Report from the Korean Group of APAA

By Kook-Chan An

I.  Changes in the Korean Intellectual Property Laws and Practices
There were only minor changes to the patent, utility model and trademark regulations for implementing the revisions to the PCT and for facilitating the proceedings under the Madrid Protocol to which Korea became a party in 2003. More changes are expected in the following year as bills proposing to amend the Design, Trademark and Copyright Acts have been or will be submitted to the National Assembly in the current year.
The Unfair Competition Prevention and Trade Secret Protection Act ("UCPA") has been amended to provide remedies against Internet cybersquatting and dead copying of product designs, while strengthening the protection of trade secrets. Major changes in the UCPA, which took effect as of July 20, 2004, are as follows:

A.  UCPA Prohibits Cybersquatting and Dead Copying
Article 2 of the UCPA, which defines acts of unfair competition regulated under the law, has been amended to include the following two acts:
Cybersquatting
The act of registering, maintaining, transferring or using an Internet domain name, which is identical or similar to another person's name, trade name, trademark or any other sign which is widely known in Korea, for the purpose of (1) selling or renting the domain name to the rightful owner of the trademark or other sign or a third party, (2) interfering with registration and use of a domain name by the rightful owner, or (3) obtaining other commercial gain.
Dead Copy
The act of transferring, renting, displaying, importing, or exporting a product which imitates the appearance (i.e. the shape, pattern, color, gloss, or a combination of these attributes including those in a prototype or product brochure) of another person's product. However, this provision shall not be applicable (1) when the imitation product is made more than three years after the date the appearance of the original product was made, or (2) if the product appearance is commonly used for such goods.
Both civil and criminal remedies can be sought against the acts of unfair competition prescribed in the previous Article 2 of the UCPA. However, only civil remedies, which include injunctive relief and compensation for damages, are allowed against the two new acts of unfair competition, i.e., cybersquatting and dead copying.

B.  Strengthened Protection of Trade Secrets
Who is liable for trade secret misappropriation?
Under the previous UCPA, only the present or former staff of the misappropriated company was punishable. Under the amended UCPA, there is no such a limitation. Anyone who committed trade secret misappropriation may now be punished.
Monetary Penalty Based on Unfair Profit
The criminal punishments include imprisonment and fine. The fine has been changed from 100M Won (about US$83,000) or less to two to ten times the amount of the profit.
Obviously, this change intends to strengthen and toughen the punishment for trade secret misappropriation since the previous punishment proved to be ineffective. In the past, the fine was relatively small in comparison to the profit typically obtained from misappropriating trade secrets.

II.  Recent Court Decisions

A.  Trademark Infringement Found in a Case Where Consumers Visiting a Website with Domain Name Identical to a Registered Trademark Were Instantaneously Forwarded to Another Website (Seoul Dist. Ct. Case No. 2003 GaHap 24685 decided on Jan. 15, 2004)

The Plaintiff, Commerce Japan, registered an Internet domain name www.bebest.co.kr to sell foods for infants imported from WAKODO of Japan. The Plaintiff also registered another domain name, www.morinaga.co.kr, in order to instantaneously forward visitors to www.bebest.co.kr.

The Defendant, Morinaga Seika of Japan, registered various trademarks including the letters MORINAGA. The Defendant was involved in exporting food products to Korea.

At the request of the Defendant, the Domain Name Dispute Resolution Committee decided to cancel the Plaintiff’s registration of the domain name www.morinaga.co.kr on the grounds that (1) the registration infringes the Defendant’s registered trademarks, and (2) such registration was made with an unjust objective of alluring consumers of MORINAGA products to purchase WAKODO products. The Plaintiff filed an action to cancel the decision before the Seoul District Court.

The Court stated that the registration and use of a domain name may be compared to the use of a trademark depending on the way that the website is used. In the present case, the Court found that consumers who typed in www.morinaga.co.kr on the Internet browser could not easily notice that they were forwarded to www.bebest.co.kr. This was because the forwarding occurred instantaneously, and consumers tend not to pay attention to an Internet address appearing on the browser once they typed in a domain name. Further, even if a consumer knew that he had been forwarded to another website, he could have thought that the latter website had business or other relationships with the website he originally typed in on the Internet browser. Thus, the Court found that this case was not different from selling products under the website www.morinaga.co.kr.

The Court also found that www.morinaga.co.kr and the Defendant's registered trademarks were identical to each other in terms of their major/dominant portions. The Court further found that the goods sold by the Plaintiff and the goods of the Defendant's trademarks were identical or confusingly similar to each other. Accordingly, the Court decided that the Plaintiff's use of the domain name infringed the Defendant's registered trademarks and dismissed the Plaintiff's claim.

This is the first Court decision on the issue of whether or not there is an infringement of a registered trademark when an Internet domain name, which is identical to the registered trademark, is used to automatically forward visitors to another website where products identical or similar to the goods of the registered trademark are sold.

B.  Protection of an Industrial Design under the Copyright Act – Hidink Necktie Case (Supreme Court Case No. 2003 Do 7572 decided on July 22, 2004)

In Korea, there has been some question over the copyrightability of applied art works such as designs or motifs, which are created for industrial purposes. In its decision rendered in 1996, the Korean Supreme Court denied copyright protection of certain textile designs, which were created for mass production of fabrics. At that time, the Court reasoned that conferring copyright protection for commercial works of applied art may run counter to the basic tenet of the Korean Design Act, which was enacted to protect mass produced works of applied art made for industrial purposes. Thus, the Court held that copyright protection should be given to industrial works of applied art only in exceptional circumstances where the applied art work contains independent artistic features or value.

However, in July of this year, the Supreme Court remanded a lower court’s decision on the ground that the lower court erred by failing to determine whether or not the design at issue was independent such that it could be separated from the product.

The accused parties made and sold neckties, which are similar to the so-called Hidink neckties. The original Hidink neckties were designed by Ms. Kyung-Soon Lee and became famous by being presented to Mr. Gus Hidink, who coached the Korean National Soccer Team, in the hopes of attaining great success in the 2002 Korea-Japan World Cup Games. Design registration applications were filed for the Hidink necktie designs with the Korea Intellectual Property Office.

The first and second instant courts found that the designs of the Hidink neckties did not deserve copyright protection. This was because the designs do not contain independent artistic features or value in view of the circumstance and objective of making the designs, not to mention the colors, elements and expression techniques of the designs. However, the Supreme Court pointed out that Article 2 of the Copyright Act defines "applied art work" as "art work which can be reproduced on articles in the same configuration and can be recognized as being independent such that it is separable from the product." The Supreme Court stated that the lower court should have determined whether or not the designs of the Hidink neckties were independent such that they could be separated from the neckties. Thus, the Supreme Court remanded the case back to the lower court.

This decision has expanded the opportunity for industrial designs to be protected under the Copyright Act even though they are/were protected under the Design Act.

III. Others

The Korean Intellectual Property Office plans to reduce the waiting period for examination of patent applications down to 12 months by the year 2007.
Currently, it takes about 22 months from the date of request for examination for a patent application to be subject to examination. The KIPO is aggressively taking measures to shorten the examination waiting period, as well as to improve the quality and efficiency of examinations. The measures include:

-  Increasing the number of examiners: The KIPO has added more than 250 examiners during the past two and a half years. The KIPO will continue to increase the number of examiners.

-  Improving the computer network system (KIPOnet): The upgraded version of KIPOnet, which will be available in 2005, will provide examiners with more efficient and effective environment for examination, including review of application documents and search of prior art references. From 2005, the examiners may also conduct examination at home by being connected to the KIPOnet through the Internet.

-  Increase in outsourcing of prior art search: The KIPO will outsource about 50% of prior art search this year. The rate was approximately 45% last year.

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