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August 20, 2007

Registration and Enforcement of IP Rights in Korea: A Brief Introduction (Part 4)

[Editor's Note: We present our fourth and final installment of our review of the Korean intellectual property system. Prior installments: Part 1, Part 2, Part 3. Once again, let me thank Drambuieman, the author, whose bio you may read in Part 1 of the series.]

Common Scams

Speaking of cyber-squatters, I thought it might be useful to give some tips I have picked up on trademark squatting. Due to issue above with what is considered a famous mark, there are a few bad-faith registration scams in Korea that a company, especially a small or mid-sized one, should be aware of.

At one time, Korea was a very restricted market. Back then, about 10-15 years ago, a distributor, particularly one distributing a foreign mark, needed to be registered at KIPO as such. This aspect of Trademark Law has since been appealed and although the system is no longer mandatory, the registration system still exists in its dusty, bureaucratic, inert way.

While the numbers are declining rapidly, some bad actors still scan this distributor register to identify marks without a distributor listed. Lack of one either signals a mark vulnerable for counterfeiting, or a mark vulnerable for other actions to be mentioned later. So I recommend companies, partially ones without much business (for reasons you will see), register a Korean distributor with KIPO or at least raise the idea with their Korean attorneys.

Another common tactic is what I like to call distributor blackmail. In this a person who hopes to be a distributor of a foreign good (or even an existing one) registers the mark in THEIR name with KIPO. They then use this to gain a distributorship from the company, or use it as a tool to gain a better bargaining position with the foreign maker. Unfortunately the only protection against this is early registration and vigilance.

The last scam can be particularly deadly if used in combination with the two above. Korean law allows a trademark to be cancelled for non-use after three years. So if you register a mark and do not sell of market goods with the mark, the mark could be canceled by anybody and then they would have an exclusive right to apply for that mark for three months. So if you have minimal sales in Korea and are vulnerable, it can helpful if you have Korean sales materials, import records (even if only samples) and perhaps an officially registered Korean distributor (see above).

Like the guy waking up in a bathtub of ice in his Las Vegas hotel room missing a kidney, the above are not guaranteed to happen to you. However, these are some common scams you may want to be aware of. If you have specific concerns, contact your local Korean representation.

Back to the beginning

So what would I recommend to the parts maker? Well, the first idea is to assess what intellectual property rights he currently holds in Korea. If he does not own the trademark, register it as soon as possible. If the current maker owns the trademark, he could argue he is the rightful owner given the fame of his mark internationally, but you may gather from the above that I would not be hopeful of success.

If the parts maker does own the mark in Korea, first, I would contact the customs service with everything I know (name, part type, shipping information, etc.). This would help isolate the problem to Korea. Ideally, the Korean Customs Service will hopefully block any exports and imports of possible counterfeit parts used in the final product.

Second, would be to send a C&D to the Korean manufacturer for either IP infringement and anti-competitive acts (depends on the specifics). Lack of compliance would lead to a criminal complaint.

All this would hopefully stop the problem short to mid term. After that I would be very vigilant about local usage and exports. Unfortunately for Korea, if it happened once, it can happen again.

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