Costco Korea loses infringement lawsuit
Seen is a Costco’s Ilsan store in Goyang, Gyeonggi Province. / Korea Times photo by Shim Hyun-chul
By Park Jae-hyuk
Costco Korea has been ordered to pay 200 million won ($186,000) for selling multifunctional storage boxes that its subcontractor supplied to the retail giant after allegedly stealing another storage box’s design from a Korean designer.
The Seoul Central District Court ruled this week in favor of the designer surnamed Kwon, who filed a lawsuit against Costco Korea for the company’s alleged infringement of a design patent.
The court ordered the U.S. retailer’s Korean subsidiary to compensate for the designer’s loss and banned the company from producing and using the storage box.
It also ordered the complete disposal of the products stored in Costco Korea’s warehouses.
According to the court, Kwon applied for a patent for the storage box’s design in 2010 and registered it two years later.
The storage box features a transparent window on the front.
The designer supplied the products with the design to an interior decoration company.
In the meantime, Costco Korea has been receiving the subcontractor’s storage box since 2012.
Kwon asked for a suspension of sales of the storage box in 2016, and Costco Korea stopped selling the products.
Then, the designer filed the lawsuit, demanding the company pay 300 million won.
Costco Korea claimed the two boxes were not similar in design.
The firm also argued it did not sell the product on purpose, because it did not know of the existence of Kwon’s design.
However, the court did not accept the claim, rebuffing the argument.
“Despite several differences, the two products are similar in overall aesthetic impression,” the judgment reads. “Costco Korea’s product infringed on the patent rights of the registered design.”
The judge also regarded five rectangles on the front and arrangement of transparent windows as similarities.
Headquartered in Gwangmyeong, Gyeonggi Province, Costco Korea has run its business since 1994.
The company initially cooperated with Shinsegae Group, a domestic retail giant.
However, E-mart, a discount chain of Shinsegae, signed a deal last year to sell its 3.3 percent stake in Costco Korea and its leased properties in Seoul, Daejeon and Daegu on which three Costco stores have operated.
At that time, E-mart said it made the decision to raise capital for other businesses, such as shopping mall and e-commerce. The lease that the two companies signed in June 1998 was scheduled to expire May this year.
The Korean firm regarded the selloff as a win-win for both companies.
Meanwhile, Costco Korea posted 3.8 trillion won in sales and 167.5 billion won in operating profits between the Sept. 1 2016 and Aug. 31 2017 period ― up 8.7 percent and 4.7 percent year-on-year, respectively.
Against this backdrop, the company has faced conflicts with small local retailers, when it decided to open new branches in several cities, such as Gwangmyeong, Bucheon, Cheonan and Daejeon.
Earlier last year, it feuded with small retailers in Songdo, Incheon, as well.
Incheon Kosa Mart, a cooperative society for small retailers in Incheon, demanded Costco establish a logistics center, buy vehicles for local retailers, close the store four days a month, sell imported alcohol only and delay the store’s opening, if the retail giant wants to run its Songdo store.