Korean Court Awards Double Damages for Intentional Design-Right Infringement: Korean Intellectual Property Law Updates

A recent decision of the Seoul Central District Court highlights the potential exposure faced by companies that manufacture or sell products incorporating designs developed by third parties without authorization from the 3rd party. In Case No. 2025Gadan106047, the court ordered Lotte Chilsung Beverage Co., Ltd. and an event-management company to jointly and severally pay KRW 39 million to a designer for the intentional infringement of a registered design right. The award represented twice the amount of the designer’s actual damages as calculated by the court.

Facts

1. Lotte Chilsung planned to operate a promotional pop-up store for its carbonated beverage, “Milkis Zero,” from May 3 to May 16, 2023.
2. In December 2022, Lotte Chilsung retained an event company to manage the advertising and operation of the pop-up store. The event company contacted the plaintiff, a designer, regarding the possible manufacture and sale of merchandise based on one of the designer’s products. The product at issue was a pencil holder registered as a Korean design right.
3. The event company discussed producing merchandise based on the designer’s product; however, it did not commission the designer to manufacture any products for the pop-up store.
4. Lotte Chilsung reviewed product proposals submitted by the event company, including materials relating to the designer’s registered pencil-holder design.
5. Defendants manufactured a beverage holder similar to the registered design. The beverage holders were displayed at the Milkis Zero pop-up store. A total of 3,000 units were reportedly produced, of which 531 units were sold.

Design Infringement Found by Seoul Central District Court

The court concluded that the registered pencil-holder design and the defendants’ beverage holder were similar (or identical) in their function as storage containers. Under Korean design law, infringement is not determined merely by identifying individual differences between two products. The court considers whether, from the perspective of an ordinary observer, the designs produce a similar overall aesthetic impression. Applying this standard, the court found that the appearance of the defendants’ beverage holder was sufficiently similar to the plaintiff’s registered design.

The defendants’ manufacture, display, and sale of the beverage holders therefore constituted an infringement of the plaintiff’s registered design right.

Korean Court Finds an Intentional Infringement of Korean IP Rights

The decision is particularly significant because the court determined that the infringement was intentional. In reaching this conclusion, the court considered several factors, including:

• the process through which the defendants selected the product manufacturer;
• the differences between the manufacturer’s initial design proposals and the final product;
• the manner in which the product design was modified;
• the defendants’ involvement in those modifications;
• the defendants’ prior communications with the designer;
• the earlier discussions concerning production quantities and unit pricing; and
• the relatively short period between those discussions and the manufacture of the defendants’ product.

Taken together, these circumstances supported the conclusion that the defendants were aware of the plaintiff’s design and nevertheless proceeded with the manufacture and commercialization of a substantially similar product.

The court accordingly held Lotte Chilsung and the event company jointly liable for the damages resulting from the infringement.

Calculation of Damages

The court acknowledged that the plaintiff had suffered damages but found that it was exceptionally difficult to prove the exact amount through conventional evidence. Article 115(6) of the Korean Design Protection Act permits a court to determine a reasonable amount of damages based on the overall evidence and arguments when the precise amount cannot be established. The court calculated the plaintiff’s underlying damages at KRW 19.5 million, using the following formula: 3,000 units × KRW 32,500 per unit × 20 percent

In determining this amount, the court considered:

1. the defendants’ production of 3,000 beverage holders for the pop-up store;
2. the plaintiff’s prior proposal to supply the original product for KRW 32,500 per unit;
3. the difficulty of determining the plaintiff’s precise profit margin for event-specific merchandise;
4. the defendants’ sale of 531 units; and
5. the apparent disposal of the remaining inventory.

The calculation was therefore not limited to the number of units actually sold. The court considered the total production quantity because the unauthorized manufacture itself constituted an infringement and potentially harmed the plaintiff’s commercial opportunity.

Under Article 115(7) of the former Design Protection Act, a Korean court may award damages of up to three times the amount of proven damages when the infringement was intentional. The court declined to impose the maximum available multiplier. Instead, it doubled the calculated damages from KRW19.5 million to KRW 39 million.

In selecting the multiplier, the court considered:

• the defendants’ superior commercial position;
• the degree of intentional conduct;
• the defendants’ awareness of the risk of harm to the designer;
• the economic benefit derived from the infringing product;
• the duration and scale of the infringement; and
• the defendants’ efforts, or lack of efforts, to remedy the harm.

Korean courts are increasingly willing to utilize enhanced-damages provisions (and award legal fees) where the evidentiary record establishes intentional infringement. Companies should therefore treat intellectual-property clearance as a substantive compliance requirement rather than a routine vendor-management issue.

IPG Legal‘s IP Law Group

IPG Legal is a leader in Korea in protecting and enforcing intellectual property rights for companies, entrepreneurs, creators, and individuals. The firm develops practical, commercially focused IP protection strategies designed to secure intellectual property assets, prevent unauthorized use, mitigate infringement risks, and support the long-term growth of its clients’ businesses and brands.

Sean Hayes advises companies, entrepreneurs, investors, and individuals on complex legal and commercial matters in Korea. He is recognized for proactively developing practical intellectual-property protection strategies that combine registration, contractual safeguards, regulatory compliance, enforcement, litigation, and cross-border risk management. Sean is the first non-Korean to work for the Korean court system. You can schedule a call with Sean Hayes at: Contact Us