Unfair competition

Unfair competition (부정경쟁) describes a situation in which the competitors compete on unequal terms because favourable or disadvantageous conditions, brought about by any of the competitors or outside factors, are applied to some specific competitors. It contrasts with fair competition, in which the same rules and conditions are applied to all participants, and the competitive action of some does not harm the ability of others to compete.

The nature of competition, "fair" or "unfair", is usually at issue when the anti-trust rules or intellectual property rights seem to be violated. The former is caused by, for example, market dominating power while the latter is related with the misuse of a trade name or trademark.

Key words
competition, unfair, intellectual property rights (IPRs), country of origin

Statutory provisions
The Act on Unfair Competition Prevention and Trade Secret Protection (hereinafter the "Unfair Competion Prevention Act" or the "Act") provides for the term "unfair competition". Article 2 (Definitions) of the Act 1. "unfair competitive act" means any act falling under any of the following items:
 * a. Creating confusion between one's own goods and any other person's goods, by using any one identical with or similar to a name, trade name, trademark, container or package of goods of the other person, or a mark indicating the other person's goods, known to the public in Korea, or by selling, distributing, importing or exporting goods using any of the above enumerated manners;
 * b. Creating confusion with any other person's business facilities or activities by using any one identical with or similar to the other person's name, trade name, or emblem, or other mark indicating the other person's business which is known to the Republic in Korea;
 * c. Other than creating confusion under items (a) and (b), damaging the identity of mark or the fame of any other person, by using any one identical with or similar to a name, trade name, trademark, or container and package of goods of the other person, or other mark indicating the other person's goods or business, known to the public in Korea, without any justifiable grounds prescribed by Presidential Decree, such as non-commercial uses, or by selling, distributing, importing or exporting goods using any of the above enumerated manners;
 * d. Misleading the public to understand the place of origin of any goods either by falsely marking that place on any commercial document or communication, in said goods or any advertisement thereof or in any manner of misleading the general public, or by selling, distributing, importing or exporting goods bearing such false mark;
 * e. Making a mark misleading people to understand as if any goods were produced or processed in an area, other than the place where said goods are produced, manufactured or processed, on any commercial document or communication, in said goods or any advertisement thereof, or in any manner of misleading the general public, or selling, distributing, importing or exporting goods bearing such mark;
 * f. Assuming any other person's goods, or publicizing any goods or making a mark in any manner of leading the public to misunderstand their quality, contents, manufacturing process, use, or quantity, in latter goods or advertisement thereof, or selling, distributing, importing or exporting goods using such method or mark;
 * g. Using the relevant trademark, without any justifiable grounds, on the goods identical with or similar to the designated goods of the trademark, or selling, distributing, exporting, or importing the goods that use the trademark by an agent or a representative of a holder of the right to a trademark registered in any of the following countries or to a similar trademark, or by a person who was an agent or a representative one year before such act was conducted:
 * i. Any party to the Paris Convention for the Protection of Industrial Property (hereinafter referred to as the "Paris Convention");
 * ii. Any member state of the World Trade Organization;
 * iii. Any signatory state of the Trademark Law Treaty;
 * h. Registering, holding, transferring or using the domain name identical with or similar to the name, firm name, trademark, or other mark of any other person, which is widely known in Korea, by any person who holds no justifiable title to do so for any of the following purposes:
 * i. The purpose of selling or renting marks, including trademarks, to any person who holds a justifiable title thereto or any third party;
 * ii. The purpose of impeding the registration and use of the domain name by any person who holds the justifiable title therefor;
 * iii. Other purpose of making commercial profits;
 * i. Transferring, renting, exhibiting, importing or exporting goods manufactured by counterfeiting the form (referring to the shape, appearance, color and gloss or the combined one of them, including the form of test products and the form in goods brochure; hereinafter the same shall apply) of goods manufactured by any other person: Provided, That any of the following acts shall be excluded herefrom:
 * i. Transferring, renting, exhibiting, importing or exporting goods manufactured by counterfeiting the form of goods for which three years elapse from the date on which the form of the goods, including test products, takes shape;
 * ii. Transferring, renting, exhibiting, importing or exporting goods manufactured by counterfeiting the common form of goods identical to goods manufactured by any other person (where the goods of the same kind are nonexistent, referring to the goods identical or similar to other goods in terms of function and efficiency).

Remedies
The Unfair Competition Prevention Act allows the alleged victim to file a lawsuit with a court claiming for prohibition of unfair competitive acts of a certain violator.

In addition, the plaintiff-victim may claim for damages caused by the said unfair competitive acts. Also the plaintiff may petition the court for an order to resore the downgraded business credit caused by such unfair competitive acts.

In this connection, when the Korean Intellectual Property Office (KIPO) finds anything wrong with the allegedly unfair competitive acts, KPO Commissioner may make recommendation, if necessary subject to hearings, to correct, stop or remove the unfair competitive acts.

Effects of FTA on the Act
When the Korea-EU Free Trade Agreement came into force, the country of origin rule was included in the Unfair Competition Prevention Act.

The newly inserted Article 3-2 prohibits importers and manufacturers from attaching geographical labeling protected by FTAs. In case of violation of such rules of origin, the subsequent measures may be taken regarding how to enjoin such violations, how to claim for damages, how to restore the lost business credit, how to investigate and make recommendation to correct such violations subject to hearings, if necessary. Articles 3-2 through 9 of the Act.

Further in relation to the KorUS FTA, Articles 14-4 through 14-6 have been inserted by Act No.11112 on December 2, 2011 as a part FTA implementing legislation, which will be effective at the same time as the KorUS FTA. They are Article 14-4 (Confidentiality Order), Article 14-5 (Revocation of Confidentiality Order) and Article 14-6 (Notification, etc. of Application for Access to Procedural Documents).

Relation with Trade Secret
The Unfair Competition Prevention Act treats the unfair competitive acts in a same manner as the infringement upon trade secret or violation of the country of origin rule. They are how to presume the damages caused by such violations, how to order submission of data and confidentiality during the court proceedings. Article 14-2 (Presumption of Damages)
 * (1) Where any person whose business profits are infringed by an unfair competitive act or an act of infringing on trade secrets requests the compensation of damage under Article 5 or 11, and where the person who has infringed on the business profits transfers the goods causing the unfair competitive act or the act of infringing on trade secrets, the amount obtained by multiplying the quantity in subparagraph 1 by the profit per unit quantity in subparagraph 2, may be made as the damages of the person whose business profits are infringed. In such cases, the damages shall be limited to the amount obtained by multiplying the quantity, calculated by deducting the volume of actual sales from the volume of possible production by the person whose business profits are infringed, by the profit amount per unit quantity: Provided, That where the person whose business profits are infringed faces the situation under which he/she is unable to sell due to other reasons than the unfair competitive act or the act of infringing on trade secrets, the amount conforming to the unsold quantity due to other reasons than the unfair competitive act or the act of infringing on trade secrets, shall be deducted:
 * 1. Quantity of goods that have been transferred;
 * 2. Profit per unit quantity of the goods, which the person whose business profits are infringed would have been able to sell if there had not been unfair competitive acts or acts of infringing on trade secrets.
 * (2) Where a person whose business profit is infringed by an unfair competitive act or an act of infringing on trade secrets requests compensation for damages under Article 5 or 11, if the person who infringes the profit gets any gain by such offense, the amount of such gain shall be presumed to be the amount of damage sustained by the person whose business profit is infringed.
 * (3) Where a person whose business profit is infringed by an unfair competitive act or an act of infringing on trade secrets requests compensation for damages under Article 5 or 11, he/she may request compensation for damages by considering the amount equivalent to that which he/she may usually receive for the use of a mark, such as a trademark, put on the goods, etc. subjected to the unfair competitive act or for the use of the trade secrets infringed, as the amount of damage which he/she sustains.
 * (4) Where the amount of damage which is sustained by an unfair competitive act or an act of infringing on trade secrets exceeds the amount under paragraph (3), the request for damages may be made even to the excess. In such cases, if the offense against the business profit is committed with no intent or gross negligence by the person who infringes the business profit, a court may take this into account in calculating the amount of damage.
 * (5) Where it is extremely difficult to establish the facts to prove the amount of damage in view of the nature of relevant facts, while it is recognized that the damage has been incurred, in the lawsuit for the unfair competitive act or the act of infringing on trade secrets, the court may recognize a resonable amount of damage on the basis of the entire tenor of oral proceedings and the results of evidence investigations, notwithstanding paragraphs (1) through (4).

Article 14-3 (Submission of Data))
 * In a lawsuit alleging the infringement of business profits by an unfair competitive act or an act of infringing on trade secrets, a court may, upon the request of a party, order the other party to submit data necessary to calculate the amount of damage incurred by the offense: Provided, That the same shall not apply where the holder of the data has a good reason for the refusal of the submission thereof.

Relation with other IPRs
If any of intellectual property rights is deemed to be infringed upon under other IPR-related laws than the Unfair Competition Prevention Act, such other law shall prevail.