Lee International

Article 2(1) of the Unfair Competition Prevention and Trade Secret Protection Act (“Unfair Competition Prevention Act”) is revised to define “act of unfair competition” as including an act of using a mark that causes confusion with another mark indicative of another person’s goods or business (Subparagraphs (a) and (b)) and an act of damaging the distinctiveness or reputation of a widely known mark (Subparagraph (c)).  Previously, prior user rights were only recognized for acts falling under Subparagraph (c) of the Unfair Competition Prevention Act and its Enforcement Decree.  Thus, before the revision, prior use of a mark of another person’s goods, before attaining widespread recognition within the Republic of Korea, was not considered an exception to unfair competition as stipulated in Subparagraphs (a) and (b).

The revised Unfair Competition Prevention Act, which was promulgated on March 28, 2023, and is set to take effect on September 29, 2023, now extends recognition to prior user rights as an exemption from unfair competition for all instances encompassing Subparagraphs (a) to (c) of Article 2(1).  Under the revised Act, if an individual has continuously used a mark that is identical or similar to another person’s trade name, trademark, packaging of goods, or any other mark signifying another person’s goods or business, without any ulterior motives, prior to the widespread recognition of said other mark, within the Republic of Korea, such use of the identical or similar mark will not be deemed an act of unfair competition.

I. Comparison with Prior User Rights in Patent, Trademark and Design Protection Acts

Before the revision of the Unfair Competition Prevention Act to fully recognized prior user rights, the Korean Trademark Act, Patent Act and Design Protection Act already included provisions concerning such prior user rights.  The comparative overview of the pertinent provisions within each respective Act is provided below.

(1)  Requirements for Prior User Eligibility

The Korean Patent Act and Design Protection Act have recognized the prior user rights since their enactment.  Both Acts share similar provisions governing the eligibility of prior user rights.  Under these Acts, an individual may qualify for prior user rights if he or she independently conceived an invention or design identical to that claimed in a patent or design registration application, without prior knowledge of its content, or acquired knowledge of the invention or design from its inventor or creator.  Furthermore, to be eligible, the person should have been working or preparing to work the invention or design for commercial purposes within the Republic of Korea at the time of the application filing.  Those who meet the criteria for qualified prior user rights are granted a non-exclusive right to continue using the invention or design within the scope of its intended purposes or the business related to the invention or design in which the prior user is working or preparing to work.

While the Design Protection Act extends prior art rights to both individuals who are working a design and those who are making preparations to work a design, the Korean Trademark Act confines prior use rights to individuals who are actually using a trademark.  The Unfair Competition Prevention Act mandates the continuous use of a mark predating widespread recognition of the other’s trade name, mark, etc. in the Republic of Korea, whereas it can be interpreted that the prior user rights under the Trademark Act exclusively allows individuals who are presently and actually using a trademark to continue using the trademark.

(2)  Prior Use Rights for Small Businesses

The Patent Act and the Design Protection Act do not have separate provisions for prior user rights tailored to small businesses.

However, the Trademark Act encompasses a provision dedicated to prior user rights for small businesses in Article 99(2).  Unlike Article 99(1) of the Trademark Act, which stipulates the necessity for a prior user’s trademark to be widely recognized as a distinctive indicator of a specific person’s goods, Article 99(2) of the same Act omits this requirement.  This distinction intended to offer safeguarding to small business owners, considering the localized nature of their operations. 

While the Unfair Competition Prevention Act does not explicitly outline prior user rights for small businesses, the prior user rights established under this Act would also be applicable to small business owners because this Act does not mandate that a prior user’s mark, when used, must be widely recognized as an indicator of a specific person’s goods or business.

(3)  Right to Request an Indication to Prevent Confusion

The Patent Act and the Design Protection Act do not have separate provisions regarding the rights to request an indication to prevent confusion.

Nonetheless, under the Trademark Act, a trademark right holder or an exclusive licensee of such a right may request a person with the prior user right, as defined by Article 99(1), to take necessary measures to prevent any misunderstanding or confusion regarding the source between his or her own goods and the prior user’s goods.

Furthermore, as part of the recent revision, Article 3(3) of the Unfair Competition Prevention Act introduces that another person denoted in Subparagraphs (a) or (b) of Article 2(1) may request a person using a mark causing confusion under Subparagraph (a) or (b) to take appropriate measures to prevent any misunderstanding or confusion regarding the source between the two persons’ goods or businesses.

II. Significance of the Revision

Even before the revision of the Unfair Competition Prevention Act, the Patent Act, the Trademark Act and the Design Protection Act in Korea had recognized prior user rights to maintain a balance between upholding intellectual property rights of right holders and safeguarding lawful interests of prior users.  The recent revision of the Unfair Competition Prevention Act has contributed to enhancing the overall coherence within Korea’s legal framework pertaining to intellectual property rights and their governance, particularly concerning prior user rights.  For instance, in cases where a prior user of a trademark encounters a claim based on the rights of a registered trademark holder or an unfair competition claim, the prior user rights may now serve as an exception to trademark infringement under the Trademark Act, or as an exception from unfair competition under the Unfair Competition Prevention Act.  Consequently, the recent revision bears significant importance in eliminating legal loopholes.