Korea’s Unfair Competition Prevention and Trade Secret Protection Act (UCPA) saw an important amendment that came into force on July 18, 2017. The new amendment stipulates that infringers of the “dead copy” provision of the UCPA may now be subject to criminal penalties including imprisonment of up to three years or a fine of up to W30 million (US$24,000). The Korean Intellectual Property Office (KIPO) and local government offices can also initiate investigations into potential dead copy violations even if no complaint from a competitor or producer has been raised.

The current dead copy provision, which came into effect on July 21, 2004, prohibits the sale of knockoff product by prohibiting the selling, leasing, displaying for sale or lease, or importing or exporting of a product that imitates the appearance of another’s product (the shape, pattern, colour, or combination of such attributes) on the grounds of unfair competition, provided that 1) the product concerned engaged in prohibited activities within three years of the date of the original product’s creation; and 2) the appearance of the imitation product is not common to products of the same type. There is no requirement that the original product design be famous or that the product be a source identifier, as it is in other UCPA and trademark causes of action.

This compares with design infringement in that the dead copy provision provides automatic protection to unregistered designs, while the Design Protection Act provides protection for registered designs against an identical or similar design without the authorization from the registered design owner. Unlike design infringement, substantial identicalness is required to apply the dead copy provision, with court precedents in South Korea evaluating strictly factors such as what is altered from the original product, the degree of change, how difficult it is to make such changes and the effect of such changes on the appearancel, etc.

Sung-Nam Kim, a senior attorney at Kim & Chang in Seoul, welcomes the amendment, pointing out that the dead copy provision protects not the creator of the original product design but, rather, the exclusive seller of the original product who invested effort and money and bore the risk of merchandising the original product. The possibility of criminal action, which is generally less arduous and less expensive for the petitioner compared to a civil action – as most investigation and trial work is undertaken by the authorities – will provide additional protection and incentive to producers and enhance the overall business environment.

Kathryn Lee, a partner at Cho & Partners in Seoul, points out that criminal cases arising out of the new provision would work differently, despite taking some burden of proof off rights owners. “The provision protects designs that are made within three years which are not common among the same type of goods. Such information is not something that someone outside the industry or the (original producing) company can readily obtain without a fair amount of research.

“Practically speaking, in order to act, authorities will need to first get information from right holders on the infringed design,” reasons Ik Hyun Seo, a partner at Cho & Partners, as he echoes Lee’s view that some involvement from right holders will be necessary in developing such cases criminally.

Prior to the amendment, KIPO’s investigation work under the Special Judicial Police (SJP) to crack down on counterfeit goods was limited to trademark infringement and violation of consumer confusion-related provisions under the UCPA, and corrective orders following investigations on infringing activities carry no penalty for non-compliance. “Previously, investigators could view merchandise on location, but did not have the power to investigate dead copy goods. The purpose was to improve efficiency of KIPO investigating officials,” says Hana Choi, a partner at Cho & Partners. Now KIPO can act ex officio on dead copy provision infringement investigations and has the option of informing law enforcement and the prosecutor’s office for criminal prosecution, expanding the level of deterrence to infringers.

In fact, in its first instance of exercising the new investigative power under UCPA, KIPO issued a corrective order in December 2017 against Mother Love Inc., requiring that the company cease the manufacture and sales, and for retailer Homeplus to cease sales, of Mother Love’s home meal replacement product. KIPO has found Mother Love’s Crash on Meal product to be substantially identical to Egnis’ LABNOSH in bottle appearance, label design, nature and colour of product (pastel-coloured powder) and overall appearance. “If the parties concerned do not comply with the order within 30 days, KIPO may pass the case to the Prosecutor’s Office and/or policy for criminal action,” adds Cho & Partners senior associate Seyoung Yun.

“Discussion with regard to whether the dead copy provision should also be subject to criminal penalties was happening even when the dead copy provision was adopted back in 2004,” Kim recalls. “In general, design is becoming more important in the industry and surveys conducted in the course of evaluating the dead copy provision show that producers are supportive of the criminal penalties. Reference was also made to the laws in other jurisdictions.” She believes the amendment will be beneficial to manufacturers and act as both a stronger and more economical deterrent, especially for first market entrants.