Member Article

We don’t often discuss Korean trade mark cases, but a recent registry decision is worth a look because it shines a spotlight on a particularly interesting aspect of trade mark law: character merchandising.

Kakao Corp is Korea’s largest mobile service provider. One of its offerings is KakaoTalk, a mobile messaging service that’s apparently used by some 154-million people around the globe. Part of the KakaoTalk service is Kakao Friends, which comprises eight characters that are used as emojis. One of the characters is Frodo, a cool-looking dog that wears shades, described as “an ambitious city dog from a wealthy family.” Not only are these eight characters used as emojis, but they’re also used on various products including cosmetics, clothing and foodstuffs. As a commercially astute company, Kakao Corp has applied to register the various characters as trade marks in Korea. 

It’s not clear whether Kakao Corp was surprised when its application to register Frodo was opposed, but the opponent was indeed the company behind the various movies that made the character Frodo Baggins so famous, The Lord of the Rings and The Hobbit. The opposition by the Saul Waentz Company was based on the argument that consumers encountering an emoji called Frodo – and indeed a cosmetic or clothing product bearing that name – would be confused.

But how exactly would they be confused? It’s quite a convoluted argument, and it goes something like this: the name Frodo is synonymous with a fictional film character; it’s quite common for film companies to license manufacturing and service companies to use names or images of famous characters on their goods or services (the licensed companies obviously see a benefit in this, believing that the presence of the character will boost sales). The public understands how this works. In this instance, there is no licence between the film company that owns the rights to the character Frodo and the company that’s offering the mobile services and the associated products under the name Frodo, so the public is confused because it mistakenly believes that Kakao Corp has a licence from the film company.

When it comes to deciding whether confusion is likely to arise, a number of issues need to be taken into account. How well-known is the character? How unique is the name or appearance of the character? What associations are there with the character? Has the character been licensed to companies in the past? How likely is it that a character like this will be licensed for products? How likely is it that a character like this will be licensed for products of this nature (for examples of unlikely licensing arrangements, think Hannibal Lecter cuddly toys, or Harry Potter assault rifles!)? How likely is it that a character like this will be licensed in a country like this (it’s not hard to imagine situations where religious or moral sensitivities might make licensing of certain characters inappropriate and unlikely)?

A few years back, there was an interesting character merchandising decision in the UK. The case involved a 1930s cartoon character called Betty Boop. The owners of the rights to this character had European trade mark registrations for both the name and image of the character, and they had licensed merchandise for many years. When they discovered that a third party was using the same image on merchandise, they sued for trade mark infringement. 

The court showed a clear understanding of character merchandising. It said that, as a result of the significant legitimate use that had been made of the character, the name and image would have a trade mark significance for most people. The court rejected the defendant’s claim that its use of the image was purely decorative (sometimes called “non- trade mark usage”), a claim that was absurd bearing in mind that its products were sold with swing tags featuring the words “officially licensed”. The court further rejected the defendant’s claim that its use was in accordance with honest practices, as well as a freedom of speech defence, saying that this “speech” was purely commercial. This quote from the judgment is key:

“I have rejected the idea that all an average consumer today would see, when looking at the T-shirt, would be a 1930s cartoon character. They will see a character with modern currency. This association certainly takes advantage of the claimants' investment in Betty Boop because many consumers will be moved to buy the T-shirt as a result of the favourable associations conjured up in their mind by Betty Boop, which associations are the creation of the claimants' extensive work.”

In the Korean case, the trade mark authorities came to the conclusion that consumer confusion was unlikely. They decided that, even if the name Frodo is associated with a movie character, there was no evidence that consumers associate that character with any products. In other words, the fact that there was no evidence that Korean consumers have been exposed to Frodo character merchandising counted against the film company. The Korean trade mark authorities appear to have given the film company a fair hearing, but finally reached the same conclusion as Gandalf: YOU SHALL NOT PASS!

Creators of characters face a difficult choice. In an ideal world, they would simply work on the assumption that they will probably find companies who wish to use their characters on a wide range of goods and services, and they would get trade mark registrations throughout the world in all 45 classes. But that simply isn’t practical and, in any event, there would be real doubts about the validity of trade mark registrations that were obtained without any real intention to use. Owners of valuable characters can, however, be strategic – they can target the most obvious countries and the most obvious product areas.