What are the requirements and procedures of a franchise trademark infringement lawsuit?

 

Franchise Law in South Korea

What are the requirements and procedures of a franchise trademark infringement lawsuit?

Franchise Trademark Infringement Litigation, Franchise Attorney | Dowoo Hwasan Attorneys & Counselors | Distribution and Franchise in South Korea | English-Speaking Lawyers Korea

 

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Today, we will examine the franchise trademark infringement lawsuit. We see cases where a former franchisee continues to use the franchisor’s trademark or changes the original trademark slightly to be very similar to conduct business after the franchise contract ends. It is necessary to closely examine the criteria for infringement and how litigation and disputes on trademark infringement should be handled.

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Franchise Trademark Infringement Lawsuits

 

What is the difference between Trademark and Trade Name?

Trade Name vs. Trademark

V Trade Name: A title, name, or other designations a merchant uses to indicate oneself in terms of business. Registration possible after designating a trade name. Apply at a Court Registry Office.

V Trademark: A mark attached to a product to distinguish between products of oneself and those of others. It functions to indicate the sameness of the product. When a trade name is attached to a product, it simultaneously becomes a trademark. Trademark can consist of a letter, symbol, shape, etc., and combination thereof or with colors. Registered at the Korean Intellectual Property Office.

 

Trade Name vs. Trademark

1. The Registry Office under the court system (trade name) and the Intellectual Property Office (trademark) do NOT share information.

2. After registration and establishment of trademark, when a third party uses thereof only as a trade name (including registration of trade name), title, or name, the trademark rights do not influence the effectiveness of the trade name in principle (Article 90(1) of the Trademark Act). Provided, however, trademark rights shall influence thereof if it is proved that the third party had a purpose of unfair competition (Article 90(2) of the same Act).

3. Application for registration of a well-known trade name is a reason for rejection (Article 34 of the Trademark Act)

4. What is the strategy of corporate image harmonization?

E.g.1) Trademark becoming trade name: Chosun Brewery Co., Ltd. à Hite Brewery Co., Ltd. (changed the trade name as Hite products were in great demand)

E.g.2) Trade name becoming trademark: Nongshim, Co., Ltd. à Nongshim Shin Ramyun (while selling Shin Ramyun, put corporate trade name into the trademark)

 

Franchise Trademark Infringement Lawsuit—what are the legal criteria and dispute procedures?

 

Trademark Infringement?

- Trademark Act: The holder of trademark rights/exclusive right can seek infringement prohibition and prevention (Article 107, Trademark Act) and claim for damages compensation (Article 109), and the infringer may be subjected to imprisonment up to 7 years or fine up to 100 million won (Article 230, Trademark Act).

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- Unfair Competition Prevention and Trade Secret Protection Act: Regardless of whether the trademark is registered or not, protecting the publicly known mark in the business world (Causing confusion with another’s product or business by using the same/similar mark as the mark that represents the name, trade name, trademark, product container, packaging, or other signs that are widely recognized in Korea à request prohibition on infringement and prevention)

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Procedure of Intellectual Property Dispute Resolution

Design, trademark, trade secret à Claim for the prohibition of production, sales, or use.

 

- Type of Lawsuit

1) Injunction (usually takes 2-3 months): It is recommended to proceed only when you are confident to win. If not, should proceed to the litigation on the merits!

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2) Compensation Damages

3) Criminal Complaint: To respond to counterfeit trademarks or in the case of trade secrete infringement

 

- Real Practice?

Usually, criminal complaints and provisional injunctions are carried out together (provisional injunctions and damages compensation are not conducted together). However, criminal complaints must not be made carelessly à this is because the provisional injunction is immediately lost when the case is acquitted.

- Other: Generally, negotiations are often attempted after sending a warning letter.

Procedure of Intellectual Property Dispute Resolution

Lawsuit Seeking Provisional Injunction on Trademark Infringement Prohibition

​- Courts with Jurisdiction? The exclusive jurisdiction is on the courts where higher courts are located (Central, Busan, Daejeon, Daegu, and Gwangju District Courts). However, in the case of regions other than Seoul, the Seoul Central District Court has parallel jurisdiction, virtually concentrated to the Seoul Central District Court. The trials of second instance for provisional injunction fall under each higher court (the trial of second instance for the main lawsuit falls under the patent court located in Daejeon).

 

- Filing Fees? Because the amount of lawsuit cannot be calculated, it is 100 million won (Article 18-2 of the Filing Fee Regulations). Also, in the case of several cases, the lawsuit amount is calculated as 100 million won per case.

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- Requirements for the provisional injunction claim to be admitted? (excerpt from Supreme Court Decision 2005MA944): The trademark owner can request the prohibition or prevention of infringement against persons infringing the trademark or with the risk thereof under Article 65(1) of the Trademark Act (present Article 107). In order to avoid significant damages or prevent an imminent risk, or when there is any other necessary reason, it is also possible to make a request in the form of provisional injunction to determine the provisional status under Article 300(2) of the Civil Execution Act.

 

​However, for the provisional injunction request to be accepted, the Respondent is infringing by using a trademark that is the same or similar to the registered trademark of the Claimant on the product that is the same or similar to the designated product or, even though the action has not reached the infringement, the circumstance that it is highly likely that the infringing act will be conducted exists as specific facts, thereby the rights to be protected are admitted.

 

Furthermore, the necessity to protect thereof shall be admitted when the court considers the relationship of interests and gain/loss of the Parties following the admission of the provisional injunction request, expectation on winning or losing of the main lawsuit (possibility of losing the main lawsuit), and other various circumstances for the purposes.

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 Contact

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437 Teheran-ro, Gangnam-gu

Seoul, Republic of Korea 06158

T. +82.2.6207.1114

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