Conclusion:
Displaying another's trademark on promotional items or gifts without authorization does not constitute a violation of trademark law. However, if one displays another's trademark without authorization on a product with exchange value, using it as a promotional item or gift still constitutes a violation of trademark law.
Explanation:
1. Supreme Court Ruling on March 17, 2022, Case No. 2021도2180 (Note: The following example has been modified from a real case for ease of understanding.)
'A' operates a store selling swimsuits and swimming accessories. 'A' sells products from various brands.
A had unauthorizedly displayed the famous swimming accessory brand X's trademark on 500 towels. A sold 200 of these towels and provided the remaining 300 for free to other business partners as promotional items.
It is clear that A's sale of the 200 towels with X's trademark constitutes a violation of trademark law. However, the second instance court and the Supreme Court had different opinions on whether providing the 300 towels as promotional items to business partners constitutes the use of the trademark.
In conclusion, the Supreme Court determined that it constitutes the use of the trademark. The towels produced by A are products involved in commercial transactions and are not considered promotional items or gifts. If the towels A sold were initially intended not to be sold but to be used only as promotional items or gifts, then it would not have constituted a violation of trademark law. However, even if some of the towels with recognized product value are provided as promotional items to certain individuals, they are still considered products (Supreme Court ruling on March 17, 2022, Case No. 2021do2180).
2. What is considered a gift or promotional item, and what is considered a product? A product refers to an item that has its own exchange value and serves as an independent object of commercial transactions.
The Supreme Court states, "Items that become advertising media, which are distributed for free to customers for purposes such as product promotion, sales stimulation, or provision of services to customers, and have no possibility of circulation in the market, cannot be considered items with their own exchange value and independent objects of commercial transactions, even if a trademark is displayed on them. Unless there are special circumstances where the displayed trademark, along with other characters or figures, can be recognized as an indication of the source of the advertised product, displaying a trademark on such items cannot be considered the use of the trademark." (Supreme Court ruling on June 25, 1999, Case No. 98hu58)
Disputes over whether something is a gift or promotional item or a product mainly arise in connection with civil and criminal cases due to violations of trademark law, or in relation to trademark registration cancellation. The case of displaying a trademark on towels mentioned earlier was a criminal trial for violation of trademark law.
Trademark registration cancellation occurs in cases like the following:
If a trademark owner does not use their trademark for three years or more, a third party can request the cancellation of the registered trademark. For example, company A might want to register and use the trademark X on their products, but X may already be registered by company B.
In this case, company A would file for trademark registration cancellation, arguing that company B has not used the trademark X for three years. Here, if company B used the trademark on any product, a dispute would arise over whether the product is a genuine product or an advertising medium (gift, promotional item, or any other item without exchange value used for advertising).
I will explain an actual case.
- Publisher A, who registered the trademark WINK, was selling a monthly magazine. Publisher A was publishing a magazine called ROADSHOW, and in December 1993, A collected photos of famous movie actors and published a booklet called WINK as a supplement to ROADSHOW, which was provided to ROADSHOW's buyers. B claimed a trademark registration cancellation trial, arguing that A's applied trademark WINK had not been used for three years. The Supreme Court ruled that the WINK published by A was "not an independently exchangeable booklet that could circulate in the market but merely an advertising medium" (Supreme Court ruling on June 25, 1999, Case No. 98후58). Since A had not used the trademark, the trademark registration was canceled.
- Company A, which applied for a trademark for cosmetic soaps and other specified products, distributed the soap with the trademark displayed on it as promotional items to business partners. However, A had never actually sold cosmetic soap with the trademark engraved on it. The Patent Court ruled that the promotional soap was merely an advertising medium and not a product, and thus the trademark was not used (Patent Court ruling on March 11, 2004, Case No. 2003허4887). As A was determined not to have used the trademark, the trademark registration was canceled.
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