Important changes introduced into Trademark Act further to Korea-US FTA

An amendment to the Korean Trademark Act was announced on December 2 2011 to reflect provisions of the recently ratified Free Trade Agreement (FTA) between Korea and the United States. The amendment will come into force on March 15 2012, the effective date of the FTA.

The most notable changes which will be introduced into the Trademark Act are as follows.

First, under the amended Trademark Act, it will be possible to protect sound and scent marks as long as they are capable of graphical representation (eg, by way of a sign, character or figure). If an application for a sound or scent mark is filed with a priority claim based on a foreign application whose filing date is earlier than the effective date of the amended Trademark Act (in accordance with the ‘first-to-file’ rule adopted by the act), for the purpose of this application, the effective date of the amended act will be deemed to be the filing date of the foreign application.

Second, it will be possible to apply for and obtain certification marks. A ‘certification mark’ is a mark:

  • owned by an entity who/which carries on the business of certifying the characteristics of goods or services (eg, quality, origin and method of production); and
  • used by business entities other than the owner for the purpose of certifying that their goods or services satisfy such characteristics.

The amended Trademark Act also introduces a ‘geographical indication certification mark’, which is defined as a geographical indication:

  • owned by an entity who/which carries on the business of certifying the characteristics of goods (eg, quality, origin and method of production); and
  • used by business entities other than the owner for the purpose of certifying that their goods satisfy such characteristics.

As a certification mark is used to certify the characteristics of the goods or services of others, it cannot be registered if the owner plans to use the mark for its own goods or services. Further, a person who owns a registration or an application for a trademark/service mark/collective mark/business emblem is prohibited from registering a certification mark for an identical or similar mark designating identical or similar goods/services.

Third, the amended Trademark Act abolishes the recordation requirement for exclusive licences. Currently, the act states that an exclusive licence must be recorded in order to be valid. Under the current act, only an exclusive licensee may grant a sub-licence to another party. In this regard, the Supreme Court has ruled that trademark use by a sub-licensee of a non-registered exclusive licensee is not deemed to be valid use in the context of a non-use cancellation action. Many foreign trademark owners have struggled with recordation issues within the context of non-use cancellation actions where a non-recorded master licensee had granted a sub-licence in Korea, and the sub-licensee had been the only party who had used the registered mark in Korea. The amended Trademark Act resolves this problematic issue.

Fourth, the amended Trademark Act implements a system of statutory damages, whereby a trademark owner will be able to claim damages of up to KRW50 million (approximately $44,000 at the current exchange rate) instead of claiming actual damages. This new system will offer an alternative to the presumption dispositions already included in the current act, under which a trademark owner can claim as damages:

  • the number of infringing articles sold, multiplied by the profit per unit of the articles that the trademark owner might have sold in the absence of the infringement;
  • the infringer's profit; or
  • reasonable royalties. 

The provision concerning statutory damages will apply only in cases where the infringer uses a mark that is identical to, or substantially indistinguishable from (but not merely similar to), another party's registered mark in connection with goods that are identical to, or substantially indistinguishable from (but not merely similar to), the goods covered by the registered mark. 

Finally, the amended Trademark Act will provide a new ground for rejecting or invalidating a trademark registration based on a lack of intent to use. It is unclear at this stage how strictly this amendment will be interpreted and applied by the Korean Intellectual Property Office, as the examination guideline for this new ground has not yet been finalised.

Sung Nam Kim and Alexandra Bélec, Kim & Chang, Seoul

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