Trademark Infringement | Punitive Damages Recognized Against a Company That Repeatedly Infringed a Trademark

The plaintiff that filed the trademark infringement lawsuit was Company A, a young startup that manufactured and sold organic snacks and similar products.

Company A had registered the trademark "Ai-O" and sold its products through online shopping malls.

Meanwhile, Company B, a large corporation that sold baby food products, had been selling formula, baby food, and snack products under the name "Agi-O." After the Ministry of Food and Drug Safety prohibited the use of the term "agi" (baby) in the labeling and advertising of general food products, Company B changed its trademark to "Ai-O" and began selling its products.

Company A then claimed that Company B had, willfully or negligently, sold products under a trademark identical or similar to Company A's trademark and thereby infringed its trademark right, and filed a lawsuit seeking 1 billion won in damages.

In particular, Company A argued that, as Company B advertised its products through means such as internet search advertising, Company A's advertising exposure decreased, which significantly harmed its sales.

The District Court, which heard the trademark infringement lawsuit, ruled in favor of Company A. It found that Company B had infringed Company A's trademark right.

The court held that "with the exception of certain products, Company B infringed Company A's trademark right and is liable to compensate the damage Company A sustained as a result." It also found that "considering the defendant's market dominance, advertising share, and influence over consumers, among other factors, this also directly affected the decline in Company A's sales."

However, taking into account the impairment of the trademark's distinctiveness caused by the infringing act and the scale of the damage, the court recognized only 500 million won of the 1 billion won claimed by Company A as the amount of compensation.

Company B did not accept the lower court's determination on the trademark infringement and appealed; however, the Patent Court, which conducted the appellate proceedings, upheld the judgment of the first instance, recognized Company B's trademark infringement, and additionally recognized punitive damages.

The court stated that "because the plaintiff competes with the defendant in the same line of business, it is clear that it sustained business losses due to the trademark infringement," and made clear that liability for compensation existed.

In addition, the court recognized punitive damages at double the amount for the "period during which the trademark continued to be used despite knowledge that it was infringing."

We analyzed the court's judgment, which ordered the addition of punitive damages for the repeated use of the trademark even after the trademark infringement had been recognized and the trademark's invalidity had become final.

If you have been subjected to trademark infringement, you can first warn the infringer by sending content-certified mail or an official notice.

If the infringing conduct continues thereafter, legal proceedings will be necessary. Trademark infringement may give rise to criminal punishment, and a civil claim for damages may also be filed on grounds such as lost sales and a decline in market share resulting from the infringement.

If you need assistance with related matters, you are welcome to request support from the 🔗Intellectual Property Group of Daeryun Law Firm LLP.