China Law Blog

There is an assumption out there that China's legal deck is completely stacked against Western companies. 

China bad.  South Korea good. 

Starbucks just proved it is not that simple.

I have handled at least 100 legal matters in Korea and in many ways I find its commercial legal system more nationalistic than China's.  Korea's laws on the books say one thing, but its bureaucrats say another when a foreign company is involved.  I often say that I am better at predicting how Korean courts will rule on a matter than any other courts anywhere in the world.  I say, ask only one question:  What is best for Korea right now? 

The answer to this one question is also the answer to how a Korean court just ruled in Starbucks' trademark case there.  Look at these two logos.   Look at the name.  Think for 30 seconds.  Is there any doubt that Starpreya's goal here is to create confusion and piggyback off Starbucks' good name?  Of course not.

But if you ask what is best for Korea in the short term, the ruling favoring Starpreya is no surprise.

The Daily Warthog blog, entitled "Coincidence," analogizes the Starbucks' and Starpreya trademarks to this line from the Eddie Murphy movie, Coming to America, in which the lead character takes a job at McDowells Restaurant, whose owner, explains the situation as follows:

Look. . . me and the McDonald's people got this little misunderstanding. See, they're McDonald's . . . I'm McDowell's.  They got the Golden Arches, mine is the Golden Arcs.  They got the Big Mac, I got the Big Mick.  We both got two all-beef patties, special sauce, lettuce, cheese, pickles and onions, but their buns have sesame seeds.  My buns have no seeds.'

The explanation for the Korean court's ruling on the IPKat blog could have come straight from the movie:

The court ruled that:

• the words looked different
• Star is commonly used in trade marks and so wasn't distinctive
• Neither 'preya' nor 'bucks' had any special meaning, and so consumers would be unlikely to separate the trade marks into their constituent elements, referring to both sometimes as 'Star'
• There was no evidence that Elpreya [the company that uses the Starpreya name] had 'plagiarised' Starbuck's logo

IPKat does not find the court's analysis convincing:

True, if you analyse each element of the two logos bit by bit it's possible to highlight many differences between them, but our good friend the moron (or should that be commuter?) in a hurry will just take a quick glance and will be confronted with two logos of green rims containing white writing and a picture in the middle.

Marmot's Hole, one of Korea's leading blog, in its post, entitled, "Starbucks Loses Korean Logo Fight, noted Korea's state-owned news agency Yonhap began its article on the court ruling with "Giant multinational firm Starbucks dropped to its knees today in its courtroom dispute with a native medium-sized firm over 'knockoff logos.'" 

A tongue in cheek comment to the Marmot Hole's post not so obliquely notes Korea's history with foreign brands:

Knockoff, schmockoff. Who do those huge multinational brutes think they are? The Korean courts were just as righteous when they wouldn't let FedEx take www.fedex.co.kr away from a legitimate, hardworking Korean [cough*cybersquatter*cough] firm.

Seoul based attorney, Brendan Carr (of the recently formed Seoul Law Group), I know and greatly respect, posted this comment at Marmot's Hole, affirming Korean court nationalism:

This is an unusual case (well, not unusual in the sense that Korean courts don't do this to hapless foreign trademark holders regularly, but weird nonetheless). I'm a little reluctant to talk out my backside and have no information other than what's in the papers; Starbucks didn't call us for this matter, or any other. I am still hopeful to get business from Starbucks one day. Starpreya seems like a less-attractive candidate, the multinational's supine position before the mighty Korean SME notwithstanding. 

However, it appears from the story that what happened here is a reversal for Starbucks at an intermediate-appellate level.  It will still be possible to appeal this seemingly-erroneous decision to the Supreme Court. (Oh, to make the kind of money Kim & Chang [Korea's largest law firm] will get in this case! Hundreds of thousands of dollars.) But our friend Sperwer's notation on the difficulty of prevailing on the 'famous mark' doctrine is right on target.  Korea basically follows a standard so onerous that no foreign litigant can meet it ' if Starbucks is not a famous mark known to the general public, then nothing is. This is a clever end-around international standards, so that Korea can 'protect intellectual property' while still winking at the same old ripoff: Adopt the language of the prevailing standard, but then interpret the same language differently so there's no meaningful protection. Or just do nothing at all, as we see with the ripoff DVD sellers on the streets.

What's odd in this story is the Yonhap report indicates that the Starbucks mark is senior to the Starpreya mark ' Starbucks registered first. The real question, then, is How on Earth did Starpreya get its registration approved? We're dealing with a case right now where a foreigner's registration of its mark in the ice cream space has been rejected because a Korean company has a mark which incorporates one of the words. Their market segments are completely different ' our client will sell in a restaurant setting only, while the Korean product is a supermarket and corner-store brand.  But there is apparent similarity in the name (the logos, however, are exactly different) and therefore, says KIPO, confusion is inevitable. So, Mr. Foreigner, no registration for you.  But local minnow Starpreya, with the highly-similar name and identical logo, congratulations ' your mark is approved. 

For more on the Korean Starpreya case, check out the following:

1. "Brand Naming: Protecting Starbuck's Brand in Asia is a Venti Order," on the Strategic Name Development Blog.
2. "Starbucks vs. Starpreya the branded beverage battle," on the Phosita Intellectual Property Law Blog.
3. "Starbucks Not a "Preya" in Korea," at the Likelihood of Confusion IP Blog, which notes Starbucks has "ample grounds"  (pun intended) to appeal.
4. "Starbucks v Starpreya - TM Korean Style," at the Blogs for the Center for Internet and Society, which finds "it quite unbelievable that these two logos are not infringing when applied to coffee-related goods."
5. "Starbucks Wars," at Japundit, which does a nice job describing Starbucks trademark wars throughout Asia.
6. "Koreans - Original?" at the consistently interesting Occidentalism blog, which does an amazing job visually pointing out this is not the first time a Korean company (or band, or movie, or advertisement) has engaged in what looks like copying. 

I note that Starbucks prevailed in China in a somewhat similar case.  For more on that case, go here and here.