition act. In other words, there was no intention. However, in light of the fact that the instant program itself assumes that the act of advertising is conducted on the website of the Internet portal site, such as NAV, and the Defendants also recruited the advertiser and actually engaged in advertising activities using the NAV screen on the premise, it is reasonable to deem that the Defendants had a dolusent intent for the unfair competition act, and the above circumstances alone are not sufficient to deem that the Defendants did not have an intentional intent for the unfair competition act (in particular, “claim 3” of the “patent name” registered by Defendant 1 (patent name omitted), and the “claim 3” of the “claim 1” refers to the Plaintiff’s business activities that clearly indicate that there was any confusion with the instant program from the time of search results to the point of providing the advertisement on the website.”

3. Conclusion

Therefore, the defendants' advertisement by the program of this case constitutes an unfair competition act under Article 2 subparagraph 1 (b) of the Unfair Competition Prevention Act.

Judges Lee Sung-chul (Presiding Judge)