An important amendment to the Unfair Competition Prevention and Trade Secret Protection Act (UCPA) will come into effect on July 18 2018. This amendment specifies the protection to be given to trade dress belonging to service providers in South Korea and introduces a new type of prohibited unfair competitive activity.

Trade dress protection for service providers

The UCPA currently prohibits activities that may create confusion between one party's trademark and the well-known source identifier of another party, or may dilute another party's well-known source identifier, through commercial use of a mark that is identical or similar to the well-known source identifier.

Such well-known source identifiers include not only trademarks, but also names, product configurations, product packaging and any other signs which identify the source of the products or services. However, until the present amendment, it was unclear whether the overall appearance of a service provider's business could also be protected under these specific provisions of the UCPA.

The amendment to the UCPA makes it clear that a service provider's trade dress is also protected by adding the following examples of the types of source identifier covered:

"the manner in which goods are offered for sale/services are provided, and the overall appearance of the place where the service is provided, such as signboards, and external and interior design."

Among others, interior and exterior design only recently started to be protected as trade dress by the South Korean courts under a different provision of the UCPA – the 'catch-all' provision – which prohibits a party from infringing another person's right to business profit by using commercially the output produced by that person through considerable effort and investment, without authorisation, through a method that contravenes fair trade practice or competition order. The first time that the Supreme Court ruled that the overall appearance of a store design was a protectable right was under the catch-all provision.(1)

The courts have established three requirements that must be met in order for a service provider to enjoy trade dress protection under the catch-all provision:

  • the trade dress must be distinctive;
  • the trade dress cannot be simply functional; and
  • there must exist a likelihood of consumer confusion.

The new amendment to the UCPA source identifier provisions, while intended to more clearly protect trade dress in South Korea, may render protection for the trade dress of service providers more elusive, as plaintiffs will have to prove that the trade dress is well-known, a difficult element to establish in practice.

However, application of the catch-all provision has mostly been limited to cases where the trade dress was not clearly protected elsewhere under South Korean IP or UCPA law (although the Supreme Court has yet to weigh in on this issue).

Thus, it remains to be seen whether the amendment, by making it clear that trade dress can function as a source identifier, will actually provide service providers with stronger protection for their trade dress compared to under the catch-all provision.

New provision regarding theft of ideas

The amendment introduces a new type of unfair competitive activity, by prohibiting the unfair use of information with economic value (including technical or business ideas) that has been obtained through a business proposal, bidding, public contest, business negotiations or during the process of a transaction. The unfair uses covered by this provision include uses for one's own business or for a third-party business, as well as providing the information to a third party for its use. However, there is no violation if the person accused of obtaining the idea had previous knowledge of the idea, or if the idea was widely known in the concerned business field.

Violation of this provision may subject the offender to civil and administrative liability, but not criminal liability.

For further information on this topic please contact Sung-Nam Kim or Alexandra Bélec at Kim & Chang by telephone (+82 2 2122 3900) or email (snkim@kimchang.com or abelec@kimchang.com). The Kim & Chang website can be accessed at www.kimchang.com.

Endnotes

(1) For further details, please see "Supreme Court affirms that shop decorations and trade dress are protected under unfair competition law".

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