Case Background

The plaintiff, owner of the trademarks "" ("imeal" in Korean transliteration) and "" designating organic snack products, accused the defendant of infringing on these marks. The defendant held rights to a similar trademark "" ("imeal" in Korean transliteration) designating baby food, tofu sticks, and beverages—products similar to those of the plaintiff.

The plaintiff initiated legal proceedings by filing an invalidation action against the defendant's trademark and subsequently pursuing a lawsuit for trademark infringement. The IP High Court ruled in favor of the plaintiff, invalidating the defendant's trademark based on the similarity between the marks, the well-known status of the plaintiff's marks, and the defendant's bad faith intent. Following this, the trademark infringement lawsuit was mediated, resulting in an agreement that required the defendant to cease using the plaintiff's trademarks.

However, despite the settlement, the plaintiff discovered continued use of their trademarks by the defendant and subsequently filed a separate lawsuit seeking damages.

First-Instance Decision

In its initial ruling, the first-instance court awarded the plaintiff KRW 500 million in damages but did not impose punitive damages. The decision was based on Article 110 of the Trademark Act:

Article 110 of the Trademark Act

Paragraph 6:

In a lawsuit concerning the infringement of trademark rights or exclusive license rights, if damage is acknowledged but it is extremely difficult to prove the facts necessary to verify the amount of damages due to the nature of the facts, the court may, notwithstanding Paragraphs 1 to 5, determine a considerable amount of damages based on the overall intent of the arguments and the results of the examination of evidence.

Paragraph 7:

For those who intentionally infringe trademark rights or exclusive license rights by using a trademark identical or similar to the registered trademark of the trademark owner or exclusive licensee on goods that are identical or similar to the designated goods, the court may, notwithstanding Article 109, determine the compensation amount within a range not exceeding three times the amount recognized as damages in accordance with paragraphs 1 to 6.

Despite considering various factors, including damage to brand reputation and duration of infringement, the first-instance court found these insufficient to warrant punitive damages under Article 110(7).

Appeal and Second-Instance Decision

Upon appeal, the IP High Court increased the damages to KRW 600 million. Of this amount, the court identified KRW 100 million as attributable to intentional infringement. This KRW 100 million portion was then doubled to KRW 200 million under Article 110(7), bringing the total damages recognized by the IP High Court to KRW 700 million.

The IP High Court's calculation considered several factors, including:

∙Continuous product sales and advertising by the defendant from 2018 to 2023

∙A significant decline in the plaintiff's product sales

∙The diminishing distinctiveness of the plaintiff's marks

∙Increased advertising expenditure by the plaintiff

∙The defendant's intentional infringement following invalidation of their registered trademark

Significance of the Ruling

This ruling highlights the evolving landscape of intellectual property law in the country. By applying punitive damages for the first time in a trademark infringement case, the court has emphasized the importance of safeguarding intellectual property rights and highlighted the potentially severe consequences of intentional infringement. As businesses navigate this changing legal environment, they must exercise heightened caution in their branding strategies to mitigate the risk of infringement and prepare for the possibility of more stringent enforcement and higher damages in trademark disputes.