CONTENTS
- 1. International Intellectual Property Rights | IP Protection at the Import and Export Customs Clearance Stage
- 2. International Intellectual Property Rights | Rights Holder's Intellectual Property Registration
- - Criteria for Determining Trademark Right Infringement
- 3. International Intellectual Property Rights | Procedure for Handling Goods Suspected of Infringement
- - Suspension of Clearance and Notification
- - Strengthening the Role of Ex Officio Investigation
- - Referral in Cases of Trademark Act Violation
- 4. International Intellectual Property Rights | Response Measures for Importers and Exporters
- - Sanctions for Importing Infringing Goods
- 5. International Intellectual Property Rights | Response Measures upon Discovery of Infringing Goods
- - Use of the Trade Commission Investigation System
- - Possibility of Settlement Between the Rights Holder and the Importer
- 6. International Intellectual Property Rights | The Importance of Determining Infringement in Advance
- - Protecting a Company's Livelihood, Starting at the Customs Clearance Stage
1. International Intellectual Property Rights | IP Protection at the Import and Export Customs Clearance Stage
Effective protection of international intellectual property rights depends on a clear grasp of how such rights are safeguarded at the import and export customs clearance stage.
Intellectual property rights protect intangible assets such as creative works, trademarks, and technology. Under the Customs Act, the import and export of goods that infringe trademark rights, copyrights and neighboring rights, plant variety protection rights, patent rights, design rights, defense industry technology, and similar rights are prohibited.
As digital transformation accelerates and global supply chains shift, the circulation of infringing goods such as counterfeits and pirated copies poses a serious threat to the order of international trade. In response, governments around the world have introduced protection measures at the import and export customs clearance stage in order to block intellectual property infringement at its source.
In Korea, the framework for protecting intellectual property rights rests on Article 235 of the Customs Act.
Article 235 of the Customs Act provides that “the import and export of goods that infringe intellectual property rights may be restricted.” On that basis, the Korea Customs Service may act to remedy unfair trade practices through measures such as suspension of clearance, investigation, and confiscation, either on application by the rights holder or on its own initiative.
2. International Intellectual Property Rights | Rights Holder's Intellectual Property Registration
To secure protection for international intellectual property rights, holders of rights such as trademarks, copyrights, and plant variety protection rights must submit documentation relating to those rights to the President of the Intellectual Property Protection Association or through the intellectual property rights information system.
Criteria for Determining Trademark Right Infringement
Infringement | Key Details |
No Infringement
| Where the domestic and foreign trademark holders are the same person or stand in a relationship such as affiliated companies or an import agency arrangement (for example, the largest investor holding 30% or more of the shares) |
Where the parties are not the same person, but the domestic trademark holder imports or sells genuine goods produced abroad | |
Where the domestic trademark holder re-imports goods that it had previously exported | |
Where custom-made samples are imported at the request of a foreign trademark holder, together with supporting documentation | |
Where a person without rights imports goods that the trademark holder has provided as security by way of transfer, with no restriction on disposal | |
Where the trademark holder has consented to or permitted the clearance of genuine goods imported by a trademark license holder (on submission of the prescribed form) | |
Infringement | Where the domestic trademark holder manufactures the designated goods entirely within Korea (including domestic ODM arrangements) |
Where goods are manufactured and imported through an overseas ODM arrangement. This does not apply where the foreign manufacturer has obtained a trademark license from the foreign trademark holder | |
Where components bearing a trademark are imported and then assembled or partially processed into a finished product with a different HS 6-digit subheading | |
From the point at which a party that had only been importing begins manufacturing and reports the commencement of manufacturing to the head of the entrusted institution | |
From the point at which a party that had been importing and manufacturing in parallel stops importing and reports that fact to the head of the entrusted institution |
3. International Intellectual Property Rights | Procedure for Handling Goods Suspected of Infringement
Where the intellectual property rights they hold may be infringed, rights holders may apply to the Commissioner of the Korea Customs Service for protection of those rights.
This route applies where it appears that the goods an importer or exporter seeks to clear infringe the applicant's patent rights, trademark rights, design rights, copyrights, geographical indication rights, or similar rights.
The application must use the separate form prescribed for each type of intellectual property right and ordinarily should include the following information.
- The registration number and term of validity of the intellectual property right, along with information on the rights holder
- A description of the goods suspected of infringement and the method of identifying them
- Comparative materials, such as samples or images, that support a determination of whether infringement exists
- Whether postal items are involved, the route of entry, and similar information
The Korea Customs Service reviews the application to decide whether to accept the request for protection and, where necessary, consults further with the rights holder or asks for supplementary materials.
Suspension of Clearance and Notification
Once an application is accepted, where goods declared for import or export may infringe the relevant intellectual property right, the customs authorities may suspend their clearance for a set period.
Notice of the suspension is also given to the rights holder, the importer, and the exporter respectively.
During the suspension period, the rights holder must show whether the goods are in fact infringing and take further steps, such as filing a civil lawsuit.
[Goods Subject to Suspension of Clearance or Detention]
The head of a customs office may suspend the clearance of, and detain, goods declared for import or export, as well as goods declared for entry into a bonded area, that pose a risk of intellectual property infringement.
For the following infringing goods in particular, release from clearance or detention is not permitted even where the owner of the goods offers security and requests it.
- Goods that infringe trademark rights through counterfeit or similar trademarks
- Illegally reproduced goods
- Goods that infringe plant variety protection rights by using a similar variety denomination
- Goods that infringe geographical indication rights by using a similar geographical indication
- Goods that infringe patent rights by using a registered patented invention
- Goods that infringe design rights by using a similar design
- Goods that use defense industry technology obtained through improper means
Strengthening the Role of Ex Officio Investigation
Even without a separate application by the rights holder, the Korea Customs Service may, on its own initiative, suspend the clearance of or detain goods suspected of infringing intellectual property rights.
Where there is a final and conclusive court judgment, an appraisal of infringement by a body such as the Korea Copyright Commission, a written statement by the importer, exporter, or other party acknowledging that the goods are infringing, or another situation recognized by the head of the customs office, clearance of the infringing goods is suspended on the office's own initiative.
[Criteria for the Head of a Customs Office to Recognize Infringing Goods]
Referral in Cases of Trademark Act Violation
Whether international intellectual property rights have been infringed is determined through the following procedure.
- Consultation on whether infringement exists with relevant experts, such as the Korean Intellectual Property Office or the Korea Seed and Variety Service
- Provision of resources, such as the specialized personnel and inspection facilities of the intellectual property rights holder
- Use of inspection, sample collection, digital photographs, and similar means
- Resolution by a majority vote of the Deliberation Committee on the Determination of Intellectual Property Rights Infringement
Where clearance is then suspended and the goods are confirmed to be infringing, the matter is referred to the investigation department.
Once a referral to the investigation department has been requested, the infringing goods cannot be destroyed until the case concludes, even at the request of the importer or exporter.
4. International Intellectual Property Rights | Response Measures for Importers and Exporters
From the standpoint of an importer or exporter that has brought infringing goods or goods suspected of infringement into Korea, materials showing that the goods do not infringe intellectual property rights must be submitted within 7 days (within 5 days for perishable goods).
To obtain acceptance of the import or export declaration or release from detention, the party must provide security equal to 120% of the dutiable value (40% for small and medium-sized enterprises).
Sanctions for Importing Infringing Goods
Supplying goods that infringe international intellectual property rights into Korea from abroad is itself a form of unfair trade practice.
A party that has imported infringing goods may face the following sanctions.
5. International Intellectual Property Rights | Response Measures upon Discovery of Infringing Goods
After the Korea Customs Service suspends clearance, the rights holder may establish that the goods are infringing and file a civil lawsuit or apply for a provisional injunction.
Through these steps, the rights holder can pursue legal measures that fundamentally block the circulation of infringing goods, and the relief may extend to claims for damages.
Where intentional infringement is found, a criminal complaint may also be filed.
Certain rights, such as trademark rights and copyrights, involve offenses that do not require a complaint for prosecution, so criminal proceedings may move forward even without a complaint by the rights holder.
Use of the Trade Commission Investigation System
Another option is to apply for an investigation by the Trade Commission under the Ministry of Trade, Industry and Energy with respect to the unfair trade practice.
- The HS code and model name of the goods under investigation
- The specific details of the alleged violation or infringement by the respondent
- Whether the respondent imports or exports the goods under investigation
- The remedial measures requested and the grounds for them
Once these materials are prepared and an application for investigation is filed with the Trade Commission, the Commission decides within 20 days whether to open an investigation and then conducts a documentary review, an on-site investigation, and an expert appraisal.
Where there is concern about irreparable harm, the Commission may impose sanctions such as suspension of imports, a corrective order, and a penalty surcharge.
Possibility of Settlement Between the Rights Holder and the Importer
In international intellectual property disputes, however, the matter may also be resolved through negotiation between the rights holder and the importer.
In some cases, the importer denies that infringement occurred or shows that any infringement was not intentional, and a settlement is reached with the rights holder on certain conditions (such as a sales prohibition, destruction, or damages).
Because such a settlement can protect rights effectively while reducing cost and time, a rights holder may also wish to consider a strategic settlement approach with the advice of professionals such as attorneys and patent attorneys.
6. International Intellectual Property Rights | The Importance of Determining Infringement in Advance
Determining whether international intellectual property rights have been infringed can be difficult for importers and exporters.
Complex technical patents, the assessment of design similarity, and the identification of similar trademarks call for a high level of legal interpretation. For that reason, rights holders should submit clear comparative materials in advance where possible and keep communication with customs open.
Registering the relevant information in advance, in order to apply for intellectual property protection, is also advisable.
For major brand owners and companies holding design rights, it can also help to use advance information registration to cooperate with customs from the clearance stage and track high-risk businesses.
Protecting a Company's Livelihood, Starting at the Customs Clearance Stage
International intellectual property rights are assets tied directly to a company's survival in the global market, and their protection should begin at the customs clearance stage at the border.
If your rights have been infringed, you may wish to prepare civil and criminal proceedings promptly and in parallel and to build a strategy for proof in cooperation with professionals such as attorneys and patent attorneys.
At our firm, a task force made up of attorneys focused on intellectual property, customs attorneys, a foreign attorney qualified to advise on U.S. law (United States), and patent attorneys who have handled many corporate IP matters can provide advisory services and assist with disputes relating to international intellectual property rights.
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