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South Korea: Korea strengthens protection against unfair competition




The Unfair Competition Prevention and Trade Secret Protection Act (UCPA) was recently amended, and the updates to the Act will be implemented on July 18 2018. Further, unfair competition can be easily prohibited in Korea by using the Unfair Competition Reporting Center, without the necessity of obtaining a court order.

1. Revision of the UCPA

(i) Expansion of trade dress protection

Trade dress generally refers to features of the interior or exterior design of a store in addition to those of the visual appearance of a product or its packaging. Small business owners may have made efforts to open and decorate their stores for a long time, and their stores may be known to general consumers. Sometimes third parties use the same store decorations and interiors to mimic these stores without authorisation, potentially causing serious business damage to the small business owners.

To prevent such unauthorised use, the revised UCPA expands protection for such trade dress by stipulating that the act of mimicking the visual appearance of a store well known to general consumers is an act of unfair competition.

(ii) Preventing the theft of ideas

Large companies may commercialise economically worthwhile ideas acquired from small business owners, venture companies, or developers through transaction consultation or business negotiations, bidding, contest exhibits or via other similar routes without authorisation or paying any compensation, thereby gaining enormous economic benefits. In this case, the small business owners, venture companies, or developers may suffer serious damage to their business activities.

According to the amended UCPA, if anyone obtains another's technical or business idea in the course of transaction consultation or business negotiations, bidding or via other similar routes and illegally uses such idea or gives it to a third party for economic purposes, such an act is considered an act of unfair competition. With the amendment, the novel ideas of small business owners or developers can be protected and fair trade can be maintained.

2. Operation of the Unfair Competition Reporting Center

In the past, businesses harmed by unfair competition could bring preliminary injunction proceedings or a civil/criminal action in a court. This is to restrain an unfair competitor from continuing its unlawful practice and/or compensate for monetary damage caused by the unfair competition. Substantial costs, however, may be required for these remedies. Therefore, even if unfair competition is discovered, small business owners or developers hesitate to sue because of the economic burden.

The Korean Intellectual Property Office (KIPO) and the Korea Intellectual Property Protection Agency (KOIPA) currently operate the Unfair Competition Reporting Center in order to prevent damage to small businesses, venture companies, and start-up companies caused by unfair competition, and to establish fair trade.

(i) Acts of unfair competition to be reported

Acts of unfair competition defined under Article 2(1)(a) to (g), and (i) of the UCPA, including the following acts, can be reported to the Unfair Competition Reporting Center:

Acts causing confusion about the origin of the product or service

An act or practice in the course of industrial or commercial activities that causes or is likely to cause confusion with another's enterprise or its activities constitutes an act of unfair competition.

Acts capable of misleading about the nature, manufacturing process, characteristics, quality, amount, etc. of goods

A misleading act creates a false impression of a competitor's product, leading the consumer to act on false information and causing financial damage. Misleading acts can take the form of a statement giving incorrect indications or claims about an enterprise or its products or services.

Dilution of famous mark

Dilution occurs when someone uses a famous mark in a manner that blurs or tarnishes the mark. In other words, dilution diminishes the capacity of a famous mark to identify and distinguish goods or services, regardless of the presence or absence of (i) competition between the owner of the famous mark and other parties, or (ii) likelihood of confusion, mistake, or deception.

(ii) Procedures

If unfair competition is suspected, a relevant party may file a written statement containing necessary information (the name and address of the reporter, a trade mark, a corporate name, products, detailed facts of the violation of the UCPA, the name and address of the unfair competitor, etc.) with KIPO or KOIPA. If the formality requirements are met after review by KIPO or KOIPA, an examiner is assigned to investigate the case.

After investigation, if an act of unfair competition is discovered, a corrective recommendation will be made in the form of a document which specifies grounds for the recommendation and a deadline for correction. If the unfair competitor does not respond to the recommendation, the commissioner of KIPO or the director of KOIPA may file a criminal complaint. If a report does not meet the formality requirements, the reporter will be notified of the examination result and the case closed.

With these changes, we believe that protection against unfair competition will be further strengthened in Korea.

Min Son

HANOL Intellectual Property & Law
6th Floor, Daemyung Tower, 135, Beobwon-ro, Songpa-gu
Seoul, 05836
Republic of Korea
Tel: +82 2 942 1100 
Fax: +82 2 942 2600
hanol@hanollawip.com
www.hanollawip.com


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