IP Newsletter | Fall 2018
	TRADEMARK, DESIGN & UNFAIR COMPETITION
	Free Riding on Gargle Dispensers: a New "Catch-All" Decision
	The Seoul District Court recently rendered an interesting decision based on the "catch-all" provision of the Unfair Competition Prevention and Trade Secret Protection Act ("UCPA") that illustrates the breadth of this provision and how it may be applied to a wide variety of unfair commercial behaviors (Seoul District Court 2017Gahap562146 rendered on June 22, 2018).
	Briefly, the "catch-all" provision seeks to address anti-competitive behavior that does not fall neatly into existing categories of unfair competition or IP infringement, and generally prohibits a party from infringing another person's right to business profit through the unauthorized commercial use of output produced at great effort or expense by the other person while using means that contravene fair trade practice or competition order.
	The plaintiff in this case was a Korean company specializing in the sale of mouthwash gargle products, who changed its marketing strategy to its target customers (restaurants, offices, golfs clubs, etc.) to begin offering to install its gargle dispensers for free at its target customers' premises (rather than selling the dispensers as it had done previously), and then encouraging customers to purchase its matching refill bottles. This marketing strategy required substantial financial investment on the part of the plaintiff, which installed approximately 70,000 free dispensers in Korea. However, the investment paid off handsomely, given that by 2015, it had secured 58% market share and derived high revenues from the sale of its refill bottles.
	In 2015, the defendant, another Korean company specializing in the gargle industry, began targeting its sales to businesses where the plaintiff had installed free dispensers, by advertising that their refill bottles were fully compatible with the plaintiff's dispensers.
	Plaintiff's gargle bottles and dispensers Defendant's gargle bottles and dispensers
	Seeking an end to what it believed to be a competitor taking advantage of its investment, the plaintiff filed a civil action requesting injunctive relief based on the catch-all provision.
	The district court recognized that the plaintiff had significantly invested in its products and marketing strategy, and found that the defendant's active targeting of locations where the plaintiff had installed free gargle dispensers contravened fair commercial practices. In particular, the court noted that the defendant was the only competitor in the market advertising its bottles as being compatible with the plaintiff's dispensers, while other competitors sold similar but non-directly-compatible dispensers and bottles, indicating that the defendant intentionally designed its bottles to take advantage of the dispensers installed by the plaintiff. The court thus issued an injunction against the defendant prohibiting further production, sale, or marketing of the disputed bottles, as well as requiring the defendant to destroy its existing inventory of bottles.
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	Min-Kyoung JEE KIM mkjee@kimchang.com Alexandra BÉLEC abelec@kimchang.com
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