Korea Legal News for the Week of May 12

This Week's Legal News Reported by Media

• North Korea names another new armed forces minister 
• U.S. law aimed at helping North Korean orphans 
• U.S. Firms see opportunities in South Korea 
• U.S. envoy says Korea investment attractive despite North Korea threats 
• South Korea apology for Yoon Chang-jung U,S. sex scandal 
• South Korean Spies accused of infiltrating Reddit-like site to manipulate election
• Korea to scrap diesel, petrol import tax break in July 
• Ministry to raise fund to help Korean firms win overseas plant orders 
• CJ couriers’ strike drags on 
• Samsung puts cash to work on research 

Most Recent Posts from The Korean Law Blog

• Music Tech Seminar in San Francisco Attended by Sean Hayes  
• How to Protect your Brands, Trademarks and other IP in the Korean Market in 10 Not So Easy Steps 
• Distribution Agreement in Korea: Factors to Always Keep in Mind
• Korean Corporate Governance Reported as One of the Worst by an Economist  
• Annulments Possible in Korea? Intention of the Marriage Potential Factor in Korean Court's Annulment Decision
• Great Article Today on the Success of K-Pop Abroad by the Korea Herald  
• Korea National Intelligence Service Caught Spying in Australia: Scooby Doo Where are You? 

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Sean Hayes may be contacted at: SeanHayes@ipglegal.com.

Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. He is the only non-Korean to have worked as an attorney for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty.

Music Tech Seminar in San Francisco Attended by Sean Hayes

Sean Hayes will be attending the Music Tech Seminar in San Francisco that will be taking place from April 27 to the 29th.  I suggest anyone interested in the music business to attend the Seminar.

More information on the Music Tech Seminar may be found at: http://www.sfmusictech.com/

International Association of Entertainment Lawyers standard discount will apply. 

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info@ipglegal.com

How to Protect your Brands, Trademarks and other IP in the Korean Market in 10 Not So Easy Steps

I just participated as a panelist for the United States Commercial Service Trade Winds-Asia Seminar for U.S. companies considering investing and/or exporting to Korea, China, the Philippines, Japan and Taiwan.  The Seminar brought together over 150 U.S. investors and exporters of products and services.  The U.S. Commercial Service did a wonderful job bringing together some of the leading experts on doing business in Korea.  I was impressed. 

At the event, the most frequent question I was asked was related to protecting companies trademarks and other intellectual property.  Additional posts will be written on this topic by Tom Coyner - Senior Commercial Advisor for IPG Legal and head of Soft Landing Korea and myself.

TOP TEN THINGS TO DO TO PROTECT YOUR BRAND IN KOREA

1. Do a Complete Intellectual Property AuditForm a team to audit all your intellectual property including your patents, trademarks, service marks, books, manuals, videos, software, know-how, and trade secrets.
   
   The team should include, at a minimum, a senior manager experienced in the internal workings of the company and an experienced Korean-savvy international consultant (attorney or intellectual property consultant) who is experienced in creating inventories.
   
   The team should send a tailored questionnaire to the heads of all your company's departments. From the questionnaire and other ascertained information, the team should produce a complete intellectual property inventory that details what intellectual property the company possesses and evidences how much the intellectual property is worth to the company.  (Protecting Your Intellectual Property in Korea)
   
   
2. Register your Trademarks and other IP in Korea  
   Yes, your international filings are not good enough for Korea and much of the rest of the world.  As the U.S. Commercial Service notes: ``protection of intellectual property and the laws governing enforcement of these protections exist but are not necessarily extra-territorial. What is understood and practiced in the United States is not always practiced in Korea. . . .U.S. companies wishing to sell their products or services in Korea should first and foremost register their intellectual property rights (copyrights, trademarks and/or patents) in Korea.''
    
3. Educate Korean Customs on What is your Product and What is Not your Product
   A few professionals in Korea, including professionals at IPG, do presentations to Customs informing them of how to spot counterfeit products.  Some fakes are very difficult to spot and, also presentations by your professionals will go a long way in getting the positive attention of Customs of your seriousness of enforcing your IP rights.
   
4.  Draft an Intellectual Property Protection Plan
   The plan should include an internal monitoring and worldwide registration and licensing scheme; an action plan to deal with intellectual property violators and trolls; forming of a team that is responsible for maintaining and fostering intellectual property rights and making sure that intellectual property is properly reflected in the company's financials.
   
   
5. Actively Engage Customs and the Prosecution
   Us all administrative avenues available to protect you products.  Companies that are perceived weak are companies that are more likely to be targeted by counterfeiters, patent trolls and the like.
     
6. Actively Engage your Sales Channels
   So much information can be garnered from those that are competing against counterfeiters and pirates. 
   
   
7. Track the Importers of Counterfeit Products into Korea
   The Prosecution, generally, does a decent job.  However, often it is advisable to employ a professional to obtain the necessary information and present the information to the Prosecution and Customs.
   
   
8. Integrate the home office with the Korean entityAll too often the Korean branch is totally out of the loop and hence unaware of developments at the home office. The Korean branch, in not only intellectual property, but in other company areas should at least be near the loop.
   
9. Don't Forget Trade SecretsI wrote an article on protecting trade secrets in Korea that may be found at: Protecting your Trade Secrets in Korea: Top 5 Things to Know Before Subjecting your Business to the Korean Market.
   
10. Get Professional Assistance
    Speaks for itself.  If you don't have an experienced inhouse team of Korean-based attorneys (and often even if you do), you need assistance from professionals in Korean IP law who have high-level contacts with the Prosecution and Customs.
    

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Sean Hayes may be contacted at: SeanHayes@ipglegal.com.

Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. He is the only non-Korean to have worked as an attorney for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty.

Distribution Agreement in Korea: Factors to Always Keep in Mind

Prior to going into any relationship with a distributor/agent in Korea, please read my post entitled: Finding a Korean Distributor: The Top 10 Things to Know Before Going to Bed with a Distributor in Korea. Please read that post in combination with this post, prior to engaging a distributor.

We see too many distribution agreements that are mere spun U.S. agreements. Please have your distribution agreement and all agreements you have in Korea drafted by an experienced and proactive attorney that has on-the-ground experience in Korea. We see too many issues that could have been easily resolved by a carefully drafted agreement and a little due diligence.

Issues to consider for your Korean Distribution Agreement:

1. Will your distributor in Korea be your agent? If the distributor is an agent, generally, you will, only, be paying your agent a commission and you will be directly invoicing the client. Liability and other issues to consider.
2. Will your Korean distributor be your exclusive distributor? How long will the relationship last? How can the relationship be terminated? Territory? Scope?
3. What occurs after termination of the relationship with the Korean distributor? Return of products, buy back inventor etc.?
4. Dispute resolution mechanisms? Venue? Arbitration?
5. Have you created a franchise? If so, we have some more talking to do. The requirements for franchising in Korea is much more cumbersome than a mere distribution relationship.
6. Have you registered your trademarks? Korea is a first-to-file nation. If you have an agreement with a distributor - you may be protected even without registering your trademarks - however- register and avoid issues with others.
7. Did you conduct a thorough due diligence on the distributor?
8. Who handles warranty claims, distribution, support, marketing etc.?
9. Is the party signing the agreement authorized to sign the agreement? Make sure the agreement is properly executed.

We see too many distribution agreements that are mere spun U.S. agreements. Please have your distribution agreement and all agreements you have in Korea drafted by an experienced and proactive attorney that has on-the-ground experience in Korea. We see too many issues that could have been easily resolved by a carefully drafted agreement and a little due diligence.

Other articles that may be of interest:

• Basic Agreements for Doing Business in Korea
• Liquidated Damages Need in Most NDAs in Korea
• Avoid the Grey Market Trap in Korea: Due Diligence, Street Smarts and Korea Law Firms

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Sean Hayes may be contacted at: SeanHayes@ipglegal.com.

Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. He is the only non-Korean to have worked as an attorney for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty.

Korea Legal News for the Week of May 5

This Week's Legal News Reported by Media

• Korea's President seeks to shore up U.S. support
• Bank of China closes account of key North Korean bank 
• Samsung C&T wins $483 mln order to build Mongolian coal railway 
• Korea dept, discount store sales both fall in April 
• GM plans no pullout from South Korea but workforce a worry: CEO quoted 
• Samsung wind turbine test site plans backed by ministers
• LG takes No. 3 spot in smartphone market 
• Korea May Jump on Rate Cutting Bandwagon 
• Korea ratifies 5.3 trln won fiscal stimulus plan 
• Foreign ownership of listed shares drops to 8-month low 
• Korea seeks deeper U.S. economic ties 

Most Recent Posts from The Korean Law Blog

• Korean Corporate Governance Reported as One of the Worst by an Economist  
• Annulments Possible in Korea? Intention of the Marriage Potential Factor in Korean Court's Annulment Decision
• Great Article Today on the Success of K-Pop Abroad by the Korea Herald  
• Korea National Intelligence Service Caught Spying in Australia: Scooby Doo Where are You? 
• Getting a Marital Separation Agreement in Korea: Divorce Checklist
• Selling Traditional Korean Products to the World by Tom Coyner
• Mandatory Retirement Age of 60 may be Mandatory for Most Companies in Korea

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Sean Hayes may be contacted at: SeanHayes@ipglegal.com.

Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. He is the only non-Korean to have worked as an attorney for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty.

Korean Corporate Governance Reported as One of the Worst by an Economist

What is the cause of the Korean discount? An economist article hits the nail right on the head.

So what is the source of the “Korea discount”, which means that the KOSPI has a forward price-to-earnings ratio of under ten, below most other Asian stockmarkets (see chart)? There are a few possibilities. The national economic model is still built on exports, often in highly cyclical industries such as shipbuilding. The capital structure of South Korean firms has historically been debt-heavy.
In this section

But the prime cause of the discount is more likely to be poor corporate governance at the family-run chaebol conglomerates that dominate the economy. Nefarious schemes to pass on control to sons, avoid taxes and exploit company assets for the benefit of family members are widely discussed in private. They are also lambasted abroad: a 2010 survey by CLSA, a broker, placed the country third-from-bottom in Asia on governance, ahead of only Indonesia and the Philippines.  . .

Other allegations are even more serious. On February 3rd, 2012 Hanwha Group announced in a regulatory filing that its chairman, Kim Seung-yeon, was among several officials being investigated for alleged embezzlement. Chey Tae-won, the chairman of SK Group, was indicted in January over the disappearance of 99 billion won from company coffers, as part of a scheme allegedly planned by his brother to cover futures-trading losses. Mr Chey denies the charges. The Federation of Korean Industries, a chaebol pressure group, has urged prosecutors to go easy on Mr Chey. They say that punishing him would harm “entrepreneurial spirit”.

Mr Chey has had previous scrapes, having been convicted of a billion-dollar accounting fraud in 2003. He eventually received a full pardon from the president and was also chosen to represent the nation during the 2010 G20 summit, leading a meeting of international chief executives. Lee Kun-hee, the chairman of Samsung, received a similar pardon in 2009, having been found guilty of tax evasion, and was picked to front South Korea’s bid for the 2018 Winter Olympics. Yujeon mujwai, mujeon yujwai—an old expression meaning “money = innocence, no money = guilt”—is enjoying a resurgence in popularity. 

What do you think?

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Sean Hayes may be contacted at: SeanHayes@ipglegal.com.

Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. He is the only non-Korean to have worked as an attorney for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty.

Annulments Possible in Korea? Intention of the Marriage Potential Factor in Korean Court's Annulment Decision

Annulments have been nearly impossible to obtain in Korea when parties have voluntarily married and the marriage was properly registered.  However,courts have been, recently, willing to entertain colorful arguments in some cases.

Recently, a young married couple obtained an annulment based on some interesting facts.  The couple lived together with the sister of the husband prior to marriage.  They were living, according to the couple, just as friends.  Thus, the couple were not having sexual relations. 

The employer of the male asked about his marital status and he advised the employer that he was single.  The company discovered that he was living with a woman.  Employees of the company were not amused and requested that he clarify the situation.   The man, then, fearing for his job requested the woman to marry him.  They married.  The woman claimed they she, only, married because she felt bad for the man.   

The case is interesting since the case doesn't rest on whether the marriage was voluntary, but focused on the intent of the marriage.  The court opined that : "The marriage was a hoax with the only intention being him not getting fired."  Seemingly, at least one court in Korea will accept that if someone purpose of marriage was not simply to marry, but for other reasons - a marriage may be annulled. 

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Sean Hayes may be contacted at: SeanHayes@ipglegal.com.

Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. He is the only non-Korean to have worked as an attorney for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty.

Great Article Today on the Success of K-Pop Abroad by the Korea Herald

We have worked with a leading entertainment company in Korea and this article, we feel, does a great job in summing up why Psy has been the, only, K-Pop star, to date, to be able to significantly capitalize on his talent in the States.  We wish more of the Korean entertainers would consider fostering the the skills that make the entertainers unique and not, simply, try to make an artist conform to what audiences are perceived to like.  Psy has done this and, thus, has been successful. 

The article notes, in part, that:

Psy’s unexpected international success not only took Korea by surprise, but the rest of the world as well. On July 15, the Korean rap star, who had enjoyed little international popularity in the past, released his comedic and cleverly choreographed “Gangnam Style” on YouTube.

What followed is history. With more than 1.5 billion global views, “Gangnam Style” has become one of the world’s most successful songs.

“Gentleman,” Psy’s follow-up single to his record-breaking track, was released worldwide on April 12. The music video which was uploaded onto YouTube the following day broke a world record for the most views in 24 hours with an astonishing 38.4 million hits, making it the rapper’s fourth entry in the Guinness World Records. As of Thursday afternoon, “Gentleman” has been viewed more than 267 million times, alleviating Psy’s public worries of becoming a one-hit wonder.

Psy was the underdog that no one thought could make it big overseas. Whereas the previous K-pop acts who premiered in the U.S. before him had tried to conform and blend in with the sounds and trends of the Western music market and had sung in English, it was Psy’s comedy, creativity and pure entertainment that finally caught America’s interest.

As for an explanation for his phenomenal global success, Psy summed it up best when he stated, “I’m simply an entertainer.” 

Psy, simply, was successful because he is doing something unique. 
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Sean Hayes may be contacted at: SeanHayes@ipglegal.com.

Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. He is the only non-Korean to have worked as an attorney for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty.