Why was the decision to ‘dismiss’ the lawsuit regarding “trademark infringement” and prohibition of use?

Clothing manufacturer files for temporary injunction, including trademark use ban, alleging “unauthorized trademark application and use” by former CEO
Busan District Court Civil Division 14 “It is difficult to exclude the former CEO’s investment and effort in creating the trademark”

A company that filed a lawsuit against its former CEO for trademark use ban, claiming that its trademark rights had been infringed, was ruled defeated in a preliminary injunction trial.

The 14th Civil Division of the Busan District Court (Presiding Judge Jong-soo Kim, and Judges Seung-hyeon Kim and Seong-min Heo) decided on November 25 to dismiss the application for a temporary injunction to prohibit use of trademark and interference with use of trade name filed by company A, a clothing manufacturer and seller, against former CEO B.

Company A was founded by Mr. B in 2015. Mr. B had been running a private business manufacturing and selling products with his wife for several years, and as the business gradually grew, he decided to establish a corporation. Afterwards, Mr. B and his wife ran the company with their family for about eight years.

The problem arose when a dispute over management rights arose among the family members. Ultimately, Mr. B was dismissed from his position as CEO in 2023. Afterwards, Mr. B registered his business using the representative product name of Company A, which he had been operating, as its business name.

The dispute over management rights escalated into a trademark dispute. Both sides filed applications for a temporary injunction to ban the use of each other's trademarks.

Company A claimed in this trial, “Although Mr. B was only nominally the CEO, he applied for and registered three trademarks in his personal name without the permission of the company and then used them without permission,” and “Mr. B infringed on their economic interests in a way that went against fair trade practices or competitive order.”

However, the 14th Civil Division of the Busan District Court, which heard this case, dismissed Company A's application.

The court ruled that “the first trademark was registered in 2014, before the establishment of Company A,” and that “it was created through Mr. B’s investment and efforts.”

He then pointed out, “The second and third trademarks were applied for and registered after the company was established, but there are no circumstances showing that Company A raised an objection, such as blocking trademark registration or demanding compensation for damages.”

The court then ruled that “Mr. B and his wife have been doing business using the brand name even before Company A was officially established,” and that “it is difficult to exclude Mr. B’s investment and efforts.”

Attorney Bang In-tae of Daeryun Law Firm (Limited), who represented Mr. B in this lawsuit, said, “Unauthorized use of the results created by another person’s significant investment or effort for one’s own business in an unfair manner may constitute an act of unfair competition,” but added, “In this case, since Mr. B was significantly involved in the related achievements for all three trademarks at issue, it does not constitute an act of unfair competition per se.”

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Why was the decision to ‘dismiss’ the lawsuit regarding “trademark infringement” and prohibition of use? (Shortcut)