Lee International

In a recent decision, the Korean Supreme Court provided important guidance on the boundary between the reform of trademarked products for personal use and trademark infringement (Supreme Court Case No. 2024Da311181).  In particular, the Court clarified that the mere affixation of a registered trademark during the reform process does not automatically constitute “trademark use” under the Korean Trademark Act.  The decision also established the standard for determining trademark infringement from a competition-law perspective centered on the marketplace.

This case arose from a dispute between Louis Vuitton Malletier (the “Plaintiff”), the owner of the registered trademarks “” and “” (collectively, the “Registered Trademarks”), and a reform service provider (the “Defendant”).  At the request of customers who owned genuine products, the Defendant modified and processed those products into items differing in form or size (the “Reformed Products”) and returned the finished products to the respective owners.  The Plaintiff alleged, primarily, that the Defendant’s activities constituted trademark infringement and, alternatively, unfair competition. 

The Patent Court, acting as the court of second instance, held that where a reform process results in the creation of a new product, the trademark displayed on the Reformed Products may be perceived by consumers as indicating the manufacturer or seller of that product.  On this basis, the court found that the Defendant’s act of affixing the Registered Trademarks to the Reformed Products in a manner suggesting that the Plaintiff was the source of the goods, and subsequently delivering these products to their owners, constituted “trademark use” under the Korean Trademark Act. 

The Supreme Court, however, reached a different conclusion.  Emphasizing that both the purpose of the Korean Trademark Act and the concept of “trademark use” are closely tied to the offering of goods in commerce and their circulation within the marketplace, the Court held that acts involving the affixation or display of a trademark do not constitute “trademark use” where they are performed solely in connection with an item intended for personal use and are not part of a commercial process through which goods are offered, distributed, or circulated in the marketplace in the course of business.  Accordingly, such conduct falls outside the scope of “trademark use” under the Korean Trademark Act.

In reaching its conclusion, the Supreme Court reasoned that, once the law permits the owner of a genuine product to reform or refashion that product for personal use, there is no principled basis for limiting such activities to cases in which the owner performs the reform personally.  Accordingly, the Court found no legal justification for treating reform carried out by a third party service provider differently from reform performed directly by the owner.

At the same time, the Supreme Court recognized that trademark infringement may still arise under certain circumstances.  Specifically, where a reform provider effectively controls and directs the entire reform process and can be regarded as manufacturing and selling reformed products as its own goods, thereby placing them into commercial circulation, the affixation or display of a trademark in connection with such activities may constitute “trademark use” under the Korean Trademark Act.  In such cases, the provider’s conduct may give rise to trademark infringement.

The Supreme Court further identified several factors relevant for assessing whether such exceptional circumstances exist.  These include, among others, the background and purpose of the owner’s request for the reform; which party ultimately determines the purpose, form, and quantity of the reformed products; the nature of the consideration received by the reform service provider; the source of the materials used in the reform process and their proportion in the finished products; and the ownership of the reformed products following the completion of the reform.

Applying these principles, the Supreme Court held that the Patent Court had erred in finding trademark infringement without conducting a sufficiently comprehensive analysis of the relevant circumstances under the foregoing criteria.  The Court therefore concluded that the Patent Court had misapplied the legal principles governing “trademark use” under the Korean Trademark Act and remanded the case.

This decision is significant as the first Korean Supreme Court ruling to establish a comprehensive legal framework for determining whether reform activities constitute trademark infringement.  Grounded in the purpose of trademark law and its competition-law function, the Court drew a clear distinction between permissible reform activities and infringing conduct while taking into account broader policy considerations, including the exercise of property rights, freedom of expression, and environmental sustainability through the recycling and reuse of resources.  As the reform and upcycling industries continue to expand, the decision is expected to serve as an important benchmark for determining what constitutes “trademark use” in future disputes.

The decision also has important practical implications for both trademark owners and reform service providers.  From the perspective of trademark owners, future enforcement efforts will likely require more than simply demonstrating the existence of reformed products.  Rather, it will be necessary to establish that the reform service provider goes beyond merely offering a reform service and, in substance, manufactures and sells the reformed products as its own goods.  Conversely, reform service providers and related platforms may mitigate the risk of trademark infringement by clearly defining the purpose and scope of reform on the premise that customers retain ownership of the products both before and after reform, ensuring that any compensation received is characterized as a service fee rather than payment for the sale of finished products, and structuring their operations so that reformed products are not advertised, displayed, or marketed as the provider’s own goods.