‘Strengthening Protection of Trademark and Design Intellectual Property Rights’… Expansion of Punitive Damages and Realistic Compensation Amounts

Provided by the Korean Intellectual Property Office

[Asia Economy (Daejeon) Reporter Jeong Il-woong] Protection of intellectual property rights in the trademark and design fields is being strengthened. The core is to protect the rights of intellectual property holders by expanding the scope of the punitive damages system, which had been limited to patents and trade secrets, to the trademark and design fields, and by making the method of calculating damages in case of infringement more realistic.

The Korean Intellectual Property Office (KIPO) announced that it will promulgate and enforce intellectual property protection laws such as the Trademark Act and the Design Protection Act as of the 20th.

The partial amendments to the Trademark Act and the Design Protection Act focus on introducing a punitive damages system that requires compensation up to three times the amount recognized as damages in cases of intentional infringement of trademark rights or design rights.

Previously, KIPO introduced and applied the punitive damages system for patent and trade secret infringement through amendments to the Patent Act and the Unfair Competition Prevention Act in 2018. By expanding the scope of the punitive damages system to the trademark and design fields, the protection network for intellectual property rights has become even more comprehensive.

Above all, KIPO revised the standard for calculating damages by royalty when trademark rights and design rights are infringed from the previous “amount that can normally be received” to “amount that can reasonably be received,” enabling a more realistic calculation of damages.

For example, previously, the term “normal” was interpreted as the royalty generally accepted in the relevant industry, making it difficult for the compensation amount to reflect the actual damages. Since the value of intellectual property rights (royalty) was applied only at the industry’s typical royalty level rather than being individually assessed, proper valuation was challenging.

However, going forward, KIPO expects that the amended law will allow the damages for infringed trademark and design rights to be made more realistic.

In fact, in Japan, which deleted the term “normal” from the damage calculation standard ahead of Korea, the recognized royalty rate increased from about 3%?4.2% before deletion to 7%?10% after deletion.

Additionally, KIPO raised the maximum limit of statutory damages introduced in the Trademark Act in 2011 from 50 million KRW to 100 million KRW (up to 300 million KRW if intentionality is recognized), and partially amended the Patent Act to allow punishment for patent infringement without the victim’s complaint.

Jung Yeon-woo, Director of the Industrial Property Protection Cooperation Bureau at KIPO, said, “With the promulgation and enforcement of the amended intellectual property protection laws, the punitive damages system can now be applied in the trademark and design fields as well. We hope this will lead to strengthened protection of intellectual property rights across the domestic intellectual property sector.”