1. Liability of Open Market Sites for Trademark Infringement in Korea September 2012 Song, Kijoong Deputy Director Multilateral Affairs Division Multilateral Affairs Division

2. Contents Overview 1 1 Cases 2 2 Conclusion 3 3 1

3. 1.Overview Definition of open market under the Korean law Cybermall Sales 2 2 Telecommunication Sales Intermediary Auction, G-market, 11st, Interpark

4. (1) Hinoki case Plaintiff is an authorized importer of ‘Hinoki’ (Hair products) Requested to stop sales of infringing products and defendants stopped the sale Later, infringing products still being sold Plaintiff filed a suit for preliminary injunction Plaintiff is an authorized importer of ‘Hinoki’ (Hair products) Requested to stop sales of infringing products and defendants stopped the sale Later, infringing products still being sold Plaintiff filed a suit for preliminary injunction (i) Facts 2. Cases 3

5. Injunction Court did not find joint liability - neither “directly or closely contribute nor cause the infringing acts” - acknowledged open market’s liability as an accessory - defendant did not implement further actions damages proceeding - neither infringement of trademark by the sellers nor act of confusing - reasoning : all of products turned out to be legitimate Injunction Court did not find joint liability - neither “directly or closely contribute nor cause the infringing acts” - acknowledged open market’s liability as an accessory - defendant did not implement further actions damages proceeding - neither infringement of trademark by the sellers nor act of confusing - reasoning : all of products turned out to be legitimate (1) Hinoki case 2. Cases (ii) Court’s Decision 4

6. (2) K2 case K2 sold outdoor clothes since 1996 Acquired a secondary meaning/a well-known mark. Similar marked goods sold (ex. “K2 Authentic”, “PRO K-2 MOUNTAIN”, etc.) K2 requested to stop the sale Defendant accepted the plaintiff’s request only, no further action (no tools to prevent newly uploaded infringing products ) Plaintiff (K2) sued K2 sold outdoor clothes since 1996 Acquired a secondary meaning/a well-known mark. Similar marked goods sold (ex. “K2 Authentic”, “PRO K-2 MOUNTAIN”, etc.) K2 requested to stop the sale Defendant accepted the plaintiff’s request only, no further action (no tools to prevent newly uploaded infringing products ) Plaintiff (K2) sued (i) Facts 2. Cases 5

7. Supreme court recognized “K2” as a well-known mark Court denied joint liability - Online facilities offered to all sellers - No sufficient evidence of concealing sellers’ identities Court denied accessory - Defendant did all it could by searching and blocking - No reasonable tools to block newly registered ones Supreme court recognized “K2” as a well-known mark Court denied joint liability - Online facilities offered to all sellers - No sufficient evidence of concealing sellers’ identities Court denied accessory - Defendant did all it could by searching and blocking - No reasonable tools to block newly registered ones (2) K2 case 2. Cases (ii) Court’s Decision 6

8. (3) Adidas case Plaintiff is an exclusive licensee and authorized dealer Plaintiff requested to prevent sales of counterfeit goods Defendant took limited measures such as deleting accounts only No filtering or blocking counterfeit goods from others Plaintiff sued for injunction Plaintiff is an exclusive licensee and authorized dealer Plaintiff requested to prevent sales of counterfeit goods Defendant took limited measures such as deleting accounts only No filtering or blocking counterfeit goods from others Plaintiff sued for injunction (i) Facts 2. Cases 7

9. No legal ground as to online market’s legal and contractual duty to protect trademark No duty of censorship, filtering and monitoring etc. Acknowledged accessory in case of open market knowingly neglected, having means to prevent No legal ground as to online market’s legal and contractual duty to protect trademark No duty of censorship, filtering and monitoring etc. Acknowledged accessory in case of open market knowingly neglected, having means to prevent (3) Adidas case 2. Cases (ii) Court’s Decision 8

10. Terms of Service disclaiming open market’s liability may be upheld General standard established by Court 3. Conclusion 9 Liability is only acknowledged when open market knew or had reason to know infringing act and had specific means to prevent or eliminate the infringing acts. Open markets have no responsibilities - not in a position to decide infringement - preventing present and future possible infringement could wither trade of legitimate products Open markets have no responsibilities - not in a position to decide infringement - preventing present and future possible infringement could wither trade of legitimate products

11. E-mail: kjsong11@kipo.go.kr 10