South Korea Trademark SquattingLast year, the U.S. Congress and Korean National Assembly approved the U.S.-Korea Free Trade Agreement. This new free trade agreement is expected to increase trading between the U.S. and South Korea and increase this Asian country’s status as a major hub for trading across Asia. South Korea exports many industrial goods to the U.S. such as consumer electronics and automobiles and we’re hoping that we can return the favor.

This trade agreement is important to trademark owners because it’s likely to increase the conflict between U.S. companies exporting goods and South Korean trademark holders. So if your company makes products like software, car parts, packaged food, or branded apparel and shoes, listen up.

South Korea’s trademark protection system is based on a “first-to-file” priority system. An individual or company can engage in “trademark squatting” by registering a mark at the South Korean Intellectual Property Office (KIPO) and then hold it hostage until the foreign company it’s associated with pays for it. Some companies have even seen their local trademark registrations cancelled by aggressive groups if they are not currently using those marks in South Korea. In the U.S., we have a trademark rights system that rewards use, not the race to the registration office, so trademark squatting is not a common practice here.

General Mills recently had to defend its “Häagen-Dazs” mark after a Korean company filed and registered related marks, complete with the accent, and used them for handbags. Ultimately, it was able to demonstrate its rights in patent court, based on a ruling that the marks are famous in Japan and therefore protectable in Korea.

The KIPO has responded to trademark squatting by lowering the standard for “famous marks” in South Korea if marks have been in use in other countries. It also now protects sound and scent trademarks, provided they have secondary meaning when associated with certain goods or services. (Think of the famous NBC chime and the MGM lion’s roar.)

With these efforts, combined with its decision to join the Anti-Counterfeiting Trade Agreement (which establishes international standards for protection of IP rights) South Korea has made a significant effort to combat trademark squatting. Only time will tell if those efforts are effective.