Use of service mark brings a whole LOTTE of trouble

The Seoul Central District Court has upheld a claim brought by affiliates of the Lotte Group - one of the major conglomerates in Korea - for a provisional injunction to prohibit NH Lotte Tour Co Ltd from using a service mark containing the term 'LOTTE' (Case 2007 Kahap 1913, August 10 2007).

NH Lotte Tour was established in May 2007 by Lotte Tours Development Co Ltd (Lotte Tours Development) together with Korea Agricultural Cooperative Marketing Inc. Lotte Tours Development is an affiliate of a company called Lotte Tours Co Ltd (Lotte Tours). Since May 2007 NH Lotte Tour has used the mark NH LOTTE TOUR and its Korean counterpart 농협롯데관광.

The brother-in-law of the chairman of Lotte Group has run Lotte Tours since 1973 and despite the fact that Lotte Tours was not officially affiliated or connected with Lotte Group at that time, it began to use the mark LOTTE with the (alleged) acquiescence of the chairman of Lotte Group. However, the use of the mark became problematic following Lotte Group's recent move into the travel and tour business.

Affiliated companies of the Lotte Group, including Lotte Shopping Co Ltd, filed the provisional injunction action against Lotte Tour and its affiliated company Lotte Tours Development, claiming that NH Lotte Tour was not affiliated or connected with Lotte Group and therefore its use of a mark containing the term 'LOTTE' amounted to a bad-faith intent to free-ride on the reputation and goodwill of Lotte Group.

Lotte Tours claimed that its own use of the LOTTE mark was not based purely on acquiescence but on an agreement with the chairman of Lotte Group. Further, the company asserted that given the fact that its board of directors includes directors from Lotte Group affiliates such as Hotel Lotte and Lotte Confectionery, Lotte Tours must be, at least superficially, considered a Lotte Group affiliate. Accordingly, NH Lotte Tour, a company jointly established by Lotte Tours Development (itself an affiliate of Lotte Tours), has the right to use a mark containing the term 'LOTTE'.

The court dismissed these claims, stating that although Lotte Tours Development permitted NH Lotte Tour to use the mark for its travel and tour business, this was a contract made simply between Lotte Tours Development and NH Lotte Tour and, therefore, NH Lotte Tour was not entitled to assert the right stipulated in the contract against the rightful owners of the service mark - the Lotte Group affiliates.

In related news, the Korean Intellectual Property Office has refused registration of the mark LOTTE TOURS filed in July 1996 jointly by Lotte Tours and Lotte Tours Development.

Yoon Bae Kim, Kims and Lees, Seoul