The Supreme Court has recently ruled on a case in which the plaintiff, the owner of a golf course, complained about the unauthorized use of computer graphics by the defendant, who provided screen golf operators with digital reproductions of the golf course (case 2016Da276467; March 26, 2020). What might be the legal repercussions for using a reproduction of a golf course for commercial purposes in a screen golf establishment without the permission of the golf course owner?

Article 2(1) of the Unfair Competition Prevention and Trade Secret Protection Act (hereafter “Unfair Competition Act”) enumerates various specific acts deemed to be unfair competition, with item 2(1)(k) — known as the “catch-all” clause — providing that an act of “infringing on other persons’ economic interests by using the outcomes, etc. achieved by them through substantial investment or efforts, for one’s own business without permission, in a manner contrary to fair commercial practices or competition order” is also considered unfair competition.

The Supreme Court does not limit the interpretation of “outcomes, etc.” mentioned in the above provision to tangible property, meaning that certain forms of intangible property which were previously difficult to protect under existing IP laws may also be included. When such “outcomes, etc.” are judged, the Supreme Court has stated that their reputation and economic value, consumer attraction, and importance/competitiveness in the relevant commercial area must be considered in a comprehensive manner.

Whether such “outcomes, etc.” were achieved “through substantial investment or efforts” is judged concretely and specifically with respect to the content and the extent of the investment or effort expended, in light of the practices and realities of the relevant business area. In using such “outcomes etc.” without permission, it must be possible to assess whether the infringed economic interests belong to the public domain and are thus freely available for anyone to use.

Further, whether an act is deemed to be “for one’s own business without permission, in a manner contrary to fair commercial practices or competition order” will require comprehensive consideration of whether the owner and potential infringer are competitors or there is a likelihood of competition in the near future; the business practices and competitive order in the business area to which the “outcomes, etc.” claimed by the owner belong, and whether such practices and competition are fair; whether such “outcomes, etc.” can be replaced by the potential infringer’s goods or services in the marketplace; and the extent to which the “outcomes, etc.” are known to consumers and traders, as well as the likelihood of confusion among consumers and traders.

The Supreme Court handed down a judgment on this case based on the aforementioned standards, determining that while the course itself is a copyright work of the designer, the comprehensive image of the course including externally expressed terrain, landscape, landscape components, facilities etc. which make up the actual golf course is separate to the design of the course alone, and is an outcome achieved through substantial investment or efforts of the plaintiff, who constructed and now operates the golf course. Accordingly, the defendant’s act of creating and using a 3D image of the golf course for use in screen golf simulation systems without the permission of the plaintiff — in which the golf course was reproduced almost identically — was deemed to be an infringement of the plaintiff’s economic interests by using the plaintiff’s “outcomes, etc.” for the defendant’s business without permission, in a manner contrary to fair commercial practices or competition order, thus falling under Article 2(1)(k) of the Unfair Competition Act.

The takeaway from this case is that in infringement situations where the facts of the case make a claim for damage compensation under the Copyright Act or other IP laws challenging, if the infringed intangible/tangible property was achieved through substantial investment or efforts, and the actions of another party can be considered as being for their own business without permission, in a manner contrary to fair commercial practices or competition order, it may be possible to rely on Article 2(1)(k) of the Unfair Competition Act when seeking compensation for damages.