Court pulls plug on Mister Donut Korea
A court has ordered the Mister Donut Korea chain to stop using the brand.
SDK2, a unit of Korean construction group SDK, has run Mister Donut stores in Korea since July 2014 after signing a franchise contract with a Hong Kong subsidiary of Duskin, which owns the Japanese-based doughnut chain.
In November, Duskin said it planned to terminate the agreement with SDK2 at the end of January, citing contract violations by the Korean company such as allegedly falsifying expiration dates.
SDK2 was fined 3 million won (US$2600) last September using ingredients with expired shelf lives for making doughnuts. However, the regulation regarding the case was found unconstitutional later last year, which prompted prosecutors to acquit SDK2.
Duskin claims the Korean company had “obviously falsified the expiration dates”. It also says the contract included a clause that headquarters could immediately terminate the agreement if a local operator received a criminal penalty. In addition, the Osaka-based company blamed SDK2 for selling products that were not on the brand’s official menu.
Seoul Central District Court has granted Duskin’s injunction against SDK2’s trademark infringement, noting the trust between Duskin and SDK2 had been “totally destroyed”.
SDK2 will not be able to use the Mister Donut brand on its products, packages and in advertisements. If the Korean company violates the order, it will have to pay 3 million won a day to Duskin.
Duskin also must put down a 100 million won deposit to compensate for SDK2’s possible losses in case the judgment is reversed. If Duskin pays the deposit, the court’s order will take effect immediately.
SDK2 is considering appealing to the upper court, but has reportedly closed its stores in Korea.