"Do You Pay Royalties Even If You Cut Worn Clothes to Make Shorts?" Controversy Over Louis Vuitton Reformation Ruling

'15 Million Won Compensation Ruling Against Reform Contractor' Controversy
"Regulations Fuel Economic Polarization" Criticism

The ripple effects continue following a court ruling ordering a craftsman who cut a Louis Vuitton bag to reform it into a wallet to pay 15 million won. Some in the legal community have even raised the question, "If you cut worn-out knees off pants to make shorts, do you have to pay royalties to the pants manufacturer?"

"If private craftsmanship is blocked by regulations, economic polarization will continue," critics point out

[Image source=Pixabay]

On the 13th, Professor Park Kyung-shin of Korea University Law School wrote on his social media (SNS) Facebook, "If you cut worn knees off pants to make and wear shorts, do you have to pay royalties to the original pants manufacturer?" He explained, "There is an exhaustion principle in all intellectual property rights, including trademark law."

The exhaustion principle means that once royalties have been paid when the product is first sold, the intellectual property rights embedded in that product are considered exhausted. Therefore, no additional royalties can be demanded regardless of how the product is used or sold afterward.

Professor Park elaborated, "This is why when we sell a used mobile phone, we do not pay royalties to the patent holders of the components inside. Louis Vuitton received the value of its trademark included in the price when it first made and sold the bag, and the buyer cannot be asked to pay royalties again just because they repair and reuse the bag."

He explained that trademark infringement occurs only when a Louis Vuitton trademark is attached to non-Louis Vuitton products causing confusion, i.e., counterfeit goods.

He emphasized, "Since to make a reformed Louis Vuitton wallet, one must purchase an authentic Louis Vuitton bag, there is no economic loss from Louis Vuitton's perspective."

Additionally, Professor Park pointed out, "The reform craftsman never sold the products. They only repaired customers' items. Every time various regulations block the public from pioneering blue oceans with their knowledge, craftsmanship, and passion, economic polarization continues to be neglected."

He questioned, "If that is the case, should people who intentionally fade jeans and sell them used also pay royalties to the original jeans company?"

Court orders reform craftsman who made wallets by reforming Louis Vuitton bags to pay 15 million won in damages

Earlier, on the 12th, the 63rd Civil Division of the Seoul Central District Court (Presiding Judge Park Chan-seok) ruled in a trademark infringement lawsuit filed by Louis Vuitton against craftsman A, stating, "A must not manufacture reformed products using fabric from bags bearing Louis Vuitton's trademark and must pay 15 million won in damages to Louis Vuitton."

From 2017 to 2021, A used Louis Vuitton bag fabric provided by customers to produce bags and wallets of different sizes, shapes, and purposes. He charged 100,000 to 700,000 won per reformed product.

Louis Vuitton filed the lawsuit in February last year, claiming that A infringed its trademark rights by undermining the source indication and quality assurance functions of its trademark.

A's side argued that the reformed products do not qualify as "goods" under trademark law. They claimed that to be considered goods, products must have "mass production"?repeated production of the same form?and "circulation"?exchange and distribution through multiple stages from producer to consumer. The reformed products lack these attributes.

They also argued that since the bag owners would not confuse the reformed products with original Louis Vuitton products, the use of the trademark under trademark law cannot be recognized.

However, the court ruled in favor of Louis Vuitton, stating, "Reformed products also qualify as goods, and A must be considered to have used Louis Vuitton's trademark."

The court emphasized that since reformed products have exchange value and serve as independent objects of commercial transactions, they must be regarded as goods under trademark law.

It further pointed out that even if the products are not practically circulated and lack mass production, the trademark's source indication function must be protected.

The court also stated, "Although A's customers are unlikely to be mistaken about the source of the reformed products, third parties and general consumers who see the reformed products are clearly at risk of confusion about their origin," and concluded, "A did use Louis Vuitton's trademark."

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