Introductory Remarks

According to the exhaustion doctrine, some or all of the exclusive rights of industrial property are exhausted as to a particular item upon the first authorized sale of that item by the owner of the industrial property or its licensee.

Once a patented article is sold by the patent owner or its licensee without restriction, that article passes beyond the exclusive rights of the patent. The first authorized sale of a patented item exhausts the patent to the extent that an unconditional sale frees the purchaser from patent liability for use and resale of the item.

Trademark rights are exhausted as to a given item upon the first authorized sale of the item. A distributor who resells branded goods without change is not a trademark infringer and needs no license. As to that product purchased and resold without change, the trademark is exhausted, or, alternatively, the buyer receives an implied license to use the mark in resales.

This report deals with international exhaustion of industrial property rights in South Korea, namely, patents, utility model registrations, design registrations and trademarks, which might occur in parallel importation of genuine goods. As the utility model and design registrations can be dealt with in the same manner as the patents in South Korea, the following questions are answered for patents and trademarks.

Answers to Questionnaire

patents: No. In South Korean Patent Act, there is no international exhaustion of patents. The Patent Act provides that importation of patented products into South Korea shall constitute a patent infringement. Although the patented products have been put on the market in another country by a patent owner or with his consent, it is construed that the patent owner can use his rights against parallel imports from that country.

trademarks: Yes and No. According to regulations of the Korean Tariff Office, if a trademark owner manufactures and sells his branded goods within the territory of South Korea, the trademark owner can block parallel imports from another country, even if the imported goods have been put on the market in that country by the trademark owner or with his consent. However, if a trademark owner does not manufacture his branded goods within the territory of South Korea, the trademark owner cannot block parallel imports. These regulations are based on the economic and political aspects rather than legal aspects.

2.

N/A

If contractual restrictions can be used to limit importation, they shall be express. Our legal system is from civil law system rather than common law system, although the common law system has been introduced somewhat to the present legal system. In particular, if contractual restrictions are used to limit importation of the genuine goods, it is preferable they are express in order to avoid any legal disputes.

patents: If contractual limitations are express, particular marking requirements are not absolute. However, the marking requirements are recommended for consumer information.

trademarks: If contractual limitations are express, particular marking requirements should be compulsory, because consumer should be protected from confusion as to sources of goods.

If any marking to indicate some marketing restriction is removed or lost, a penalty or criminal remedy shall be applied.

patents: No. The South Korean Patent Act provides as to compulsory license. However, there is no international exhaustion of patents applying to the product put on the market under a compulsory license. We do not have any court cases on international exhaustion of patent rights under a compulsory license.

trademarks: N/A. A compulsory license is not operated under the Korean Trademark Act.

patents: N/A. However, if this "consent" occurs in a parallel import of patented products, the international exhaustion doctrine may apply to specific arrangements such as a relationship with a subsidiary or affiliated company, or an agreement with a licensee.

trademarks: The "consent" for international exhaustion of branded goods is limited to a relationship with a subsidiary or affiliated company, or an agreement with a licensee. According to regulations of the Korean Fair Trade Committee, the trademark owner cannot block the parallel imports under a relationship with a subsidiary or affiliated company, or an agreement with an exclusive licensee.

patents: No.

trademarks: N/A. We do not have any statutory regulations or any court cases where goods or their packaging have been modified. However, if a trademark owner manufactures and sells his branded goods within the territory of South Korea, the trademark owner may block parallel imports from another country. If a trademark owner does not manufacture his branded goods within the territory of South Korea, the trademark owner may not block parallel imports.

The Korean Group of AIPPI are of opinion that the patent owner can prevent parallel import of a patented product except under specific arrangements such as a relationship with a subsidiary or affiliated company, or an agreement with a licensee, otherwise the fundamental principle of territoriality of patent rights will be destroyed. However, the parallel import of branded products under particular circumstances such as affiliated relationship, license agreement, rebottling, repackaging, etc shall further be researched independently.