Compliance with Cosmetics Act – justifiable reason for non-use of trademark?

South Korea

The IP Trial and Appeal Board (IPTAB) recently rendered notable decisions regarding acceptable defences to non-use cancellation actions against registered trademarks. In particular, the IPTAB found that non-use on cosmetics due to a likelihood of consumer confusion with a mark famous for medicinal products is an acceptable defence.

The case concerned a South Korean pharmaceutical company, which had registered the marks MADECASSOL and 마데카솔 (the Korean transliteration of MADECASSOL), designating, among other goods, cosmetics. The registrant was also the producer of a famous medicinal skin product sold under the 마데카솔 mark. The petitioner, a South Korean cosmetics company, filed non-use cancellation actions against these marks, asserting that the registrant had not used them on cosmetic goods within the relevant three-year period. In response, the registrant acknowledged that it had not used the marks, but argued that there was legal justification for this.

The registrant argued that it had been abiding by the Cosmetics Act, which prohibits labels or ads which are likely to mislead consumers into thinking cosmetics are medicines, as it had not used its registered marks on cosmetic products to prevent consumers from confusing them with its mark used on medicinal products (the Patent Court had confirmed the reputation of that mark in a previous decision). In other words, since the mark was famous with regard to medicinal products, its use on a cosmetic product would likely lead consumers to believe that such product was medicinal, resulting in a violation of the Cosmetics Act.

The IPTAB accepted the registrant's arguments and rejected the cancellation petitions. As a result, the registrant can prevent its famous marks MADECASSOL and 마데카솔from being diluted by blocking third-party registration or use of the marks on cosmetics, even if the registrant cannot use the marks on cosmetics.

The IPTAB's recent decisions (which have become final and conclusive) are noteworthy because they broadly interpret ‘legitimate reasons’ for not using a registered mark. Thus, it will be interesting to see whether the scope of legitimate reasons for non-use will continue to expand in future cancellation cases.

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