Measures to prevent sale of counterfeits on open-market sites needed

Two recent developments in South Korea have demonstrated the need for active measures to prevent the sale of counterfeit goods on open-market websites.

First, the Seoul Central Prosecutor’s Office recently concluded a two-year investigation into three major open-market websites on suspicion of trademark infringement. However, the office declined to issue any indictments due to the lack of evidence that the operators of these sites had aided and abetted trademark infringement by individual sellers. Despite the abundance of evidence that large volumes of counterfeit branded fashion items were sold on these sites, the prosecutors were unable to produce concrete evidence that the operators of these sites were aware of specific incidents of trademark infringement.
Given the nature of open-market websites (ie, online marketplaces linking a variety of sellers and buyers), prosecutors have had difficulty gathering the necessary evidence to support a finding of contributory liability against the operators of these sites for acts of trademark infringement carried out by individual sellers. However, the prosecutors have not ruled out further action against the operators in cases where there is specific evidence that they were aware of, or complicit in, trademark infringement.
Second, the Seoul High Court recently found that Gmarket, a major open-market website, was not liable for the sale of infringing adidas products. The court held that, while open-market websites are required to take active steps to address specific incidents of trademark infringement that have been brought to their attention, they do not have an obligation to prevent all potential acts of trademark infringement. Therefore, open-market websites must delete listings of counterfeit goods when apprised of the existence of such listings, and take steps to prevent repeat sales of counterfeit goods by specific sellers. However, they will not be strictly liable for all sales of counterfeit items taking place on their sites.
In light of the outcome of the Seoul Central Prosecutor’s Office's investigation, as well as the Seoul High Court’s decision, it is clear that both brand owners and operators of open-market websites need to pay close attention to the issue of counterfeiting - brand owners must step up their efforts to police open-market websites, while operators must review their complaint and takedown procedures to ensure that they are adequate.
Joo Young Moon and Nayoung Kim, Kim & Chang, Seoul

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