Introduction

The IP High Court's recent decision in Case No. 2024Na11402, where Kim & Chang represented the plaintiff, marks one of the earliest judicial applications of enhanced (punitive) damages for willful trademark infringement. This provision was adopted on October 20, 2020, and the ruling provides rare insight into how judges weigh the statutory factors to recognize and calibrate such damages.

Parties and Background

The plaintiff, a neurosurgeon operating the Bareunnamu Neurosurgery Clinic owns a service mark registration for " ("Bareunnamu" & and tree device)" (Reg. No. 41-330107; "Registered Mark") for a broad range of medical services, including neurosurgery and dental services.

In April 20, 2020, the defendant took over and operated a dental clinic under the name "바른나무치과(Bareunnamu Dental Clinic)" but later changed the clinic's name to "Gangnam Sookmyeon Dental Clinic" on March 28, 2024.

On November 9, 2020, the defendant filed a trademark application for "바른나무치과" ("Bareunnamu Dental Office"), which was rejected based on the plaintiff's Registered Mark. Anticipating such refusal, the defendant had simultaneously filed a non-use cancellation action against the Registered Mark, but it was dismissed on January 14, 2022, as the plaintiff was able to demonstrate use of the mark with neurosurgical services.

Shortly after the cancellation action was dismissed, the plaintiff sent the defendant a cease-and-desist letter demanding that he stop infringing the Registered Mark and warned that continued infringement could subject the defendant to enhanced damages. Upon receipt of the letter, the defendant sought to reach a settlement with the plaintiff, but the negotiations failed. Thereafter, the plaintiff brought an action against the defendant before the Seoul Central District Court on December 28, 2022, seeking an injunction prohibiting infringement of the Registered Mark and recovery of damages.

The defendant then filed a new, partial cancellation action against the Registered Mark, targeting just "dental services" this time. It was successful and the targeted services were cancelled from the registration on February 28, 2023.

The Seoul Central District Court recognized the defendant's trademark infringement and awarded damages, but rejected the plaintiff's claim for enhanced damages for the defendant's willful infringement. On appeal, however, the IP High Court ordered damages increased to 1.5 times the base amount. The IP High Court's decision was finalized without appeals from either party.

Similarity Analysis of the Courts

Both courts found that the distinctive portion of the compared marks was "Bareunnamu," since "Dental Clinic" merely described the nature of the services. Given their identical dominant element, the marks were deemed similar. 

The more complex issue was whether dental services were similar to medical clinic services, given that the existing precedents were inconsistent. Both courts concurred that dental services were similar to medical clinic services because (i) "medical practice" as defined by the Medical Service Act is interpreted to include dental practice; (ii) many hospitals also have dental departments; and (iii) dental practices and surgical practices partly overlap in treating facial conditions such as temporomandibular joint disorders (in fact, the neurosurgeon plaintiff had also treated patients requiring oral and maxillofacial surgery). 

Calculation of Base Damages

Both courts accepted that the plaintiff suffered damages from likely confusion due to the overlapping treatment areas (e.g., maxillofacial work), reduced online visibility and advertising effect due to the defendant's search ads and posts using "Bareunnamu", and loss of opportunity to earn income equivalent to royalties.

Because actual losses could not be precisely measured, both courts exercised their statutory discretion to fix base damages at KRW 50 million, factoring in the defendant's revenue and profits, the relative scale and advertising activity of both clinics, the duration and extent of online infringement, etc., while reducing the amount to account for market context such as limited business overlap.

Willful Infringement and Enhanced Damages

The two courts reached different conclusions regarding the enhanced damages. Courts may order enhanced (punitive) damages for willful infringement, taking into account the factors set forth in Article 110 (8) of the Trademark Act, including: the degree to which the infringed mark's distinctiveness or reputation has been impaired; the extent of the infringer's intent or awareness of the risk of causing harm; the damages suffered by the trademark owner; the economic benefit obtained by the infringer; and the duration and repetition of the infringement.

The first-instance court denied enhanced damages, noting that the defendant had not adopted the name "Bareunnamu Dental Clinic" but had acquired the clinic and continued operating it under that name. However, the IP High Court determined that the defendant's use became willful from November 9, 2020, when the first cancellation action was filed. It emphasized that the defendant had clear knowledge of the plaintiff's rights, received a cease-and-desist letter referencing enhanced damages, and continued using the infringing mark for more than three years despite the failed settlement negotiations and the initiation of infringement proceedings.

The defendant argued that he lacked intent to infringe, believing that the cancellation of dental services from the Registered Mark made it possible for him to use the name for his dental clinic. The IP High Court dismissed this argument, holding that the defendant had no reasonable basis to believe that dental and medical clinic services were dissimilar, and that—even though a non-use cancellation decision has no retroactive effect—the defendant continued the infringement prior to the cancellation of the dental services in the second cancellation proceedings against the Registered Mark.

Implications

The case underscores that continued use after formal notice amid contentious proceedings can transform an otherwise "ordinary" infringement into a willful one, opening the door to enhanced damages, even when the infringer believes they are not engaging in trademark infringement due to factors like limited commercial overlap.

With the statutory cap on willful infringement damages rising from threefold to fivefold effective July 22, 2025, the reasoning in this case provides a useful reference for asserting or defending against enhanced damage claims. Rights holders should maintain detailed evidence of market disruption, while alleged infringers should move to quickly mitigate their risk if a notice of infringement is received.