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IP Newsletter | Winter 2016/17
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TRADEMARK, DESIGN & UNFAIR COMPETITION
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Supreme Court Rules that Statutory Damages Requirements are Strictly Construed
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A recent Supreme Court case involving the mark "CROWNGENE," which was registered for gene testing services, gene analysis, and related services, has provided the Court its first opportunity to rule on the requirements for claiming statutory damages under the Korean Trademark Act.
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Prior to 2012, the Trademark Act only provided for actual damages for trademark infringement, which generally are limited to one of 1) the registrant's profit but-for the infringement (calculated by multiplying the registrant's profit margin by the number of additional articles the registrant would have sold in the absence of infringement), 2) the infringer's profits from the infringement, 3) a reasonable royalty, or 4) an amount of actual damages the court determines is reasonable in light of the available evidence, if the other methods are not feasible. However, it can be difficult in practice to obtain evidence regarding damages in Korea, particularly regarding the accused infringer's sales and profits.
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In 2012, the Trademark Act was amended to add Article 111, which allows for awards of statutory damages of up to KRW 50,000,000 (approximately USD 44,000) in lieu of the above methods of calculation. In order to qualify for statutory damages, Article 111 requires that both the registered mark and the infringing mark and their associated goods/services be "identical or substantially indistinguishable," and additionally, that there be actual use of the registered mark at the time of infringement (as opposed to the actual damages provisions, which do not require use (though use has been required by courts regardless)).
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In the "CROWNGENE" case, the Supreme Court upheld the lower appellate ruling denying the plaintiff's statutory damages claim, both for lack of use and lack of exact similarity between the registered and accused marks. The lack of use ruling in particular may have depended in part on the complicated ownership and use history of the registered mark – the party that registered the mark sold the mark to another party, and the successor's subsidiary actually used the mark, but the High Court and Supreme Court essentially determined that that use did not accrue to the mark owner for purposes of qualifying for statutory damages.
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Thus, while the new statutory damages provision may reduce some of the burden of proving trademark infringement damages in Korea, the Court has made it clear that it will only be available to parties that strictly meet the requirements for such damages under the statute.
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For more information, please visit our website: www.ip.kimchang.com
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