The Act for Partial Revision of the Unfair Competition Prevention Act (IP Lump-sum Act)

The Act for Partial Revision of the Unfair Competition Prevention Act (IP Lump-sum Act) was passed and enacted as Act No. 51 on June 14, 2023.

1. Comprehensive Amendments

Act No. 51 is a comprehensive law amendment, including amendments to the Unfair Competition Prevention Law, the Trademark Law, the Design Law, the Patent Law, and the Utility Model Law.

Among various amendments of Act No. 51, the following items are the major amendments.

2. Prevention of Acts of Imitation in the Digital Space (Unfair Competition Prevention Law)

The act of offering a product that imitates the form of another person’s product (genuine article) in real space is regulated under the current Unfair Competition Prevention Law.

However, in recent years, with the development of digital technology and the utilization of digital space, economic transactions of digitally elaborate goods such as clothing and accessories have become more active. More and more imitation products are being displayed on the Internet, and transactions are being conducted for those imitation products.

The new Unfair Competition Prevention Law regulates the act of offering an imitation product in digital space, the imitation product imitating the genuine product existing in real space. Furthermore, the new Unfair Competition Prevention Law regulates the act of offering an imitation product in digital space, the imitation products in digital space imitating the genuine product presented in digital space.

Offering an imitation product in digital space is considered unfair competition and is added as Article 2 (1) (iii) of the Unfair Competition Law.

The Unfair Competition Prevention Law allows the right to demand an injunction for such an unfair competition.

3. Strengthening Protection of Trade Secrets and Limited Provision Data (Unfair Competition Prevention Law)

The amendment to the Unfair Competition Prevention Law in 2018 introduced the concept of “limited provision data (Big Data)” for the protection of Big Data, in addition to Trade Secrets.

In order to distinguish between Big Data and Trade Secrets, the law stipulates that “data managed as confidential” does not fall under the category of “limited provision data” (Article 2(7) of the Unfair Competition Prevention Law), while Big Data which is not managed as confidential falls under the category of “limited provision data” and is protected by the Unfair Competition Prevention Law.

Therefore, under the current Unfair Competition Prevention Law, as amended in 2018, only Big Data that is not managed as confidential is eligible for protection.

However, in recent years, the scope of Big Data has expanded to include “Big Data managed as confidential” because of the corporate practice of providing Big Data to others even if the Big Data is managed as confidential by the company itself.

Therefore, the new Unfair Competition Prevention Law expands to cover the Big Data managed as confidential as the “limited provision data” (Article 2 of the Unfair Competition Law).

Furthermore, the provisions for calculating damages have also been expanded.

Under the current law, damages in excess of the infringed party’s production and sales capacity have been denied.

In order to prevent infringement and ensure appropriate recovery of damages, a provision that allows the amount of damages to be increased by an amount equivalent to the license fee, as if the infringer had licensed the infringed product to the infringer, was added.

4. Expansion of Registrable Trademarks (Trademark Law)

(1) Introduction of a Consent System for Trademarks (Article 4, etc. of the Trademark Law)

Under the current Trademark Law, a trademark that is identical or similar to a prior registered trademark of another cannot be registered for goods or services related to or similar to the registered trademark.

Following other foreign countries which have the Consent System, the new Trademark Law introduced the Consent System.

The introduced Consent System allows concurrent registration if the right holder of the prior registered trademark agrees and there is no risk of confusion among consumers.

(2) Establishment of a new provision exempting the application of the Unfair Competition Prevention Law (Article 19 of the Unfair Competition Prevention Law)

Under the newly introduced Consent System, after similar trademarks are registered concurrently and one of the trademarks becomes well-known or famous, the trademark owner technically may request an injunction and compensation for damages based on the current Unfair Competition Prevention Law, claiming that the other party’s use of the trademark is an act of confusing the trademark with its own trademark.

If both parties who have agreed to use the trademark are using it without any unfair purpose, the other party’s act of using the trademark should not be treated as an act of unfair competition. From this point of view, the new Unfaire Competition Prevention Law exempts an act of using the trademark that both parties have agreed to use without any unfair purpose from unfair competition.