Kim & Chang secured a landmark decision before the Supreme Court when the Court recognized that the mark LEGOCHEMPHARMA was likely to damage the property value of the LEGO trademark and held that it should be invalidated. This decision marks the first time the Supreme Court applied Article 34(1)(xi) of the Trademark Act (TMA) and provided criteria for how dilution is to be assessed under this provision. Article 34(1)(xi) was introduced in 2014 and prohibits the registration of "any trademark likely to tarnish the distinctiveness or reputation of the goods or business of another party remarkably recognized by consumers".

In this decision, the Supreme Court found that the LEGO mark is a well-known trademark with a significant property value that is protectable under the trademark law, and held that since the use of the LEGOCHEMPHARMA mark was likely to damage its value, the registration should be invalidated regardless of whether there is a likelihood of confusion as to source.

The registrant was LegoChem Biosciences Inc. ("LegoChem Bio"), a biopharmaceutical company that is known for developing antibody-drug conjugates. One of their key arguments was that "lego chemistry" is a generic term because it is widely used in their field to refer to a method of joining molecules together, and they asserted that the "LegoChem" part of their name was adopted because they use "lego chemistry" technology in the development of their therapeutics. 

This case started in 2016, when LegoChem Bio filed applications for the subject mark, as well as for their "LegoChemBio" logo in English and in Korean (10 applications in total). The LEGO Group ("TLG") filed oppositions against them all but requested suspensions of the other cases, pending the dispute over the subject LEGOCHEMPHARMA mark. 

TLG's opposition against the subject LEGOCHEMPHARMA mark was accepted on the basis of consumer confusion and dilution, but LegoChem Bio successfully appealed to the Intellectual Property Trial and Appeal Board (IPTAB), which thereafter also dismissed TLG's invalidation action on the basis that consumer confusion would be unlikely, and denied TLG's dilution claim. 

During the IP High Court (formerly the Patent Court) appeal, LegoChem Bio voluntarily cancelled their registration for LEGOCHEMPHARMA which was the subject of this Supreme Court appeal. By cancelling their registration for the subject LEGOCHEMPHARMA mark, the registrant was able to raise a "lack of legal benefit of appeal" claim and sought dismissal of the appeal by the IP High Court so that the IPTAB's favorable invalidation decision would be the conclusive holding in this case.

However, in its decision, the IP High Court accepted TLG's Article 34(1)(xi) claim and decided in favor of TLG. The court stated that since the LEGO mark has obtained a very high level of fame in Korea and the compared marks are similar, regardless of whether there is a likelihood of confusion or any competition between the parties' products, it is reasonable to think that the positive reputation which TLG enjoys as a result of its significant investments in its brand, the brand's marketing power and consumer appeal would be diluted by the use of the subject mark, and the distinctiveness of the LEGO mark and its ability to function as a source identifier would be damaged as a result. 

The court also accepted our arguments with respect to there being a legal benefit of appeal for TLG.

The Supreme Court upheld the IP High Court's decision, and confirmed that the purpose of Article 34(1)(xi) of the TMA is to protect the property value of a well-known trademark, such as consumer appeal or sales power, by preventing the registration of a trademark that is likely to damage the distinctiveness or reputation of the well-known trademark, even if there is no risk of misunderstanding or confusion as to source. The specific criteria set out by the Court for applying this provision are (1) the degree of similarity of the compared marks, (2) the degree of recognition and distinctiveness of the well-known trademark, (3) whether the applicant of the registered trademark intended an association between the registered trademark and the well-known trademark, and (4) whether the actual association occurs between the registered trademark and the well-known trademark.

Specifically, in this case, the Court held that the "LEGO" part of the LEGOCHEMPHARMA mark alone could function as the source identifier. Given that TLG's LEGO mark is highly distinctive and a powerful brand, the "LEGO" part of the LEGOCHEMPHARMA mark would leave a strong impression on consumers. Also, the Court said there is no supporting ground to say that "lego chemistry" is a generic term in the chemical industry. In addition, the Court noted that given the likelihood that consumers would associate the LEGOCHEMPHARMA mark with TLG's LEGO mark and the fact that it was unnecessary for the Respondent to use the term "lego chemistry", there is a strong likelihood that the Respondent applied for the LEGOCHEMPHARMA mark with the intention of causing an association with the prior LEGO mark. The Court held that when used on the designated goods, the LEGOCHEMPHARMA mark would impair the power of the well-known LEGO mark to indicate a single source.

As a result of this decision, TLG will be able to block third party applications more easily because they will not have to demonstrate that the relevant goods/services are similar to, or have an economic relationship with, their business. The decision also has significant implications for all owners of very famous trademarks.