Use of trademark on free promotional items may constitute infringement

The Seoul Central District Court has held that use of a registered trademark on free gifts given with purchases may amount to trademark infringement (Case 2009kahap73580, November 25 2009, pending appeal).

SK Telecom Co Ltd, a Korean telecommunications provider, gave handbags bearing the famous RENOMA mark as free gifts to new customers. These bags were manufactured by a Korean national, Mr Chae, without the trademark owner's authorization. Durukay Co Ltd, the exclusive licensee of the RENOMA mark in Korea, sued Chae and SK Telecom for trademark infringement. The court held that infringement had occurred and ordered each defendant to pay W40 million (approximately $35,000) to Durukay.
  
In particular, the court ruled that SK Telecom's actions amounted to trademark use, even if the handbags were given away free of charge, because:

  • RENOMA-branded bags were sold in Korea by the exclusive licensee;
  • use of the RENOMA mark on free gifts was similar to use as a trademark; 
  • the RENOMA mark is well known in Korea; and
  • SK Telecom advertised that "new customers will receive a free Renoma bag". 
The court reasoned that the RENOMA mark, as used on the handbags, functioned as a source identifier - that is, it distinguished the handbags from those of others and guaranteed their quality to consumers. Therefore, SK Telecom's actions amounted to the transfer or delivery of goods on which a trademark is affixed, and thus resulted in use of the RENOMA mark as a trademark.
 
This case is distinguishable from the CASS Case, in which the Seoul District Court held that a beer company, which owned the trademark CASS for beer, could provide customers with free t-shirts bearing the CASS mark for promotional purposes (Case 95kahap3529, October 24 1995). The court concluded that such use did not infringe the registered trademark CASS for clothing. In particular, the court ruled that t-shirts given away for promotional purposes are not a subject of trade, but merely an advertising tool. This decision was subsequently affirmed by the Seoul High Court (Case 95Lah202, December 30 1995). 

Kyoung-Sun Lee and Nayoung Kim, Kim & Chang, Seoul

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