A decision recently issued by the Intellectual Property High Court of South Korea has considered the application of the region’s recently adopted punitive damages provisions when assessing compensation for intentional trade mark infringement and bad faith. Punitive damages are a discretionary award which may be granted alongside actual damages where it is considered reasonable to do so in light of particularly errant behaviour by an infringer. Under the existing provisions, punitive damages are currently capped to a maximum of 3 times the amount of actual damages but this is scheduled to rise to 5 times the amount of actual damages later this year.
In the late 2024 decision, the High Court awarded punitive damages for intentional trade mark infringement for the first time as a part of their ruling in appeal proceedings.
These proceedings followed a series of events involving the claimant who held registered trade mark protection in South Korea for the marks
("imeal") and
for food related products and was able to show continuous and intentional trade mark infringement by the defendant’s registration and use of the mark
(“imeal”) for similar goods.
During initial proceedings, the claimant was successful in invalidating the defendant’s registration on the basis of their earlier rights and the bad faith of the defendant in registering their mark. A separate action for trade mark infringement resulting from the defendant’s use of the mark was also decided in the claimant’s favour and culminated in an agreement that the defendant would cease use of the mark.
Despite these initially successful actions, the defendant continued their use of the mark for similar products of the claimant, resulting in further action for trade mark infringement being brought against them.
The initial judgment issued in these subsequent proceedings was decided in the claimant’s favour and they were granted actual damages to compensate for the infringement but the first instance court did not consider it appropriate to impose punitive damages against the defendant.
This decision on damages was appealed to the IP High Court who decided that punitive damages were reasonable in this situation due to the defendant’s continued and intentional infringement of the claimant’s mark and the considerable negative impact that this infringement had had on the claimant’s brand. The High Court considered evidence of a decline in the claimant’s product sales, an increase in their advertising costs and a reduced level of distinctiveness in their own trade mark when making their decision to impose punitive damages against the defendant and the portion of damages that was allocated to the intentional infringement was doubled under the new provisions.
The impact that the decision in this case may have on brand-owners are potentially tri-fold in that it firstly serves as reassurance to brand owners that there is now increased recourse and relief where their intellectual property rights are infringed on in the region. Secondly, the recent application of punitive damages may act as a cautionary tale and deterrent against future bad actors, potentially helping to safeguard and prevent against future instances of trade mark infringement. Finally, it offers new consideration for genuine brand owners when preparing strategies for new trade marks involving South Korea. Despite this decision being based on intentional and continued trade mark infringement in bad faith, it is always a good idea to consider conducting clearance searches before adopting the use of a new mark to alleviate potential risk of infringement on existing third party rights.
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