"Trademark Infringement Warnings for Business Names Based on Neighborhoods, Don't Be Afraid"

A received a warning letter after operating a store with a signboard bearing a name that included a place name. The warning was sent by B, who had registered the trademark with the same place name first. The unfamiliar B threatened A to stop using the business name and warned that if a settlement fee was not paid, damages would be claimed. After receiving the warning, A decided to respond jointly with nearby merchants but is also considering whether to pay the settlement fee. This is because, regardless of the popularity of the place name, it is an undeniable fact that B registered the trademark first.

According to the Korean Intellectual Property Office (KIPO) on the 8th, small business owners like A who receive warning letters from those who registered administrative district names (neighborhood names) as trademarks are not uncommon. Most of these good-faith business operators use business names including place names without knowing about the trademark registration. KIPO advises that in such cases, rather than hastily giving up the business name out of fear of disadvantages such as damages, one should carefully verify whether continued use is possible.

The basis for A and others to examine whether trademark infringement has occurred can be found in the Trademark Act. The current Trademark Act protects those who have used identical or similar business names earlier in good faith than the trademark owner.

It also specifies that registered trademark owners cannot assert rights against identical or similar business names used by others according to commercial practices. This distinguishes between ‘business names’ as means to indicate personality and identity, and ‘trademarks’ as marks identifying one’s own and others’ goods.

For example, in 2014, the court rejected the claim by the trademark owner of the registered trademark ‘Haslla’ that the user of the business name ‘Hasllaga-bae’ (used since 2020) infringed the trademark. The court concluded that Hasllaga-bae did not infringe the trademark, recognizing that the business name was used according to commercial practices.

Haslla is an old place name known by most residents living in Gangneung, and ‘Gabae’ is a Sino-Korean transliteration of coffee. Therefore, even if Haslla is registered as a trademark, if the business name combines the place name Haslla and the Sino-Korean transliteration of coffee (and is not a business name imitating the trademark), it does not constitute trademark infringement according to the court’s judgment.

This interpretation allows that even if a warning letter is received for using an obscure old place name as a business name, it is not necessarily concluded as trademark infringement.

However, if after another’s trademark registration, an identical or similar business name is used as a source indicator for goods or services with the intent to ride on the trademark’s fame (unfair competition purpose), it may constitute trademark infringement. The intent behind using the business name can be a factor in determining trademark infringement.

Conversely, KIPO clarified that the prior use right is only a means to defend against a lawsuit filed by the trademark owner and is not a right to attack the trademark owner. Simply using a business name earlier does not allow one to damage the trademark owner’s rights.

Whether the effect of the trademark right is limited is also subject to court disputes. Accordingly, KIPO emphasized that to prevent disputes and maintain stable business operations, it is important to register trademarks in advance from the start of the business.

Gu Young-min, Director of the Trademark Design Examination Bureau at KIPO, said, “Even if one receives a warning letter like A while using a business name including a place name, whether the business name can continue to be used should be carefully examined before making a judgment. Rather than hastily giving up the business name, it is essential to confirm whether continued use is possible, and to fundamentally avoid disputes, it is important to register one’s business name as a trademark first to protect it safely.”

Meanwhile, when trademark disputes arise, assistance can be obtained through the Public Patent Attorney Consultation Center of the Korea Intellectual Property Protection Agency or the Industrial Property Dispute Mediation Committee.