Court confirms that store's appearance is protectable trade dress

At the end of 2014, the Seoul Central District Court recognised for the first time, in a case involving competing ice cream shops, that a shop's general appearance and decorative elements can be protectable trade dress under the Unfair Competition Prevention and Trade Secrets Act (UCPA) (one of the UCPA claims in that case was later overturned on appeal and is now pending before the Supreme Court; however, the appeal concerning the ‘catch-all’ provision of the UCPA covering the general appearance of the store was withdrawn by the defendant and thus the decision as to that claim is now final).

In another recent case, the same court has now issued another decision confirming that a shop's general appearance (including the logo, outdoor signage and indoor layout) and other decorative elements are protectable trade dress under the UCPA (Case No 2014Gahap529490, July 10 2015).

This case was brought by Seoul Lovers, a premium bakery shop specialising in freshly baked sweet red bean pastries, against a former employee and his business partner, who had opened their own bakery imitating Seoul Lovers' appearance and design concept.

Under the so-called ‘catch-all’ provision of the UCPA (Article 2(1)(x): “A party shall not interfere with another person's right to profit by appropriating for one's own business use, without authorisation, anything which the other person produced through considerable effort or investment in a manner that contravenes fair commercial trade practice or the competition order”), Seoul Lovers sought a permanent injunction against the defendants, as well as damages, on the grounds that the defendants infringed Seoul Lovers' trade dress by copying the shop’s appearance and design.

The court recognised that:

• the appearance and design elements claimed by Seoul Lovers as its trade dress were produced through considerable effort and investment on its part for the purpose of distinguishing itself from other bakeries; and

• the defendants were engaging in deceptive and wrongful business practices by free-riding on Seoul Lovers' goodwill.

The court also awarded substantial damages to Seoul Lovers, even though it is usually difficult to calculate the actual damages in trade dress cases. The court used the defendants' entire sales during the period of infringement as a basis for the assessment of the damages, and calculated the lost profits according to Seoul Lovers' profit margin, rather than the defendants’.

Although the decision has been appealed to the Seoul High Court and is pending, it is becoming increasingly clear that the general appearance and design concepts of retail stores can be effectively protected in Korea under the UCPA, even if they are not otherwise registered in the country.

Chunsoo Lee, Mikyung Choe and Seung-Chan Eom, Kim & Chang, Seoul

Kim & Chang represented the plaintiff in this case