Website operator not liable for sellers' unfair competition acts

In K2 Korea Co Ltd v Interpark Co Ltd (Case 2006Gahap46488, November 20 2008), the Seoul Central District Court has denied K2 Korea Co Ltd’s claim for damages and an injunction against Interpark Co Ltd for Interpark's alleged facilitation of sales of infringing products by individual sellers on its open-market website. 

The court acknowledged that the sellers’ use of marks identical or similar to those of K2 for the same type of goods constituted unfair competition under the Unfair Competition Prevention and Trade Secret Protection Act, stating that:
  • the K2 mark was well known in Korea; and
  • the sellers' use of similar marks on the open market was likely to cause confusion among consumers.
However, the court found that Interpark, as the operator of an open-market website, could be found to have a concrete obligation to prevent infringing acts by individual sellers only where it:
  • knew or could have known of the occurrence of such acts; and
  • had concrete means to prevent the occurrence or eliminate the risk of such acts.
The court concluded that:
  • Interpark did not have concrete means to block the sellers’ input of product information in advance;
  • the K2 mark was not distinctive and thus Interpark could not judge the similarity between K2's mark and the sellers’ marks;
  • the Korean Intellectual Property Office and the Patent Court have issued contrary judgments with respect to the well-known status and distinctiveness of the K2 mark (subsequent to the commencement of this case, the Supreme Court has ruled that the K2 mark had acquired well-known status) and no decision has held that individual sellers’ acts on Interpark's open-market website constituted unfair competition;
  • most of the similar trademarks used by the sellers were registered trademarks; and
  • Interpark complied with K2's request to block the sale of infringing goods and expressed its intention to cooperate actively to prevent such sales in the future.
In a previous case, SJ Kim v Interpark G-Market Co Ltd (Case 2008Kahap1901, August 5 2008), the Seoul Central District Court had ruled that open-market website operators have an obligation to prevent trademark infringement by individual sellers because such operators:
  • control websites that present a risk of trademark infringement; and
  • receive commissions from resulting sales.
In that case, the court had found that the website operators had violated their duty to prevent trademark infringement by individual sellers, and had thus granted an injunction ordering the operators to block sales of infringing goods.
 
However, the case at hand may be distinguished from the SJ Kim Case. SJ Kim dealt with trademark infringement rather than unfair competition under the Unfair Competition Prevention and Trade Secret Protection Act. In addition, the website operators in question had not removed the infringing materials, even after the trademark owner had issued a request for removal.
 
In the present case, the court appears to have more narrowly defined the circumstances under which it will find an open-market website operator liable for the activity of individual sellers. Following these two decisions, many questions surrounding the scope of liability for open-market, shopping mall and auction website operators remain unresolved. In the future, it will be vital to review guidance from the higher courts on this issue.
 
Jay Young June Yang, Kim & Chang, Seoul

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