[Exclusive] After Partnering with Shinsegae, Alibaba Launches Legal Battle for Exclusive Trademark Rights [Choi Seokjin's Law & Biz]

Establishing a Joint Venture with Shinsegae for Full-Scale Entry into Korea
Lost All Seven Previous Trademark Disputes
Retains Kim & Chang for a Rematch After Five Years
'Fame' and 'Unfair Intent' of the Trademark at Issue

The global e-commerce group Alibaba has filed requests for invalidation and cancellation trials against a domestic company operating a food and beverage franchise business under the Korean name 'Alibaba' or the English name 'ALIBABA'.

This company had previously won all seven domestic trademark invalidation and cancellation trials against Alibaba between 2016 and 2020, making this a rematch between the two companies.

Alibaba is preparing for a full-scale entry into the domestic market through the establishment of a joint venture with Shinsegae, aimed at strengthening its competitiveness in the Korean e-commerce market. This move appears to be an attempt to preemptively resolve potential disputes over trademarks. The domestic company, which has continued its business for years using trademarks registered with the Korean Intellectual Property Office, now faces the prospect of a legal battle with a major foreign capital group.

Dozens of Industries, Five Trial Requests

According to legal sources on June 12, Alibaba (Alibaba Group Holding Limited) filed four trademark invalidation trials and one trademark cancellation trial with the Intellectual Property Trial and Appeal Board on March 14 against Alibaba Partners, a domestic food and beverage franchise company led by CEO Kim Jihwan.

The trademarks at issue are two types: one where the English 'ALIBABA' is stacked in two lines above the Korean 'Alibaba', and another where 'ALIBABA' is stacked above 'CAFFE & DONUT'.

Alibaba claims that these trademarks are visually similar to Alibaba's own and could confuse consumers or damage Alibaba's reputation. They also argue that the trademarks were registered with the unfair intent to gain improper benefits by exploiting Alibaba's globally recognized reputation.

Although Alibaba has filed five cases, the trademarks in question are used across dozens of industries, ranging from large discount store operations to various food and beverage retail and wholesale businesses, including the coffee and hamburger franchise operations run by Alibaba Partners. If Alibaba's trial requests are accepted, Alibaba Partners may find it virtually impossible to continue its business.

Alibaba Partners began its food and beverage franchise business by launching the Alibaba Cafe brand in 2016, followed by Alibaba Burger and Alibaba SsoKssok Gimbap in 2018, and Alibaba Chicken in 2019. In 2020, it launched the Alibaba Unmanned Robot Cafe brand after investing billions of won in development costs.

At one point, the company operated 10 brands and 150 stores, but due to the aftermath of excessive investment, it underwent a simplified rehabilitation process and the number of stores has since dropped significantly. During this period, the ownership of the company also changed.

Alibaba China Lost All Seven Previous Trademark Disputes

This is not the first trademark dispute between the two companies. Alibaba Partners applied for the 'Alibaba' trademark in 18 industries, including the cafe business, in 2013 and completed registration the following year. From 2016 to 2019, Alibaba Partners filed seven domestic trademark cancellation or invalidation trials against Alibaba and won all of them.

In some cases, Alibaba lost because it failed to submit a response within the deadline. In others, Alibaba argued that there was a record of domestic trademark use within three years, but this was not accepted, resulting in a loss. As a result, Alibaba Partners successfully applied for and registered several Alibaba trademarks since 2016.

Meanwhile, in September last year, Alibaba Partners sent a certified letter to Alibaba requesting a halt to trademark infringement and warning that it would proceed with a lawsuit and criminal complaint if Alibaba did not comply. Alibaba Partners argued that Alibaba was infringing its trademark by selling food and beverages domestically through online platforms such as Alibaba.com and AliExpress, and that there was clear intent to infringe, given that the Intellectual Property Trial and Appeal Board had previously canceled Alibaba's domestic trademark rights for food and beverage businesses. However, Alibaba responded that it could not accept this request and filed for trademark invalidation and cancellation trials a few months later.

Was the Trademark Widely Known at the Time of Application? 'Fame' and 'Unfair Intent' Are Key Issues

The first key issue in this case is whether, at the time Alibaba Partners applied for the disputed trademarks in 2016, Korean consumers were sufficiently aware of Alibaba, the Chinese company, or its trademark?essentially, the "fame" of the mark. In other words, the question is whether seeing the 'Alibaba' trademark would have immediately brought the Chinese company to mind, causing confusion among consumers.

In its filing, Alibaba cited the brand value and sales recognized overseas as supporting evidence, arguing that "the positive image, advertising power, and customer appeal of the Alibaba trademarks, which have been built up through significant advertising expenditure and time, could be seriously diluted."

On the other hand, Alibaba Partners argues that at the time, Chinese Alibaba was not well known among domestic consumers, and that the trademark was actually recognized as belonging to Alibaba Partners, so there was no risk of confusion or damage to the distinctiveness of Alibaba China's mark. Alibaba Partners contends, "Alibaba has only submitted evidence of use overseas, and has not provided any evidence proving that the mark was widely recognized or famous among domestic consumers."

The second key issue is whether Alibaba Partners had an "unfair intent" to obtain improper benefits by taking advantage of Alibaba's fame. Regarding this, Alibaba Partners states, "Since the legitimate cancellation and invalidation decisions of the Intellectual Property Trial and Appeal Board regarding Alibaba's domestic 'ALIBABA' trademarks have been finalized, we lawfully applied for and registered the disputed trademarks. Considering that we have operated a franchise headquarters with over 100 franchisees using these trademarks, it is clear that there was no unfair intent in using the trademarks."

Alibaba Partners operates the Alibaba Coffee store.

Kim & Chang vs. YK: Likely to Set an Important Precedent

Alibaba has entrusted this case to Kim & Chang, Korea's top law firm. Alibaba Partners is represented by law firm YK.

Kim Dongseop, an attorney at YK, stated, "Since Alibaba Partners began applying for the 'Alibaba' trademark in 2013 and started its franchise business after receiving decisions from the Intellectual Property Trial and Appeal Board, developing over 10 brands, the key issues will be whether Alibaba China was well known among domestic consumers in 2016 and whether Alibaba Partners applied with unfair intent."

Kim & Chang stated, "As this matter is ongoing, it is difficult to respond without the client's consent." Alibaba also commented, "It is difficult to make a statement given the uncertainty of how this will be reported."

The decisions of the Intellectual Property Trial and Appeal Board and the courts in this case are expected to set a precedent for future trademark disputes involving global foreign companies in Korea. However, there is also a possibility that the parties may reach a settlement during the trial or litigation process.

*Trademark Invalidation and Cancellation Trials

Unlike trademark infringement lawsuits, which are subject to a three-instance system, cases disputing the validity of trademark rights are essentially handled by the Intellectual Property Trial and Appeal Board as the court of first instance. If dissatisfied with the Board's decision, parties may file a lawsuit with the Patent Court to overturn the decision, and may further appeal to the Supreme Court.