Criminal Liability Response to a Reseller's Unauthorized Comparative Advertising

In the course of distributing its own brand products online, the client successively received certified-content notices from a competitor alleging violations of the Trademark Act, the Unfair Competition Prevention Act, and the Act on Fair Labeling and Advertising, on the ground that third-party resellers had, without authorization, created and posted content that mentioned or compared the competitor's brand. Citing the fact that some of the problematic posts were linked to the client's official store, the competitor raised the suspicion that the advertising had been carried out at the client's direction or on its commission, and even mentioned the possibility of a criminal complaint. In reality, the client had neither directed the creation of the posts nor paid any advertising fees, and was rather suffering harm from resellers using its brand without authorization. In this situation, a comprehensive legal review of the possibility of criminal liability and of response strategy was urgently needed.

The core issues in this matter were whether the problematic posts could be evaluated as the client's "advertising," and further, whether the resellers' acts could be attributed to the client so as to give rise to criminal liability under the Trademark Act, the Unfair Competition Prevention Act, and the Act on Fair Labeling and Advertising.

Your Legal Team first, on the premise that the client had never directly written the posts or commissioned or entrusted them through an advertising agency, reviewed the applicability of the constituent elements of each statute step by step.

As a result, we clearly organized the point that, where a third-party reseller independently writes and posts content, it is difficult-absent any circumstances in which the client directed or condoned it-to evaluate this as "use of the trademark" or as "an unfair competition act for one's own business," and it is also hard to regard it as a business operator's labeling or advertising act under the Act on Fair Labeling and Advertising.

In addition, we presented the strategic judgment that, although the fact that the advertising-agency contract structure and official advertising channels were operated solely through a particular agency could serve as important supporting material at the investigative-agency stage, since this corresponds to sensitive business information, there was no need to proactively provide it to the competitor at the current stage.

Furthermore, we designed the direction of the response so as to make clear that the client was not the beneficiary of the problematic comparative advertising but was rather a victim, by emphasizing the fact that the client had already commenced criminal-complaint procedures against the resellers who had carried out unauthorized advertising and sales.

In accordance with Your Legal Team's advice, the client, in its reply to the competitor, clearly stated that it was neither the author nor the commissioner of the problematic posts, organized and conveyed the facts that official advertising is conducted solely through a designated advertising agency and that legal measures against the resellers were currently underway. At the same time, in preparation for future criminal procedures, it systematically secured and organized materials such as the advertising-agency contract, records of advertising-fee execution, official advertising materials, and complaint materials related to the resellers, thereby establishing a risk-management system. Through this, the client was able to substantially block the possibility of escalation into an unnecessary criminal dispute and to effectively control the risk of having liability shifted onto it due to the illegal acts of third parties. This case is an example that shows how a company should clearly define the scope of its legal liability and respond proactively to the problem of unauthorized reseller advertising, which frequently arises in online distribution structures, and it well demonstrates that "Your Legal Team" functions as a practical risk-management partner for companies, beyond mere dispute response. Insight Law Firm will continue to support companies' sustainable growth and prevent unnecessary legal disputes through strategic legal advice that takes into account companies' business structures and practical realities.