Lee International

Recently, the Intellectual Property High Court of Korea issued a landmark decision recognizing punitive damages for willful trademark infringement (Intellectual Property High Court Case No. 2023Na11399, issued on 2024. 09. 26). This decision is significant as it marks the first-time punitive damages have been awarded for the period during which the willful trademark infringement is found, within the overall duration of the infringement.

Relevant Law

Punitive damages refer to an amount of up to three times the calculated damages in cases of willful trademark infringement, and was introduced on October 20, 2020. Under this provision, the damages are determined based on following criteria :

1. the amount the right holder could have earned if the infringement had not occurred;
2. the profit made by the infringer through the infringement;
3. the royalty amount the right holder could reasonably have expected to receive for the use of the trademark; and/or
4. the amount determined by considering the overall context of the case and the results of the evidence investigation (Korean Trademark Act, Article 110, Sections 1 to 6).

The punitive damages, up to three times the actual damages, are determined by considering the following factors:

1. )the degree to which the infringement damaged the distinctiveness or reputation of the trademark;
2. )the extent to which the infringer was aware of the intentionality or risk of harm;
3. )the scale of harm caused to the trademark holder or exclusive licensee due to the infringement;
4. )the economic benefits gained by the infringer from the infringement;
5. )the duration and frequency of the infringement;
6. )fines imposed due to the infringement, 
7. ) the infringer's financial situation, and 
8. ) the extent of the infringer’s efforts to mitigate the harm caused. (Trademark Act, Articles 110, Sections 7 and 8)

Background and Summary of the Decision

This case involves iMeal Co., Ltd. ("iMeal"), which had registered and was using the trademarks "" and "" ("iMeal Trademarks") for infant food products.  The dispute arose when IlDong Foodis Co., Ltd. ("IlDong Foodis"), a company in the same industry, began using a trademark with the same name, "" ("IlDong Foodis Trademark"), for its own infant food products.

In response, iMeal took the following actions: 1) filed an invalidation action against the IlDong Foodis's trademark registration, citing similarity to iMeal’s prior-registered trademark, 2) filed a lawsuit seeking an injunction for trademark infringement, and 3) sought damages. In 2021, the Intellectual Property High Court of Korea issued a decision, invalidating IlDong Foodis’s trademark registration and granting iMeal’s request for an injunction. However, despite the invalidation of IlDong Foodis’s trademark and the adverse ruling in the infringement case, IlDong Foodis continued to use the disputed trademark.

In the damages action, iMeal argued that punitive damages should be awarded for infringement activities that occurred after October 20, 2020, when the punitive damages provision (Article 110, Paragraph 7 of the Trademark Act) was enacted. In the first-instance judgment, while a substantial amount of damages was awarded, the court ultimately determined that, given the overall circumstances, the punitive damages provision did not apply.

In its appeal to the Intellectual Property High Court of Korea, iMeal successfully argued for punitive damages and was awarded a higher amount of damages than the first-instance ruling.  A summary of the court’s ruling is outlined below:

-The infringement activities that occurred after June 12, 2021, when the registration of IlDong Foodis’ trademark ‘’ was invalidated due to its similarity to iMeal's prior registered trademarks (‘’, ‘’), are considered to be willful infringements.

-Regarding the infringement activities between January 2018 and December 31, 2023, damages amounting to 600 million KRW are recognized, with: i) 500 million KRW for the damaged caused by the infringement activities between January 2018 and June 12, 2021 (before the willful infringement was recognized), and ii) 100 million KRW for the damages caused by the infringement activities between June 13, 2021, and December 31, 2023 (after the willful infringement was recognized).

-The damages for the period of willful infringement were set at 200 million KRW, which is double the previously recognized amount of 100 million KRW in taking consideration of following factors.:

1. IlDong Foodis’ willful infringement significantly harmed the distinctiveness of iMeal's trademark;
2. IlDong Foodis was aware that iMeal might suffer damages;
3. The period of willful infringement (approximately 2 years and 6 months) was not short; and
4. IlDong Foodis continued infringing by failing to remove advertisements bearing its trademark and not making adequate steps to remedy iMeal's damages.

Significance

The Intellectual Property High Court of Korea acknowledged the willfulness of IlDong Foodis's infringement and applied the punitive damages provision based on the findings that despite the invalidation of IlDong Foodis's registered trademark due to its similarity to iMeal's prior registered trademark, IlDong Foodis continued to promote its trademark through social media accounts, and infringing products were still being sold through both online and offline distribution channels.  Additionally, keyword advertising for the relevant products on internet search engines persisted.

This case serves as a significant example of the practical application of the punitive damages provision and is expected to influence future case law with similar issues. In particular, by imposing stricter liability for malicious and intentional trademark infringement, the court's decision strengthens the protection of trademark holders' rights and supports market order. This ruling is notable for raising awareness of the seriousness of trademark infringement and is likely to positively impact the legal environment for trademark protection moving forward.