Supreme Court: "Registration of Geumgangtex Trademark Confusing with Geumgangjehwa Trademark Must Be Canceled"

Trademarks actually used by Geumgang Tex (above) and trademarks of Geumgang Jehwa.

[Asia Economy Reporter Choi Seok-jin, Legal Affairs Specialist] The Supreme Court has ruled that some trademarks used by the sock manufacturer 'Geumgang Tex' are similar to the shoe company 'Geumgang Jehwa' trademarks, causing potential confusion among consumers, and therefore the trademark registrations must be canceled.

The two companies have been engaged in legal disputes over trademark rights since the early 2000s, and in this case, the Supreme Court sided with Geumgang Jehwa.

According to the legal community on the 25th, the Supreme Court's 2nd Division (Presiding Justice Cheon Dae-yeop) upheld the lower court's ruling that dismissed the appeal filed by Yoon, the trademark rights holder of Geumgang Tex, against Geumgang Co., Ltd. (Geumgang Jehwa) in the trademark registration cancellation lawsuit.

The court stated, "There is no error affecting the judgment result such as failure to conduct necessary hearings for the lower court's decision, exceeding the limits of free evaluation of evidence, legal misinterpretation regarding contract interpretation, abuse of rights, cancellation trials due to unfair use, use of similar trademarks, similarity or relatedness of goods, likelihood of confusion with goods related to another's business, intent of unfair use, lack of grounds, or omission of judgment," and thus dismissed the appeal.

Geumgang Tex had registered trademarks distinct from Geumgang Jehwa's trademarks since 1969, using them on gloves, socks, children's clothing, and more. However, the dispute began in 2002 when Geumgang Tex started using a modified diamond-shaped trademark (hereinafter referred to as the Geumgang trademark).

Geumgang Jehwa filed a lawsuit to prohibit the use of the mark against Geumgang Tex and won partial victory in November 2002, but Geumgang Tex appealed, leading to the withdrawal of the lawsuit in 2003. In September 2002, Geumgang Tex was also accused of violating the Trademark Act.

While both Geumgang Jehwa and Geumgang Tex filed cancellation and invalidation trials against each other's registered trademarks at the Patent Tribunal, the two companies reached an agreement on January 27, 2003, and even drafted a memorandum of understanding to resolve the dispute.

The agreement stipulated that only Mr. A, then the representative of Geumgang Tex's predecessor Geumgang Textile, could use the Geumgang trademark, that the trademark would be used only for designated goods, that both parties would pursue coexistence and mutual prosperity based on preventing consumer confusion, and that all previous criminal complaints, civil lawsuits, and trademark lawsuits would be withdrawn.

After Mr. A passed away, on February 7, 2013, Mr. Yoon, Mr. A's brother-in-law, acquired the trademark rights of the Geumgang trademark from Mr. A's heirs.

Then, on November 29, 2017, Geumgang Jehwa filed a cancellation trial at the Patent Tribunal claiming that the Geumgang trademark used by Geumgang Tex violated Article 119, Paragraph 1, Items 1 and 3 of the Trademark Act, reigniting the dispute.

Article 119 (Cancellation Trial of Trademark Registration) Paragraph 1 of the Trademark Act states, "If a registered trademark falls under any of the following items, a cancellation trial of the trademark registration may be requested."

Item 1 lists cases where "the trademark owner intentionally uses a trademark similar to the registered trademark on designated goods or uses the registered trademark or a similar trademark on goods similar to the designated goods, causing consumers to misunderstand the quality of the goods or causing confusion with goods related to another's business."

On May 24, 2019, the Patent Tribunal ruled in favor of Geumgang Jehwa, stating, "Geumgang Tex intentionally used a trademark similar to Geumgang Jehwa's registered trademark, causing confusion among general traders and consumers with goods related to another's business, thus falling under Article 119, Paragraph 1, Item 1 of the Trademark Act."

Geumgang Tex then filed a lawsuit at the Patent Court against Geumgang Jehwa, seeking to cancel the Patent Tribunal's decision.

In court, Geumgang Tex argued that Geumgang Jehwa's request for cancellation of trademark registration violated the 2003 agreement and constituted abuse of rights.

On the other hand, Geumgang Jehwa argued that Mr. Yoon was not a party to the agreement (Mr. A) and therefore the agreement did not apply to him, and even if the previous agreement applied, its effect should be limited to cases that do not cause consumer confusion about the source, so the current cancellation trial request does not constitute abuse of rights.

The court sided with Geumgang Jehwa's argument.

The court stated, "The previous agreement was concluded between Geumgang Jehwa and Mr. A, and it cannot be considered effective against the plaintiff (Mr. Yoon). It is also difficult to see that the previous agreement applies to cases where the risk of consumer confusion about the source of goods increases. Considering that Article 119, Paragraph 1, Item 1 of the Trademark Act aims to ensure the safety of goods transactions, prevent acts that ride on the credit or reputation of another's trademark, protect the interests of traders and consumers, and also protect the business credit and rights of others using different trademarks as a public interest provision, the plaintiff's claim alone cannot be deemed as abuse of rights in this cancellation trial request," the court ruled.

Furthermore, the court noted, "Although the trademarks differ in shape, the position of Korean and English characters, and color, the Korean and English names and pronunciations are the same, and the modifications have increased the likelihood of consumer confusion about the source of the goods, so they are considered similar marks."

It added, "The socks on which Geumgang Tex's actual trademarks are used and the shoes on which Geumgang Jehwa's trademarks are used have a close economic relationship, creating a risk of confusion about the source."

The court concluded that socks sold by Geumgang Tex and shoes or footwear sold by Geumgang Jehwa are all products worn on the feet, serving to protect the feet or as fashion items, so if these products are distributed together, consumers may mistakenly believe they are produced and supplied by entities with certain personal or capital relationships.

The Supreme Court also found no problem with the lower court's judgment.

This content was produced with the assistance of AI translation services.