In two separate decisions rendered on the same day, the Supreme Court of Korea reaffirmed that the “justifiable reasons” defense against trademark cancellation remains a narrow gateway. The rulings clarify that subjective or internal circumstances—such as anxiety over potential infringement while an invalidation action is pending, or the mere state of bankruptcy—do not excuse a failure to use a mark under Article 119(1)3 of the Trademark Act.

Doctrinal Backdrop: How Korean Courts Interpret “Justifiable Reasons”

Article 119(1)3 of the Trademark Act allows any party to seek the cancellation of a trademark registration that has remained unused in Korea for three consecutive years. However, Article 119(3) provides a defense if the registrant can prove a “justifiable reason” for the non-use. 

Historically, Korean courts have interpreted this defense strictly, recognizing it only when the non-use is not attributable to the trademark owner’s fault. This typically requires a showing of force majeure—such as serious illness, natural disasters, or other external obstacles that render business operations impossible.

Under this strict framework, successful defenses have been rare and generally limited to external legal constraints. These typically include government-imposed restrictions on the import or sale of specific goods and pharmaceutical-related regulatory impediments, such as awaiting mandatory approval from the Korean Food and Drug Administration. Conversely, defensive holdings, business downturns, fear of litigation, internal business circumstances, and mere preparatory acts have consistently failed to meet the “justifiable reasons” standard.

Even ongoing trademark disputes do not excuse non-use, as courts traditionally view them as subjective obstacles within the registrant’s control. Most cases decided to date have involved situations where a registrant’s mark faced an invalidation proceeding or a third party was infringing upon the registrant’s mark. In those cases, the courts have held that even a potential declaration of invalidity does not preclude the mark’s use on the designated goods, and that business difficulties caused by third-party trademark infringement amount merely to an “economic problem” rather than a legal impossibility.

Supreme Court Decision 1: Infringement Risk is Not a Justifiable Reason

The Facts.  The registrant had used its registered marks for jewelry and accessories since 2014. The petitioner (in subsequent cancellation proceedings) later obtained two cosmetics-related registrations on December 6, 2017. The registrant subsequently secured its own cosmetics registration on August 26, 2019, and filed invalidation actions against the petitioner’s senior registrations on October 8, 2019, citing a conflict with its prior jewelry related registration and the fame of its mark. While these actions were ultimately successful—with the invalidation of the petitioner’s marks confirmed on July 27, 2023—the petitioner counter-attacked by filing a non-use cancellation action against the registrant on August 29, 2022. At that point, the registrant had only undertaken preparatory acts—packaging design, OEM negotiations, registering as a cosmetics-responsible-distributor, and undergoing related training—without achieving actual sales.

IP High Court (Overturned).  On May 9, 2024, the IP High Court initially accepted the registrant’s defense. It reasoned that compelling the registrant to use its mark while the senior registrations were still valid would expose the registrant to the risk of criminal trademark infringement. The IP High Court also noted that the registrant had promptly sought a legal remedy by filing the invalidation actions against the petitioner’s marks within two months of its own registration.

Supreme Court (Reversed and Remanded).  The Supreme Court reversed, ruling that concern about infringing a senior registration is a controllable, subjective decision, not an objective, external obstacle. The Court reasoned that: (i) the registrant is capable of deciding for itself whether to use its registered mark and must bear the consequences of its non-use; (ii) the registrant can mitigate infringement risks by asserting an “abuse of rights” defense or by initiating invalidation actions; (iii) invalidation rulings concerning the petitioner’ marks relate only to those marks and do not, by themselves, create a legal duty for the registrant to refrain from using its own registered mark; and (iv) allowing non-use based solely on a fear of infringement would undermine the purpose of the non-use cancellation provision.

Supreme Court Decision 2: Bankruptcy Not Excused

The Facts.  A limited partnership registered the disputed mark in 2005 for goods including beans and sweet potatoes. The partnership entered rehabilitation proceedings in 2009, during which it borrowed KRW 400 million from a lender who would later participate as a party in non-use cancellation proceedings, pledging eight trademarks (including the mark in dispute) as collateral. After rehabilitation process was discontinued in 2010 and two subsequent rehabilitation petitions were dismissed, the partnership filed for bankruptcy in March 2016 and was officially adjudicated bankrupt on April 25, 2016. In July 2017, the bankruptcy trustee sold the mark to the petitioner with court approval, but the assignment of the mark was never officially recorded. The petitioner subsequently filed a non-use cancellation action on August 10, 2022, and the pledgee intervened in the proceedings.

IP High Court & Supreme Court (Appeal Dismissed).  On October 31, 2024, the IP High Court rejected the registrant’s defense, citing the trustee’s failure to seek court permission to continue business operations. The Supreme Court affirmed and established two practically significant doctrinal points: (a) once a registrant is adjudicated bankrupt, the mark falls into the bankruptcy estate, and the existence of justifiable reasons must be assessed from the trustee’s perspective; and (b) since a bankruptcy trustee is legally permitted to obtain court approval to continue a debtor’s business, a trustee who could have applied for such permission—but failed to do so—cannot rely on the bankruptcy alone as a justifiable reason for non-use.

Takeaways

Through these rulings, the Supreme Court has reaffirmed that the scope of “justifiable reasons” must be interpreted and applied strictly. Trademark owners should bear this high threshold in mind and proactively monitor the three-year statutory time limit for every dormant Korean registration, taking concrete, timely steps to guard against vulnerability to non-use cancellation.