A repair shop in the basement of a building in Apgujeong-dong, Gangnam-gu, Seoul, won a trademark infringement lawsuit filed by French luxury brand Louis Vuitton. When a bag owner requested a refashion (repair), this shop reused the bag's fabric to make other forms of bags and wallets, but the Supreme Court did not accept Louis Vuitton's claim that this constituted trademark infringement.
The Supreme Court's Second Division (Presiding Justice Kwon Young-jun) on the 26th overturned the lower court ruling in favor of Louis Vuitton and remanded the case to the Intellectual Property High Court in a lawsuit seeking an injunction against trademark infringement and damages against refashion (repair) operator Lee Kyung-han.
◇ Louis Vuitton prevails in both first and second trials
From 2017 to 2021, Lee dismantled Louis Vuitton bags received from customers and used raw materials such as fabric and metal parts to produce bags and wallets of different sizes and shapes. Lee charged 100,000 to 700,000 won per job.
Louis Vuitton then filed suit in Feb. 2022, arguing that Lee's conduct infringed its trademark. The company claimed the source-identifying and quality-assurance functions of the Louis Vuitton mark were diminished, constituting trademark infringement.
Louis Vuitton won in both the first and second trials. The first trial held that Lee must not make refashioned products using Louis Vuitton bag fabric and ordered Lee to pay 15 million won in damages to Louis Vuitton. This finding was maintained on appeal.
The first trial court found that refashioned products are traded in the secondhand market and therefore fall under "goods" under the Trademark Act as independent objects of commerce. It also determined that ordinary consumers could be misled into believing the source of these products was Louis Vuitton, thus constituting "use of a trademark."
◇ Supreme Court: "Distributing refashioned products constitutes trademark infringement … burden of proof on the trademark owner"
By contrast, the Supreme Court determined that if a refashioner undertook modification or processing upon order from the owner for personal use, it generally does not constitute "use of a trademark" under the Trademark Act. Before refashioning, Lee received orders from the bag owners regarding design, form, and purpose. And because the refashioned products were returned to the owners after the work, it is not trademark infringement.
However, the Supreme Court said that even if a service appears to be provided for an owner's personal use, if, in substance, the refashioner controlled and led a series of refashioning steps and produced and sold refashioned products as their own products, thereby distributing them in the transaction market, it may constitute trademark infringement under special circumstances warranting such an assessment.
The Supreme Court said, "Whether such special circumstances exist should be determined comprehensively, considering various factors such as the circumstances and details of the owner's refashion request; who had final decision-making authority regarding the purpose, form, and quantity of the refashioned products; the nature of the consideration the refashioner received; and the source of the materials provided for the refashioned products," adding, "The burden of proof regarding these circumstances lies with the trademark owner."
It also said, "If the owner requested refashioning not for personal use but with the purpose of distribution in the market, and the refashioner, despite knowing or being able to know of the trademark infringement, provided the service and became involved in the conduct, they may share legal liability for the trademark infringement."
In this case, the Supreme Court for the first time declared the legal doctrine on whether a refashioner's refashioning conduct constitutes trademark infringement. A Supreme Court official said, "This case is being closely watched in many countries around the world, including the United States, Europe, and Japan, and the importance of the legal doctrine as well as the social impact is considerable."
For this ruling, the Supreme Court held a public hearing in Dec. last year to hear expert opinions supporting the arguments of both Louis Vuitton and the refashioner.
◇ Refashioner: "Louis Vuitton intimidated small business owners … then we shouldn't even alter clothes"
Lee Kyung-han, who runs the refashion business "Gangnamsa," appeared in a YouTube video last month and said, "Louis Vuitton intimidated small business owners by saying, 'If you get caught refashioning this even once, we'll impose tens of millions of won in fines. We'll file lawsuits,'" adding, "So small business owners signed undertakings saying they wouldn't do it. I was the only one who didn't sign."
Regarding not signing the undertaking, Lee said, "No matter how I think about it, it doesn't make sense. I wasn't refashioning goods to sell; when a customer entrusted an item, I repaired it and returned it. If they prohibit this kind of work, then shouldn't we also stop altering clothes?"