Jun-Seok Park,Is Self-Use by a Co-Owner of a Trade Secret Without Consent an Infringement? — Proposing an Interpretative Model to Fill the Gap in Co-Ownership Provisions, Seoul Law Journal, Vol. 64, No. 1(2023), pp. 297–400.
<Abstract>
The Korean intellectual property law, which consists of a maximum of 10 or more diverse laws, has its own characteristics in each of the three major fields of patent, trademark, and copyright while the trademark law and the unfair competition prevention law (exactly, Korean Unfair Competition Prevention Act, hereinafter “KUCPA” commonly belong to the trademark field and require reasonable interpretation to fill the gap arising from different circumstances. Among them, the KUCPA requires courts to go through reasonable and elaborated interpretation process to compensate for defects in the provisions because relevant statutory provisions are so brief that there are large gaps between almost all the provisions. The same is true of whether the “free use” (self-use by a co-owner without the consent of the other co-owners) is recognized among trade secret co-owners (common holders), which is the core issue of this article. In such interpretation process of the KUCPA, unlike patent law, copyright law etc., from the outset, there is a clear limit of the comparative legal analysis that is currently frequently adopted in Korean intellectual property law academia and practice. Furthermore, regarding the free use of trade secrets, there is almost no academic discussion in Japan, and even in the United States, there are only contradicting arguments that analyzed conflicting trends in very rare cases in opposite directions. Unavoidably, the most suitable interpretation process to fill the gap of co-ownership provisions in KUCPA can be achieved only by applying co-ownership provisions in other Korean laws that are most similar in nature mutatis mutandis to the trade secret protection in the KUCPA, while making appropriate revisions during the application process after taking into consideration the unique characteristics of trade secret protection. Although the basic nature of the KUCPA has been severely debated, the prevailing views are that it is close to tort law rather than property law. From this point of view, if we first look at the co-ownership provisions in the Korean Civil Act (hereinafter, KCA) as Korean general tort law rather than those provisions in Korean intellectual property law, there has been a series of Supreme Court judgments and supporting academic opinions to argue that the related provisions about tenancy-in-common rather than joint-tenancy among 3 types of joint ownership in the KCA shall be directly applied to the interpretation of the co-ownership issue in the intellectual property law in general and such an argument is currently dominant. However, even if such co-ownership issue falls under the type of tenancy-in-common basically, it is very unreasonable to ignore the intrinsic characteristics of the intellectual property laws and unconditionally apply the tenancy-in-common provisions of the KCA. Typically, Article 263 of the KCA, which allows free disposal of shares and free use & profit gathering without the consent of the co-owners, contradicts the very nature of the entire KUCPA protection including trade secret protection whose legal status cannot be freely disposed of in general. Therefore, it is necessary to look at co-ownership provisions of all the Korean IP Law one by one in the following steps. At this moment, this article followed a premeditated sequence based on how much similar in nature to trade secrets while thoroughly examined each of the 10 Korean intellectual property laws in total. Several significant implications were drawn through the process of examining individual laws, such as so-called trademark law field (general unfair competition prevention regulations under the KUCPA, the Korean Trademark Act, and geographical indication rights under the Agricultural and Fishery Products Quality Control Act), patent law field (the Korean Patent Act, the Korean Utility Model Act, the Korean Plant Variety Protection Act, and the Korean Design Protection Act) and copyright law field etc. (the Korean Copyright Act including already abolished old Korean Computer Program Protection Act and the Korean Act on the Layout-Design of Semiconductor Integrated Circuits). The Trademark Act is silent on whether or not free use by a co-owner is permitted. In this article's analysis, it seems to reflect the legislative intent of at least being very cautious and doubtful in recognizing it, considering that even the other co-owners will be harmed by the cancellation of a registered trademark due to the wrongful use of a co-owner. In addition, the geographical indication right of the Agricultural and Fishery Products Quality Management Act denies the co-ownership system itself, considering the act’s own characteristics. These facts suggest that it is necessary to consider whether there are any unique characteristics of trade secrets protection in KUCPA when determining whether free use of trade secrets is recognized and whether it is appropriate to revise general free use doctrine. Next, in the Patent Act, free use is expressly recognized in a statutory provision, and it is arguably allowed to receive help from third parties such as subcontracting party, under certain conditions within the scope of free use. However, trade secrets protection in KUCPA has the unique characteristics requiring ‘confidentiality etc.’, among others. As a result, there is an impassable obstacle to applying the co-ownership provisions, including free use, in the Patent Act of opposite nature. The Utility Model Act, the Plant Variety Protection Act, and the Design Protection Act are mere abbreviations of the co-ownership provisions of the Patent Act, and therefore, they are of little help in solving the core issue addressed in this article. Finally, the Copyright Act (including the old Korean Computer Program Protection Act) expressly denies free use by a co-owner. Nonetheless, the 2014 Korean Supreme Court ruling on the chinjeong-eomma (the married woman's mother) has already been heavily criticized by many Korean scholars for its total misinterpretation of a specific co-ownership provision (Article 48 of the Korean Copyright Act). This article also criticizes it based on the facts that the relationship between co-authors is arguably closer to joint-tenancy rather than tenancy-in-common, that the logic of the ruling is actually close to unreasonable adoption of the majority voting process, and that the court overlooked the facts of the case, which actually had nothing to do with free use issue from the perspective of not reproduction rights but performance rights. In conclusion, this article proposes the following approach as the most suitable interpretation to fill the gap of co-ownership provisions in the trade secret protection of the KUCPA. First, if we trace the origin of the logic of some lower courts that already affirmed the free use of a trade secrets co-owner and the chinjeong-eomma ruling recognizing the free use by a co-author, which are commonly based on the non-rivalrous nature of intellectual property rights, it originated from critically misunderstanding the famous explanation of a leading Japanese scholar. Secondly, even though the author of this article sincerely believes that generally too excessive restraints on co-ownership in the Korean IP law must be relaxed, unique characteristics, such as confidentiality, must be taken into consideration when deciding whether to recognize free use by a trade secrets co-owner, just as in the similar consideration of each respective unique characteristics of trademark and geographical indication rights. Thirdly, if free use was fully permitted, any trade secrets would be blatantly and audaciously transmitted to subcontracting third parties, and the loss of confidentiality will unavoidably occur in many cases, ultimately resulting in unjustly depriving the rights of other co-owners. Considering the implications obtained by comparative legal analysis and Korea's national policy perspective, this will be the reality. Finally, it is reasonable to limit the scope of recognition of free use of trade secrets to the so-called ‘true free use’ in the end, which consists purely of the co-owner's own facilities and workers. On the contrary, it is difficult to allow ‘non-true free use’, including subcontracting.
<Keywords>
Trade secrets infringement by a common holder, co-owner in trade secrets, Interpretation process to fill the gap of co-ownership provisions in the Korean Unfair Competition Prevention Act, scope of self-use under the Patent Act, Tenancy-in-common and joint-tenancy related to joint ownership of intellectual property rights such as patent, trademark rights, and copyrights, etc., Method of exercising the rights of the copyright co-owner of a joint work and copyright infringement, Nature of unfair competition prevention law related to tort protection and property protection
Jun-Seok Park,Is Self-Use by a Co-Owner of a Trade Secret Without Consent an Infringement? — Proposing an Interpretative Model to Fill the Gap in Co-Ownership Provisions, Seoul Law Journal, Vol. 64, No. 1(2023), pp. 297–400.
<Abstract>
The Korean intellectual property law, which consists of a maximum of 10 or more diverse laws, has its own characteristics in each of the three major fields of patent, trademark, and copyright while the trademark law and the unfair competition prevention law (exactly, Korean Unfair Competition Prevention Act, hereinafter “KUCPA” commonly belong to the trademark field and require reasonable interpretation to fill the gap arising from different circumstances. Among them, the KUCPA requires courts to go through reasonable and elaborated interpretation process to compensate for defects in the provisions because relevant statutory provisions are so brief that there are large gaps between almost all the provisions. The same is true of whether the “free use” (self-use by a co-owner without the consent of the other co-owners) is recognized among trade secret co-owners (common holders), which is the core issue of this article. In such interpretation process of the KUCPA, unlike patent law, copyright law etc., from the outset, there is a clear limit of the comparative legal analysis that is currently frequently adopted in Korean intellectual property law academia and practice. Furthermore, regarding the free use of trade secrets, there is almost no academic discussion in Japan, and even in the United States, there are only contradicting arguments that analyzed conflicting trends in very rare cases in opposite directions. Unavoidably, the most suitable interpretation process to fill the gap of co-ownership provisions in KUCPA can be achieved only by applying co-ownership provisions in other Korean laws that are most similar in nature mutatis mutandis to the trade secret protection in the KUCPA, while making appropriate revisions during the application process after taking into consideration the unique characteristics of trade secret protection. Although the basic nature of the KUCPA has been severely debated, the prevailing views are that it is close to tort law rather than property law. From this point of view, if we first look at the co-ownership provisions in the Korean Civil Act (hereinafter, KCA) as Korean general tort law rather than those provisions in Korean intellectual property law, there has been a series of Supreme Court judgments and supporting academic opinions to argue that the related provisions about tenancy-in-common rather than joint-tenancy among 3 types of joint ownership in the KCA shall be directly applied to the interpretation of the co-ownership issue in the intellectual property law in general and such an argument is currently dominant. However, even if such co-ownership issue falls under the type of tenancy-in-common basically, it is very unreasonable to ignore the intrinsic characteristics of the intellectual property laws and unconditionally apply the tenancy-in-common provisions of the KCA. Typically, Article 263 of the KCA, which allows free disposal of shares and free use & profit gathering without the consent of the co-owners, contradicts the very nature of the entire KUCPA protection including trade secret protection whose legal status cannot be freely disposed of in general. Therefore, it is necessary to look at co-ownership provisions of all the Korean IP Law one by one in the following steps. At this moment, this article followed a premeditated sequence based on how much similar in nature to trade secrets while thoroughly examined each of the 10 Korean intellectual property laws in total. Several significant implications were drawn through the process of examining individual laws, such as so-called trademark law field (general unfair competition prevention regulations under the KUCPA, the Korean Trademark Act, and geographical indication rights under the Agricultural and Fishery Products Quality Control Act), patent law field (the Korean Patent Act, the Korean Utility Model Act, the Korean Plant Variety Protection Act, and the Korean Design Protection Act) and copyright law field etc. (the Korean Copyright Act including already abolished old Korean Computer Program Protection Act and the Korean Act on the Layout-Design of Semiconductor Integrated Circuits). The Trademark Act is silent on whether or not free use by a co-owner is permitted. In this article's analysis, it seems to reflect the legislative intent of at least being very cautious and doubtful in recognizing it, considering that even the other co-owners will be harmed by the cancellation of a registered trademark due to the wrongful use of a co-owner. In addition, the geographical indication right of the Agricultural and Fishery Products Quality Management Act denies the co-ownership system itself, considering the act’s own characteristics. These facts suggest that it is necessary to consider whether there are any unique characteristics of trade secrets protection in KUCPA when determining whether free use of trade secrets is recognized and whether it is appropriate to revise general free use doctrine. Next, in the Patent Act, free use is expressly recognized in a statutory provision, and it is arguably allowed to receive help from third parties such as subcontracting party, under certain conditions within the scope of free use. However, trade secrets protection in KUCPA has the unique characteristics requiring ‘confidentiality etc.’, among others. As a result, there is an impassable obstacle to applying the co-ownership provisions, including free use, in the Patent Act of opposite nature. The Utility Model Act, the Plant Variety Protection Act, and the Design Protection Act are mere abbreviations of the co-ownership provisions of the Patent Act, and therefore, they are of little help in solving the core issue addressed in this article. Finally, the Copyright Act (including the old Korean Computer Program Protection Act) expressly denies free use by a co-owner. Nonetheless, the 2014 Korean Supreme Court ruling on the chinjeong-eomma (the married woman's mother) has already been heavily criticized by many Korean scholars for its total misinterpretation of a specific co-ownership provision (Article 48 of the Korean Copyright Act). This article also criticizes it based on the facts that the relationship between co-authors is arguably closer to joint-tenancy rather than tenancy-in-common, that the logic of the ruling is actually close to unreasonable adoption of the majority voting process, and that the court overlooked the facts of the case, which actually had nothing to do with free use issue from the perspective of not reproduction rights but performance rights. In conclusion, this article proposes the following approach as the most suitable interpretation to fill the gap of co-ownership provisions in the trade secret protection of the KUCPA. First, if we trace the origin of the logic of some lower courts that already affirmed the free use of a trade secrets co-owner and the chinjeong-eomma ruling recognizing the free use by a co-author, which are commonly based on the non-rivalrous nature of intellectual property rights, it originated from critically misunderstanding the famous explanation of a leading Japanese scholar. Secondly, even though the author of this article sincerely believes that generally too excessive restraints on co-ownership in the Korean IP law must be relaxed, unique characteristics, such as confidentiality, must be taken into consideration when deciding whether to recognize free use by a trade secrets co-owner, just as in the similar consideration of each respective unique characteristics of trademark and geographical indication rights. Thirdly, if free use was fully permitted, any trade secrets would be blatantly and audaciously transmitted to subcontracting third parties, and the loss of confidentiality will unavoidably occur in many cases, ultimately resulting in unjustly depriving the rights of other co-owners. Considering the implications obtained by comparative legal analysis and Korea's national policy perspective, this will be the reality. Finally, it is reasonable to limit the scope of recognition of free use of trade secrets to the so-called ‘true free use’ in the end, which consists purely of the co-owner's own facilities and workers. On the contrary, it is difficult to allow ‘non-true free use’, including subcontracting.
<Keywords>