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Trademark disputes affect startups, small businesses and independent brands as well as major companies. Even a single dispute can have serious commercial consequences.
In particular, as online shopping malls and social media marketing have become more active in recent years, trademark disputes have become as fast as brand exposures.
The important thing is that the trademark dispute is not just a matter of luck.
Most disputes begin where they were sufficiently preventable.
1. If the same trademark is registered.
One common and serious source of disputes is an earlier filing by another party.
For example, suppose a company has been running a brand for two or three years, acquiring customers, and growing sales through SNS and online malls.
Suppose Company B then files and registers an identical or similar trademark before the brand owner does.
The dispute usually follows in the same order.
- A formal cease-and-desist letter sent within one or two months of registration
- Request to stop selling to online platforms (Naver Smart Store, Coupang, etc.)
- Claims of infringement on advertising, SNS accounts, and package usage
From this point on, the company is in a position to become a “trademark infringer” even if it uses its own brand.
Many companies think, “Why does it matter if we used it first?”, but the trademark scheme judges rights based on ‘registration’, not ‘use’.
A company is forced to make the same choice.
- A complete rebrand, including packaging, domains, and marketing assets
- Payment of settlement or license fees
- Business suspension
2. Disputes due to similar brand naming
Even if not completely identical, disputes caused by similar trademarks occur very frequently.
In particular, many companies judge themselves as “no problem” for the following reasons:
- 1 to 2 letter difference (e.g. BEANLY vs BEENLY)
- Differences between English and Korean script, such as MORIN and 모린
- Different meanings but similar pronunciation
However, the Court may judge any of the following criteria as infringement:
- Meaning (concept)
Even though we were convinced that it was an internally differentiated naming in practice, there are not a few cases in which “source confusion” is recognized as an infringement. In this case, the problem that the company is going through is not simple.
- Brand renewal costs (package, logo, ad material all modified)
- Existing customer awareness loss
- Search Keywords and Reset SEO Assets
After all, “it’s okay because it’s a little different” can lead to having to start the whole business again.
3. If you have not set the specified goods range correctly
The trademark must not only register the name, but also set together which goods or services are designed for use.
The problem is that many companies only focus on the initial scope of their business to narrow down the designated goods.
For example, let’s say you have a brand that only sells coffee beans.
As the business grows, we plan the next expansion.
- RTD Coffee Drink Launch
- Cafe Management
- Sales of Goods and Lifestyle Products
However, if a third party already has the same or similar trademark registered in a ‘beverage’ or ‘service business’, the same brand may not be used in that area. In this case, the choice is limited.
- Use of other brands in the expansion business (consistency of the brand collapse)
- Trademark Authorization and License Negotiations (Costs Occur)
- Putting the expansion plan on hold
As a result, the initial narrowly designated goods setup is a deadly constraint in the business expansion phase.
4. Conflicts of rights arising during outsourcing and collaboration
There are many trademark disputes when you leave your brand naming to an outsourcer or start a business in the form of a joint venture.
The typical pattern is:
- An outside contractor files the trademark in its own name
- Co-Founder Claims Trademark After Withdrawal
- The contract does not specify ownership of rights
At the beginning, the problem is not obvious, but at the stage of business growth or investment acquisition, the problem is revealed in earnest.
In the process of investment due diligence (DD), the following issues occur:
- The trademark is owned by an individual rather than the company
- If the transfer of rights is not completed
- If there is a possible conflict of rights;
These issues can delay or derail an investment and may force negotiations to restart.
5. Trademark squatting during overseas expansion
Trademark rights are territorial: protection is established separately in each jurisdiction.
In other words, having registered a trademark in the country does not automatically protect you from abroad.
Problems may emerge as overseas expansion plans become public.
- Brand awareness increases.
- Public announcement of overseas expansion plans
- Global Exposure through SNS
At this point, local companies or so-called ‘trademark brokers’ often place the same trademark in their countries. After that, the company faces the same choice.
- Negotiation to return the trademark (high cost)
- Signed a license agreement
- Relaunching Brands for Overseas Use
There is a big difference in terms of cost.
- Pre-apply: Hundreds of thousands of won to millions of won
- Responding later: tens of millions of won or more, with a risk that negotiations fail
In the end, the trademark strategy for overseas expansion is determined not “after the launch” but “before the launch”.
The trademark dispute is not a sudden one. Most of the delays at the time of application, lack of prior investigation, design of designated goods, etc. were sufficiently preventable in advance.
In other words, a trademark is not the right of the first person to use it, but of the first person to prepare and design it. To do this, you need the same strategy.
- Investigate before naming: Get a close look at the possibility of a collision with an existing trademark.
- Comprehensively designated goods design: not only present products, but also future business roadmaps.
- Clarity of the rights relationship: At the contract stage of outsourcing and collaboration, the subject of trademark rights must be ensured.
Design the safest path with a professional so that your valuable brand can grow reliably without legal disputes.
This article reflects the information available when it was published. Contact us to discuss your circumstances.