An important amendment to the Unfair Competition Prevention and Trade Secret Protection Act (“UCPA”) will go into effect on July 18, 2018, specifying the protection of trade dress for service providers in Korea and introducing a new protection against idea theft.

Trade Dress Protection for Service Providers:

Currently, the UCPA prohibits activities that may create confusion between one party's mark and a well-known source identifier of another party, or dilute another party's well-known source identifier, through commercial use of a mark that is identical or similar to the well-known source identifier.  Such well-known source identifiers not only include trademarks, but also names, product configurations, product packaging and any other signs identifying the source of the products or services.  

The recent amendment added the overall appearance of the physical location where a business provides services as a potential source identifier, effectively creating trade dress protection for the general appearance of a business under the UCPA.

While there has been no express protection for trade dress in Korea until now, in recent years, Korean courts have begun protecting trade dress under a different provision of the UCPA, the so-called “catch-all” provision.  The catch-all provision generally prohibits a party from infringing another person's right to business profit by making unauthorized commercial use of the output produced at great effort or expense by that person through means that contravene fair trade practice or competition order.  

The first decision issued by the Supreme Court of Korea concerning the protection of trade dress states that the overall appearance of a store design qualifies as a “protectable right” under the catch-all provision¹.  Courts have established three requirements that must be met for a service provider to enjoy trade dress protection under the catch-all provision: (i) the trade dress has to be distinctive; (ii) it cannot be merely functional; and (iii) there must be a likelihood of consumer confusion.  In addition, courts have generally been reluctant to enforce the catch-all provision to protect IP that is covered elsewhere under the law (e.g., trademark or design law).

Ironically, while it creates express protection for trade dress under the UCPA, in practice, the amendment may actually make it more difficult to protect the trade dress of service providers, because plaintiffs will now have to prove that the trade dress is well-known (unlike under the catch-all provision).  Since this is usually a difficult element to establish, it remains to be seen whether trade dress is more effectively protected under the amendment than under the catch-all provision.

New Provision Regarding the Theft of Ideas:

It is often the case that creative ideas are not easily protected using standard intellectual property laws such as patent, copyright or trademark laws.  Yet, it is sometimes necessary to disclose such ideas in the course of negotiating with other companies for financing or business collaboration purposes.  

Unfortunately, it is not uncommon for a smaller party presenting a new idea to a larger company to find out after negotiations have ended that the larger company has simply taken the smaller party's idea for its own use.  To protect such ideas, parties have often resorted to other legal theories (such as implied contract, unjust enrichment, misappropriation, breach of fiduciary relationship, or passing off) with mixed success.

Under the amendment, a new type of unfair competition relating to the theft of ideas is recognized – a new provision has been added, prohibiting the unfair use of information with economic value (including technical or business ideas) that has been obtained through a business proposal, bidding, public contest or business negotiations, or during the process of a transaction.

The unfair uses covered by this provision include uses for one's own business or for a third party's business, as well as provision of the information to a third party for its use.  However, there is no violation if the person accused of obtaining the idea had previous knowledge of the idea, or if the idea was widely known in the relevant business field.

While violation of this provision may subject the offender to civil or administrative liability, the amendment does not provide for any criminal liability or penalties.