Kim & Chang’s Intellectual Property Group represented a Korean cosmetics company in an appeal before the Supreme Court arising from its non-use cancellation action against a registered trademark, which had not been used for more than 3 years by a company unrelated to the cosmetics business. The Supreme Court ruled in our client’s favor, reversing the lower court’s decision and remanding the case to the IP High Court. In its decision, the Supreme Court clarified that the risk of infringing another party’s trademark rights does not constitute a “justifiable ground” for non-use of a registered trademark.

The counterparty, as a seller of precious metal accessories, had obtained a trademark registration for the mark it has long used for its accessory business, for cosmetics as designated goods, but did not actually use the mark on cosmetics after its registration. Accordingly, the subject cosmetics company filed a cancellation action on the ground that the registrant had not used the subject mark for more than 3 years, and the Intellectual Property Trial and Appeal Board (IPTAB) accepted the petition. However, the IP High Court ruled that there was a justifiable reason for the registrant's failure to use the subject mark, on the grounds that if it had used the subject mark, it could have infringed on the trademark that the cosmetics company had registered first, and that a dispute over the trademarks of both parties was ongoing at the time.

In the Supreme Court appeal, our firm focused its arguments on the following three points: that the possibility of conflict with a previously filed and registered trademark constitutes an ordinary business risk faced by any business operator and must therefore be borne by the trademark owner itself; that, under well-established case law and practice, neither the assertion of rights through litigation nor the mere existence of a dispute constitutes a “justifiable ground” for non-use, and that the prevailing views and case law in major jurisdictions, including Europe, Germany, and Japan are consistent with this position; and that, if the lower court’s reasoning were upheld, a trademark owner could effectively maintain its registration indefinitely simply by pointing to a seemingly similar earlier-filed trademark, thereby undermining the very purpose of the non-use cancellation system.

The Supreme Court accepted our firm’s arguments and held that a “justifiable ground” for non-use may be recognized only where the trademark owner was unable to use the trademark due to objective and external circumstances beyond its control. By contrast, subjective or internal circumstances, such as concerns over a potential legal dispute, are insufficient to avoid cancellation of the trademark registration.

This decision makes clear that the mere risk of infringing another party’s trademark rights does not constitute a “justifiable ground” for non-use. The ruling is expected to serve as an important standard in future practice concerning non-use cancellation proceedings.