Korea-US FTA brings Trademark Act changes

An amendment to the Trademark Act was announced on 2nd December 2011 to reflect provisions of the recently ratified free trade agreement (FTA) between Korea and the United States. The amendment came into force on 15th March 2012, the effective date of the FTA. On the same date, an additional amendment was introduced to the act regarding the lack of intent to use.

Sound and scent marks
Under the amended act, it is possible to protect sound and scent marks as long as they are capable of graphical representation (eg, by way of a sign, character or figure). According to the examination guidelines set out by the Korean Intellectual Property Office (KIPO), in order for the trademark to be registered, applicants must show – through various types of objective evidence – that the sound or scent has acquired a secondary meaning due to extensive use over a long period of time in South Korea (not abroad). Further, the sound or scent mark should not be functional for the designated goods or services.

Certification marks
Second, it is possible to apply for and obtain certification marks. A "certification mark" is a mark: 

• Owned by an entity which carries on the business of certifying the characteristics of goods or services (eg, quality, origin and method of production). 
• Used by business entities other than the owner for the purpose of certifying that their goods or services satisfy such characteristics.

The amended act also introduces a "geographical indication certification mark", which is defined as a geographical indication owned and used as above in the same way as a certification mark.

As a certification mark is used to certify the characteristics of the goods or services of others, it cannot be registered if the owner plans to use the mark for its own goods or services. Furthermore, the owner of a registration or an application for a trademark, service mark, collective mark or business emblem is prohibited from registering a certification mark for an identical or similar mark designating identical or similar goods or services.

Exclusive licences
The amended Trademark Act abolishes the recordation requirement for exclusive licences. Previously, the act stated that an exclusive licence must be recorded in order to be valid. Furthermore, only an exclusive licensee could grant a sub-licence to another party. In this regard, the Supreme Court has ruled that trademark use by a sub-licensee of a non-registered exclusive licensee is not deemed to be valid use in the context of a non-use cancellation action. Many foreign trademark owners have struggled with recordation issues in the context of non-use cancellation actions where a non-recorded master licensee had granted a sub-licence in Korea, and the sub-licensee had been the only party to have used the registered mark in Korea. The amended act resolves this problematic issue.

Statutory damages
The amended act implements a system of statutory damages, whereby a trademark owner can claim damages of up to KRW50 million (approximately US$44,000) instead of claiming actual damages. This new system will offer an alternative to the presumption dispositions already included in the act, under which a trademark owner can claim damages in respect of: 

• The number of infringing articles sold, multiplied by the profit per unit of the articles that the trademark owner might have sold in the absence of the infringement. 
• The infringer's profit. 
• Reasonable royalties.

The provision concerning statutory damages will apply only in cases where the infringer uses a mark that is identical to, or substantially indistinguishable from (but not merely similar to), another party's registered mark in connection with goods that are identical to, or substantially indistinguishable from (but not merely similar to), the goods covered by the registered mark.

Lack of intent to use
The amended act provides a new ground for rejecting or invalidating a trademark registration based on a lack of intent to use. Under the KIPO guidelines, the examiner may request evidence of use and/or intent to use (ie, printed materials, product photographs, invoices or declaration describing plans for use) when there is doubt as to intent to use. It is unclear at this stage how strictly this amendment will be interpreted and applied by KIPO, but the guidelines state that there is a doubt as to the intent to use if: 

• One application covers goods or services in more than five international classes. 
• Various unrelated goods or services are claimed, irrespective of the number of classes. 
• It is prohibited by law for the applicant to be engaged in a business in relation to the designated goods or services. 
• An individual files an application for services that require large facilities and/or substantial capital (eg, banking services and air transportation services).

This article was first published by the International Law Office (www.internationallawoffice.com).