Executive Summary
In the case of small businesses, it has been common practice to hold the rights to trademarks used in the company’s business in the name of the CEO, executive or a related person, or to change the name of the trademark owner between the representative and the company free of charge for various needs. However, as the value of trademark rights as an intangible “property” is being enhanced, it is becoming important to consider who holds the trademark rights, and people are also being led to change their understanding to see that the transfer should also be accompanied by a fair consideration and procedure.
Previously, the Supreme Court ruled that “if a director of a small company does not disclose important facts about the transaction to the shareholders and obtain the approval of the shareholders before engaging in a transaction with the company on his own account, the transaction is invalid unless there are special circumstances” (Supreme Court Decision 2019Da205398 rendered on July 9, 2020), and the Patent Court cited this ruling and ruled that “if a service mark transfer contract is made between a company representative and a company without disclosing the important contents of the transaction to the shareholders or without going through a shareholders’ meeting resolution, the service mark transfer contract is invalid.” As a result, the Patent Court ruled that the service mark transfer registration should be canceled (Patent Court Decision 2022Na1661, etc. rendered on August 24, 2023).
Considering that the evaluation of the value of trademark rights as property is increasing, it is necessary to be careful about whether the appropriate procedures have been followed in the registration and transfer of trademarks, whether the costs incurred in the registration process and the payment of consideration for the transfer have been properly carried out in accordance with the provisions of the applicable law, etc., in order to avoid the invalidity of the transfer registration, administrative penalties/taxation measures by the Fair Trade Commission or the National Tax Service, etc.