1 . Trademark
1.1. Sources of law
Trademarks may be protected under the Korean Trademark Act (TMA), while well-known marks can be protected under the Unfair Competition Prevention and Trade Secret Protection Act (UCPA). International conventions to which Korea is a signatory, such as the Agreement Establishing the World Intellectual Property Organization, the Paris Convention for the Protection of Industrial Property, the Madrid Protocol on the International Registration of Marks and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), have the same legal effect as domestic laws.
While protection is provided to non-registered marks that are famous in Korea, “use” per se will not be recognized as a source of a trademark right in Korea.
1.2. Substantive law
The law makes a distinction between “well-known” and “famous” marks. A well-known mark is considered as a mark that is recognized by a majority of customers in the relevant industry, while a famous mark is recognized by a majority of customers within and beyond the industry.
Trademarks belonging to the “luxury industry” do not enjoy a broader range of protection.
The fame of the mark must be established in order to prove that a trademark is entitled to broader protection in Korea. The courts generally review sales and advertising figures, sales volume and duration, global registration status, and any other evidence showing that the mark was exposed to local traders and consumers as an indication of source.
The well-known status of a mark may be substantiated by the above evidence or in an affidavit duly executed by a person who has access and knowledge of such information. Oral testimony and expert evidence are also acceptable forms of evidence.
For <.co.kr> or <.kr> level domain names, trademark owners may file an administrative proceeding with the Internet Dispute Resolution Committee (IDRC) or file a civil action based on the UCPA and/or the Internet Address Resources Act (IARA) in order to transfer or de-register an unauthorized domain name that contains their trademark. An IDRC action is similar to a Uniform Domain Name Dispute Resolution Policy (UDRP) proceeding, and petitioners may rely on claims under the IARA that are similar to those under the UDRP, except that trademark infringement claims can be also raised under the IARA. The anti-cybersquatting provision of the UCPA can also be applied as long as the trademark is well-known to Korean consumers.
A registered trademark can be enforced against a trade name, but TMA Article 51 limits the extension of such trademark right if the trade name indicates the trademark in a common manner.
A trademark can be enforced against other distinctive and source-identifying signs.
A trademark cannot be enforced its use as a metatag.
If the trademark is used as a source identifier in social media in relation to similar/identical goods/services, then the owner may have a claim for infringement. Also, if the trademark is used to cause dilution or mislead the public as to an affiliation between the trademark owner and account holder, then there may be claims available under the UCPA.
With unauthorized use in comparative advertising the key is to establish whether the trademark was used as a source identifier in the advertisement. Most comparative advertisements do not use a third party’s trademark as a source identifier, and thus it is generally difficult to assert infringement under these circumstances. The trademark owner may explore other regulatory claims as well as Article 2(1)(vi) of the UCPA, the Fair Labeling and Advertising Act and other advertising related regulations if any of the statements in the advertisement are false.
It is possible for a trademark to be enforced against its unauthorized use in a parody if the parody mark is used as a source identifier. The owner may also assert likelihood of confusion over the source of the goods and/or dilution under the UCPA. Further, the owner may seek redress under the "catch-all" provision of the UCPA, which prohibits acts of infringing another person's achievements through considerable effort and investment, in contravention of fair trade practice or competition order.
A trademark owner can claim both trademark infringement and unfair competition in the same civil and/or criminal proceedings. It is also possible to bring parallel and/or separate proceedings.
The issues that luxury brands face in expanding and protecting their trademark rights in South Korea include:
- Finding the proper protection of trademark rights to respond to the development of information technology, such as applying for new types of goods and services, and dealing with new types of infringement in virtual environments (for example, metaverse, NFTs, and so on).
- Luxury brands are also finding ways to collaborate with online platforms given that most infringement activities have moved online.
2 . Copyright
2.1. Sources of law
The Korean Copyright Act (CA) is the relevant local law regarding copyrights, while Korea is also a member country of the Universal Copyright Convention, the Geneva Phonogram Convention, the TRIPS Agreement, the Berne Convention for the Protection of Literary and Artistic Works, the WIPO Copyright Treaty and the International Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations and the WIPO Performances and Phonograms Treaty.
In principle, the CA and treaties have equal effect and there is no order of priority. However, if there is a conflict between these sources, the more recent or special laws are applied depending on the circumstances or parties involved.
2.2. Substantive law
The CA non-exhaustively lists examples of categories of protected works according to the forms they take, but even if a type of work is not included in this list, it may still be protected under the Act. The list reads as follows:
- novels, poems, theses, lectures, recitations, plays, and other literary works;
- musical works;
- theatrical works, including dramas, dances, pantomimes, etc.;
- paintings, calligraphic works, sculptures, crafts, works of applied art, and other artistic works;
- architectural works, including architecture, architectural models, and design drawings;
- photographic works including photographs and other works prepared by similar methods;
- cinematographic works;
- maps, charts, design drawings, sketches, models, and other diagrammatic works; and
- computer program works.
Objects of industrial design may be copyrightable as applied art. The industrial design or applied art must possess the fundamental elements of a copyrightable work, which is “creativity” and “expression of human emotion or idea,” in addition to having artistic value that is physically or conceptually separable from the function of the industrial article.
The rights of reproduction, public performance, broadcasting, transmission, exhibition, distribution, renting and making derivative works are covered by copyright. According to the CA, the copyright holder also has moral rights, which include the rights of public disclosure, preservation of integrity or identity of the work, and attribution of authorship.
The CA deems an employing legal entity, organization, or other person to be the “author” and own copyright in a work, if all of the following conditions are satisfied:
- the work is created by an employee within the scope of employment, subject to the employer’s supervision;
- the work is published in the name of the employer (except computer program); and
- there is no separate or particular contract or employment regulation providing that the status of the author, or ownership of the copyright in, the work-for-hire should belong to the employee.
If the above three conditions are met, then the legal entity is the copyright holder of the work.
Consultants are not considered as an “employee” as identified in the above provision, and thus the legal entity would have to receive an assignment of the copyright to the work through a separate agreement.
Shareholders are not considered an “employee” as identified in the above provision.
If the director was subject to the employing legal entity’s supervision, then it is possible for the director’s work to be considered a work made for hire.
Suppliers are not considered an “employee” as identified in the above provision.
As long as the parties agree to an assignment of the copyright, a copyright assignment agreement does not have to satisfy any particular formalities to be valid. However, in the event that the copyright holder has executed duplicate assignment agreements, it is possible that protection would be granted only for the assignment that has been recorded with the Korean Copyright Commission.
It is not possible for an author to transfer or waive his/her moral rights.
Copyright protection lasts for the life of the author plus a term of 70 years after death. Works made for hire have a protection term of 70 years after the work is made public, but if the works have not been made public or published within 50 years of its creation, the protection term is then for 70 years after its creation.
The CA provides that a protected work may be registered with the Ministry of Culture, Sports, and Tourism, which delegates its authority for registration to the Copyright Council. Although a copyright deposit or notice is not required, a person who desires to register the copyright in a work must submit an application to the Copyright Council with specified information.
Industrial designs are capable of protection by copyright under certain conditions, and any type or form of evidence may be produced to establish the foregoing (see above, 2.2 Substantive law).
Copyright infringement is assessed by proving that the infringer created its work based on a third party’s copyright work, and that there is substantial similarity between the compared works. Actual copying is not necessary, and substantial similarity is sufficient to establish infringement.
Despite a valid trademark registration, if the trademark conflicts with a copyright of a third party that existed prior to the trademark application filing date, then the trademark registrant is not allowed to use his/her own registered mark without the copyright owner's authorization (Article 53 of the Trademark Act).
Despite a valid design registration, if the design conflicts with a copyright of a third party that existed prior to the design application filing date, then the design registrant is not allowed to use his/her own registered design without the copyright owner's authorization (Article 95 of the Design Protection Act).
There is no specific provision with regard to the enforceability of a copyright against a patent, domain name, trade name, pseudonym, or other IP right. However, in principle, the copyright holder’s consent is necessary if the foregoing IP rights conflict with a copyright.
A copyright may be enforced against its unauthorized use in social media or comparative advertising, as long as the conditions identified above are met and there are no other exceptions applicable, such as fair use.
There is no settled law or precedent with regards to the use of a third party’s copyright in parody. However, a lower court decision has acknowledged copyright infringement against a party’s production of an album and music video that was a parody of a famous song.
The CA provides exceptions to copyright infringement. For instance, an alleged infringer may have an available defence against infringement if use of the copyright work was for any of the following uses: private, educational, library and other archival reproduction, non-profit performance and broadcasting, current news reports, reproduction for judicial proceedings, temporary sound or visual recording by a broadcaster, exhibition or reproduction of fine art, temporary reproduction on a computer, reproduction for the handicapped, and free use of public works.
The fair use defence is also included in the CA, and expressly permits the use of copyrighted works for the purposes of reporting, criticism, education and research, etc. to the extent that such use does not conflict with the ordinary use of the works, and does not unreasonably prejudice the legitimate interests of right holders.
There is no time limit for seeking injunctive relief in an infringement action. However, a claim for damages must be brought within three years from when the copyright owner became aware of the infringement, or ten years from the date of infringement.
Parallel importation of genuine goods are permitted under Korean law, and luxury brands are not able to stop parallel importers from using their trademarks within such permissible scope, but they have been able to stop parallel importers from using their copyright works (for example, an advertisement issued by the luxury brand owner) based on copyright infringement.
3 . Design
3.1. Sources of law
Product designs that are registered with the Korean Intellectual Property Office (KIPO) are protected in Korea under the Design Protection Act (DA). Unregistered designs can be protected under the UCPA and/or CA in certain circumstances. Further, Korea is a signatory to the Agreement Establishing the World Intellectual Property Organization and the Paris Convention for the Protection of Industrial Property, and thus they have the same legal effect as domestic laws.
In principle, the DA and treaties have equal effect. However, if there is a conflict between these sources, the more recent or special laws are applied depending on the circumstances or parties involved.
3.2. Substantive law
The subject matter protected by the DA is industrial designs. The DA defines “design” as “the shape, pattern, color, image, or a combination of these in an article (including part of an article) which produces an aesthetic impression in the sense of sight”. A typeface can also be protected under the DA, as well as moving designs and image designs regardless of whether they are displayed on a screen or not. As for an image design that is not displayed on a screen, such image design should be used for the operation of a device or exhibits a function.
Unregistered designs cannot be protected by the DA, but under the UCPA, any act of assigning, renting, displaying, importing or exporting a product which imitates the appearance of another party’s product (e.g., the shape, pattern, color, or combination of such attributes) within three years after the creation of a design is deemed to be unlawful.
In order to obtain a grant of a valid design registration, a design must possess novelty and creativity. More specifically, prior to the filing of the design application, such design must not be:
- identical or similar to one which has been publicly known or used in Korea or in a foreign country; or
- identical or similar to one which has been described in a publication circulated in Korea or in a foreign country.
Further, a design may not be registered where a person with ordinary skill in the particular field of design could have easily created the design from a widely known design in Korea, or from a design publicly known or used in Korea, or in a foreign country.
As for unregistered design rights, the “dead copy” provision (that is, a product which imitates the appearance of another party’s product (e.g., the shape, pattern, color, or combination of such attributes) is not applicable where:
- the imitation product is manufactured more than three years after the date of manufacture of the original product; or
- the product shape is commonly used for the subject goods.
The basic principle underlying the Korean laws on in-service inventions is that intellectual property rights (including patents, utility models and designs) inherently belong to the employee who created the invention. That is, an employee has an inherent right to obtain a registration for his/her design.
There are two ways for an employer to have vested title to in-service inventions. One is to enter into a pre-invention assignment agreement with the employee, thereby the employee agrees to assign any and all future in-service inventions to the employer. The other is to adopt an employment rule (e.g. an invention compensation policy) expressly providing for employee-inventors’ assignment of any and all future in-service inventions to the employer. When an employer succeeds in gaining the rights to the in-service invention in accordance with a contract or employment rule, the employee is entitled to "reasonable compensation" from the employer – even if the employer ultimately decides not to pursue a design registration and, instead, decides to keep the invention as a trade secret.
Consultants are not considered an “employee” as identified in the above provision, and thus the legal entity would have to receive an assignment of the design through a separate agreement. However, depending on the facts, the consultant’s work may be considered an in-service invention if he/she was actually working for the legal entity as an employee.
If a director was subject to the employing legal entity’s supervision, then it is possible for the director’s work to be considered an in-service invention.
Shareholders and suppliers are not considered to be “employees”, and thus the legal entity would have to receive an assignment of the design through a separate agreement.
As long as the parties agree to an assignment of the design, a design assignment agreement does not have to satisfy particular formalities to be valid. However, for the design assignment itself to be valid, the assignment must be recorded with KIPO.
The Korean Invention Promotion Act (KIPA) sets forth a set of rules governing two aspects:
- the procedural requirements for an employer to acquire ownership in and title to an in-service invention; and
- factors in determining reasonable compensation that the employee is entitled to when the employer acquires the in-service invention.
KIPO also has published guidelines in connection with in-service inventions. Therefore, KIPA rules and KIPO guidelines should be taken into consideration when drafting a design assignment agreement.
There are no moral rights in relation to designs.
Once registered, a design is protected for twenty years from the application filing date.
As discussed above, the “dead copy” provision is not applicable if the imitation product is manufactured more than three years after the date of manufacture of the original product.
It is an infringement of the rights to a registered design to use an identical or similar design without authorization from the owner of the registered design. Substantial similarity is sufficient to establish infringement.
As for protection of unregistered designs under the “dead copy” provision, the compared designs must be nearly identical.
According to Article 95 of the DA, a registered design or a design similar to the registered design may be enforced against another’s trademark, design, patent, copyright, or utility model if an application for the foregoing was filed earlier than the filing date of the registration of the design concerned. In cases of conflict between the design right and other person’s patent right, utility model right, trademark right, copyright, the owner of the registered design in question shall not commercialize the design without permission from the owner of the relevant design right, patent right, utility model right, trademark right or copyright, or without complying with Article 123 (trial for granting a non-exclusive license in connection with relevant design right, patent right, utility model right or trademark right).
There must be an infringement of the registered design right for a design to be enforced against its unauthorized use in social media, comparative advertising or parody.
There is no “repair clause” in Korea nor are there any comparable limitations. Invalidity of the design is the most common defence raised by alleged infringers.
An otherwise valid registered design can be deemed unenforceable if there are validity issues. There is no time limit for seeking injunctive relief in an infringement action. However, a claim for damages must be brought within three years from when the design registrant became aware of the infringement, or ten years from the date of infringement.
A design holder may file one action claiming design and copyright infringement, as well as unfair competition, for the same set of facts. It is possible to bring parallel and/or separate proceedings.
Current issues that luxury brands face in expanding and protecting their design rights include:
- Finding the proper protection of design rights to respond to the development of IT technology, such as applying for new types of designs and articles, and dealing with new types of infringement in virtual environments (for example, metaverse, NFTs, and so on).
- Luxury brands are also finding ways to collaborate with online platforms given that most infringement activities have moved online.
4 . Right of privacy, publicity and personal endorsement
4.1. Sources of law
There is no law in South Korea recognizing the right of an individual to control the commercial use of his or her name, image, likeness, or other unequivocal aspect of his/her identity. Furthermore, the lower court decisions are also split on this issue of one’s right to publicity, and there is no Supreme Court precedent in this regard.
For those lower courts that have recognized the right to publicity, they have relied on constitutional laws, such as personal rights, the right to pursue one’s happiness, or the right to own property.
4.2. Substantive law
The lower court decisions that recognize the right of publicity have at minimum, required commercial value in such right. As such, there have been instances where the court has recognized the infringement of publicity rights even for non-public figures as long as there is commercial value in their name or likeness.
There is no statute or Supreme Court decision regarding the right of publicity and whether such right survives the death of the individual. Moreover, the lower courts that have addressed this issue are inconsistent as well.
Although not a Supreme Court decision, a lower court has held that it is possible to assign one’s right of publicity.
It is possible for an individual to license his/her right of publicity. Such license can either be exclusive or non-exclusive, and it is common practice for celebrities that enter into contracts authorizing third parties to use their name, likeness, or other aspect of their identity.
There are no set requirements for an agreement involving the assignment/license of the right of publicity to be valid.
As there is no statute with regard to the right of publicity, there are no unique conditions and the parties are free to enter into an agreement according to their desired terms.
The lower courts are split on the issue of how to treat a license agreement following the death of a licensor or assignor. While one court ruled that the right of publicity extinguishes upon the right holder’s death, another court has recognized that such right can be passed on to one’s heirs.
There is no law or precedent in South Korea regarding the assignee’s or licensee’s position in relation to heirs that have an independent right over the deceased individual’s publicity right.
Similarly, there is no Supreme Court decision on the right of publicity being transmissible mortis causa. A lower court decision has recognized that the right of publicity term corresponds to the copyright term, while others have not.
Although not a Supreme Court decision, some lower courts have enforced the right of publicity against infringing commercial use. Further, it would be possible to assert one’s constitutional rights against a third party’s unauthorized use of one’s name or likeness despite lacking a commercial aspect.
The right to publicity is not recognized by law or precedents, but for those cases that have addressed this issue, the commercial value of one’s name, image, or likeness was generally presumed for purposes of obtaining a remedy against its unauthorized use.
Rather than traditional modeling contracts that involve the celebrity’s consent to use the celebrity in an advertisement for a certain period of time, new types of contracts are increasing where the celebrities themselves directly create the video or advertisement content relating to the luxury brand and publicize on their own online channel, social media, etc. This is one of the current issues facing luxury brands when working with celebrities.
5 . Product placement
Product placement is permitted if certain requirements are met under the Broadcast Act.
The Enforcement Decree of the Broadcast Act specifies various limitations with regards to product placement (e.g., the type of broadcast and product, and method). For instance, product placement is only permitted on programs related to entertainment and culture, and it is prohibited to refer to the product or recommend purchase/use. Also, the logo or brand shown on the product cannot exceed a quarter of the screen.
In the event the other party fails to perform the agreement the brand owner should give them an opportunity for corrective measures, then, if they have not been taken, the owner can terminate the agreement and also petition for damages incurred due to such failure to perform.
There has been a recent controversy in Korea involving advertisements by famous local YouTubers that failed to disclose the fact that they were compensated for offering a review of a particular product online. As a result, the Fair Trade Commission amended their review guidelines regarding labelling and advertising so that an advertisement would be considered unfair if a product is advertised without disclosing an economic relationship between the advertiser and product owner.
6 . Protection of corporate image and reputation
There is no law regarding right of publicity and/or privacy for legal entities/corporations. However, it may be considered an unlawful tort for a party to harm the reputation or credibility of a legal entity, and such party may be subject to damages.
It is generally possible to include specific clauses in agreements aimed at protecting the corporate image/reputation.
It is possible for a party to include a clause regarding re-sellers, but such condition may be perceived as an unfair trade practice prohibited by the Monopoly Regulations and Fair Trade Law (MRFTL). When determining if there is a risk for impeding fair business practices under the MRFTL, the Korea Fair Trade Commission will review the totality of the circumstances, including the party’s intent, purpose, and the effect of the party’s actions, in addition to the nature of the product in question, transaction terms, and whether the party is in a dominant position within the relevant market, as well as the contents and degree of harm on the transacting party.
The MRFTL prohibits the maintenance of resale price, but will allow a business to implement actions to prevent its products from being sold higher than a certain price as long as there are business justifications.
Prohibition against buying non-original, but legitimate, spare parts and components are generally permissible, but depending on the circumstances, such prohibition may be considered a violation of the MRFTL for possibly hindering fair trade.
It is permissible to include a liquidated damages clause for protecting the reputation or corporate image of the other party in an agreement, and such provision is considered valid by a court. However, the court may ultimately order a decrease in the payment amount if it determines that the liquidated damages pursuant to the agreement is excessive compared to the market position of the parties, the proportion between actual damages compared to the liquidated damages amount, and expected amount of actual losses.
One of the unique concerns of luxury brands in the secondary market is that they are encountering a new type of trademark infringement issue involving third parties that recondition (reform or customization) old luxury handbags into new bags for sale.