Kim & Chang obtained a significant decision from the Seoul District Court on behalf of its client Hermès that the offering of classes on how to manufacture imitations of famous bags constituted a violation of the consumer confusion provision of the Unfair Competition Prevention and Trade Secret Act ("UCPA"), substantially broadening the scope of acts that may be considered unfair competition in Korea.
In recent years, a worrisome trend for luxury brands owners has developed in South Korea, where ateliers and studios have begun to offer classes on how to fabricate imitations of various iconic luxury bags, such as the Hermès KELLY and BIRKIN bags. Very often the ateliers offer the necessary materials pre-cut and made easy to assemble, and simply teach students how to assemble the materials using simple stitching techniques, offering students a way to own their own "luxury bag" at a fraction of the cost of genuine bags.
In the present case, Hermès filed a civil action for injunctive relief and damages compensation against one such atelier called Franc Atelier, which was offering classes on how to fabricate Hermès most iconic bags and selling pre-prepared DIY kits to students.
The District Court ruled that the act of teaching was equivalent to using a source identifier similar to a well-known source identifier as prohibited by consumer confusion provision of the UCPA, even though the provision did not specifically mention "teaching" as a prohibited act . The District Court noted that the atelier did not simply teach students general craftwork methods, but also showed students how to assemble the material provided which was in the same shapes as Hermès’ famous bags, and that such acts could be deemed equivalent to the atelier’s direct use of Hermès’ source identifiers. The District Court also defined the act of "teaching" broadly, mentioning it could include the following acts of the defendant: advertisement of classes on how to manufacture the imitations, provision of responses to questions asked by potential students, selection by students of subject classes, sale by the atelier of DIY kits to manufacture the imitations during the classes, provision of classes to students and manufacture by students of imitation products during the class.
The District Court also agreed that the act of teaching was equivalent to the act of manufacturing and selling imitations of a third party's well-known source identifier, which is also prohibited by the consumer confusion provision of the UCPA. The District Court mentioned that even if the physical assembly was done by the students, the atelier was effectively manufacturing and selling the imitation bags by providing the students with classes and the necessary material to make the imitations under its direct control and supervision. Consequently, the District Court issued an injunctive order and held Franc Atelier liable to compensate for damages to Hermès.
As a result of this groundbreaking decision, luxury companies now have a powerful new tool to stop the misuse of their source identifiers through these atelier classes.
