Fighting Trademark Squatters: Bad Faith and Relationship-Based Refusals

South Korea’s first-to-file trade mark system, while offering clarity and predictability, creates opportunities for bad faith applicants to register marks they know belong to others. The Korean Trademark Act (KTA) addresses this through several provisions that target different forms of opportunistic and dishonest filings. Two of the most important are Article 34(1)(13), which bars marks filed for unjust enrichment, and Articles 34(1)(20) and 34(1)(21), which specifically prevent agents, distributors, and other related parties from hijacking a foreign brand owner’s mark.

Article 34(1)(13): Unjust Enrichment and Free-Riding

Article 34(1)(13) provides one of the most broadly applicable protections against bad faith filings. It prohibits the registration of a trade mark that is identical or similar to a mark recognised as indicating the goods of a specific person by consumers in Korea or abroad, when the applicant intends to use the mark for unjust enrichment or to inflict loss on the specific person.

The key elements of this ground are:

• The mark is recognised: The prior mark must be recognised as identifying the goods of a specific person. This does not require the mark to be “well-known” or “famous” in the formal sense — a lower threshold of recognition suffices, both domestically and internationally.
• Unjust purpose: The applicant’s filing must be motivated by an unfair purpose, such as free-riding on the earlier mark’s reputation, blocking the legitimate owner from entering the Korean market, or extracting a financial payment for transfer of the registration.
• Identity or similarity: The applied mark must be identical or similar to the recognised earlier mark.

This provision is particularly useful for foreign brands that have not yet entered the Korean market but whose marks have gained international recognition. It allows the legitimate owner to oppose or invalidate a bad faith filing even without a prior Korean registration, provided the applicant’s unjust intent can be demonstrated.

Articles 34(1)(20) and 34(1)(21): Agent and Distributor Bad Faith

Articles 34(1)(20) and 34(1)(21) address a specific and particularly damaging form of bad faith: filings by persons who have (or have had) a contractual, business, or other relationship with the foreign trade mark holder. This implements South Korea’s obligations under Article 6septies of the Paris Convention.

Under these provisions, a related party — defined to include agents, distributors, licensees, joint venture partners, and any other party who is or has been in a relationship with the foreign trade mark owner — cannot register a mark that is identical or similar to the foreign owner’s mark for identical or similar goods without the express consent of the foreign owner.

The key features are:

• No prior Korean registration required: The foreign owner does not need to hold a Korean registration for the protection to apply. The mark must be registered in a contracting state to the Paris Convention or WTO, which covers virtually all countries.
• Broad definition of “related party”: The relationship does not need to be current. Former agents, distributors, and business partners are captured, recognising that the knowledge of the brand typically persists after the relationship ends.
• No need for a formal objection: Under the amended KTA, KIPO can refuse the application on its own initiative, without requiring the foreign owner to file an opposition or objection. Previously, the foreign owner had to actively intervene.

Using These Provisions Offensively

These provisions can be invoked in three contexts:

• During examination: If KIPO identifies a filing that falls within these provisions, it may issue a refusal on its own initiative (particularly for Article 34(1)(20)-(21)).
• In opposition proceedings: If the application is published for opposition, the legitimate brand owner can file an opposition citing Article 34(1)(13) or (20)-(21) within two months of publication.
• In invalidation proceedings: If the bad faith mark has already been registered, the legitimate owner can file an invalidation trial before the IPTAB, seeking to have the registration declared invalid from the outset.

Evidence of Bad Faith

Because direct evidence of subjective intent is rarely available, bad faith is typically proven through circumstantial evidence, including:

• Knowledge of the prior mark: Evidence that the applicant was aware of the legitimate owner’s mark, whether through a business relationship, industry presence, or the mark’s international recognition.
• Degree of similarity: Copying a mark identically or near-identically, without any independent creative justification, strongly suggests bad faith.
• Absence of legitimate use: The applicant has no independent business reason for choosing the mark, and has no history of use or genuine commercial plans.
• Pattern of behaviour: A history of filing marks that correspond to foreign brands suggests systematic squatting.
• Demand for payment: An offer to sell or license the mark back to the legitimate owner is strong evidence of an unjust enrichment motive.

Strategic Recommendations

• File early in Korea: The most effective defence against bad faith is a proactive filing. Register your mark before entering the Korean market to pre-empt squatters.
• Monitor KIPO filings: Use the KIPRIS database and trade mark monitoring services to detect third-party applications for marks similar to yours. The two-month opposition window from publication is the most cost-effective point of intervention.
• Document your relationship with Korean partners: If you work with agents, distributors, or licensees in Korea, maintain clear records of the relationship and ensure contracts include trade mark ownership clauses and non-filing obligations.
• Act quickly: Bad faith registrations cause more damage the longer they remain on the register. File oppositions within the two-month window, and pursue invalidation promptly if the window is missed.
• Build your evidence package: Compile evidence of your mark’s international recognition, the relationship with the applicant, and the absence of any legitimate commercial rationale for the filing.

Common Mistakes

• Assuming bad faith is impossible to prove: Circumstantial evidence — prior relationship, identical copying, demand for payment, serial filing patterns — can build a compelling case.
• Failing to monitor the Korean Gazette: The two-month opposition window is the most efficient point for challenge. Without monitoring, it passes before the brand owner is aware.
• Waiting to enter the Korean market before filing: By then, a squatter may have already registered your mark. File proactively, even before commercial entry.
• Neglecting contractual protections: Agreements with Korean agents and distributors should include explicit trade mark ownership clauses and non-filing obligations.

Key Takeaway

South Korea provides robust tools against bad faith trade mark filings, from the broad unjust enrichment provision of Article 34(1)(13) to the specific agent and distributor protections of Articles 34(1)(20)-(21). These provisions cover both domestic and international recognition, capture current and former business relationships, and can be invoked during examination, opposition, or invalidation proceedings. However, the most effective strategy remains prevention: file early, monitor the register, document your business relationships, and act quickly when suspicious filings are detected.