IV. Protection of Intellectual Property Rights of Imported
Goods and Parallel Import
1. Cases of Risks Relating to Parallel Import of Imported Goods
subject to Protection of Intellectual Property Rights
[Case 1] A Korean company‘A,’the authorized importer of products distributed by
an US company‘B’in the Korean market, found that company‘C’and other
companies parallel imported B’s products, which were found to be different from
B’s products exported under authorization and indicated manufacturing dates and
other information falsely, causing inconvenience to Korean consumers. Company A
sent an official letter to the Ministry of Food and Drug Safety of Korea to report
such facts and requested the ministry to take action. ▶Company C was punished for
violation of the Trademark Act.
2. Intellectual Property Rights Protection System for Imported
Goods
(1) What is the Intellectual Property Rights Protection System for
Imported Goods under the Customs Act?
Any person intending to protect the intellectual property rights (trademark rights,
copyrights, variety protection rights, geographical indications (rights), patent rights,
and design rights) (“IP rights”) should made a notification of such rights to the
customs authorities. If the person has made a notification of IP rights to the customs
authorities, the person’s IP rights are protected as set forth below.
(2) Notification of IP Rights
Starting from April 1, 2010, notifications of IP rights should be made through the
Trade-related IPR Protection Association (the “TIPA”). Any person intending to
make a notification should visit the TIPA or its website (http://www.e-tipa.org). Or, a
notification may be made by post.
* Process of Filing and Handling an IP Rights Notification
Submitting a notification, the original copy of
register
(a
certificate
of
registration),
materials regarding infringement, and other
relevant materials
Filing a notification
⇓
Examining the notification filed
and entering the results of
examination into the
electronic system
Examining the appropriateness of the notified
matters, whether to allow parallel import,
and other matters and entering the results of
examination into the Intellectual Property
Rights Electronic System.
⇓
Providing notice of results
(3)
Procedures
of
IP
Sending a notice of results of examination of
the IP rights notification.
Notifications should be handled within 4
days after the receipt.
rights
protection
in
import
customs
procedures1)
1) Guidelines on Declaration in Good Faith for Customs Duty Payers, p. 44 (Korea Customs Service, 2015)
3. Basic Principles on Parallel Import
(1) What is parallel import?
Parallel import refers to an act by a third person of importing without authorization
of the exclusive importer for the domestic market the products that are lawfully
distributed overseas with trademarks attached thereon. That is, while the products
imported with authorization are those imported under an exclusive agreement with
the overseas trademark right holder, parallel imported products are the products
purchased from an overseas market and then imported to the domestic market.
Parallel import is not allowed for all imported goods. The basic principle in
determining whether parallel import is possible or not is that there should be neither
confusion nor misunderstanding over the source and quality of goods.
According to such principle, the cases where parallel import is allowed or not are as
set forth below.
(2) Cases where parallel import is allowed
Overseas
Same Person ○
Trademark Holder
in Korea (Including
Trademark Holder
exclusive licensees)
Regardless of whether manufactured in
Korea or imported
※ If the trademark holders in and outside Korea (including exclusive licensees) are in
the“same
person
relationship,”even
if
the
trademark
holder
in
Korea
manufactures the products, parallel import is allowed (because there is no
misunderstanding over the source and quality of goods).
Overseas
Same person ×
Trademark Holder
in Korea (Including
Trademark Holder
exclusive licensees)
Allowed only if the products are
imported
※ If the trademark holders in and outside Korea (including exclusive licensees) are
not in the“same person relationship”and the trademark holder in Korea imports
genuine products, parallel import is allowed (because there is no difference in the
source and quality of goods).
※ What is the same person relationship?
It refers to a relationship in which the trademark holders in Korea and in a
foreign country are or can be considered the same person including affiliates’
relationship (if an affiliate holds 30% or more of the shares of another affiliate
with the largest ratio of shareholding in such another affiliate) and an
import-distributor’s relationship.
(3) Cases where parallel import is not allowed
Overseas
Same Person ×
Trademark Holder
Trademark Holder
in Korea (Including
exclusive licensees)
prohibited if products are
manufactured in Korea
※ If trademark holders in and outside Korea (including exclusive licensees) are not in
the same person relationship and the trademark holder in Korea only manufactures
products, parallel import is not allowed.
Any person can find whether the goods to be imported may be parallel imported on
the online portal of the Korea Customs Service (Uni-Pass). If the trademark holder in
Korea, in order to protect its trademark right, has made a notification of trademark
at the Korea Customs Service, the Korea Customs Service notifies the trademark
holder in Korea of the filing of the import declaration on the products with the
relevant trademark attached thereon. Then, if requested by the trademark holder in
Korea, customs clearance is withheld. And, whether the importer infringes on the
trademark right is finally determined by the court if the trademark holder in Korea
institutes a lawsuit thereon at the court.
4. Criminal Punishment for Violations Relating to Imported
Goods
subject to Protection of Intellectual Property Rights
(1) Unfair competition under the Unfair Competition Prevention and
Trade Secret Protection Act (the “Unfair Competition Prevention
Act”)(Article 18(3) of the Unfair Competition Prevention Act)
If any person engaged in parallel import commits an act of causing misunderstandings
by misleading consumers to believe that the person is the authorized importer of the
relevant trademark for the Korean market, such person is subject to imprisonment of
up to 3 years or administrative fines not exceeding KRW 30 million.
(2) Offense of infringement under the Trademark Act (Article 93 of
the Trademark Act)
Any person who has infringed on trademark rights or an exclusive license is subject to
imprisonment of up to 7 years or administrative fines not exceeding KRW 100 million.
5. Expected Risks and Necessity of Professional (Customs
Agents and Lawyers) Assistance
(1) Expected risks
• If an importer, without closely checking the permissibility of parallel import in
advance, intends to plan the import of certain goods and then imports certain
goods to Korea, such import may not clear customs at the import and may
cause large economic damages to the importer.
(2) Necessity of professional assistance
• First of all, professionals may help establish strategies by determining whether
the subject goods can be parallel imported. And, even if certain goods can be
parallel imported, if such goods become subject to trademark holder’s
withholding of customs clearance or a lawsuit instituted at court, the importer
can take prompt and effective actions, thereby minimizing damage in terms of
time and cost.
• If a company seeks protection of its trademark rights as a trademark right
holder in Korea, professionals may help protect the company’s rights and
benefits by providing services such as filing a notification of trademark
registration on behalf of the company and providing advice on the sanctions
on the imported products infringing on the client’s trademark rights as well
as countermeasures.