Oct 5, 2010

Korea Licensing Agreements: The Slim Basics

We always advise our clients for every license agreement that there is a very high probability that at the end of the agreement license payment obligations will not be honored by the Korean licensee. The same holds true for our Chinese and Southeast Asian practices.

If a Korean licensee is not going to continue the relationship with the foreign licensor, many Korean companies simply choose to forego the obliged payments in favor of not responding to emails, phone calls and mail.

We represent many foreign companies that retain us to collect on overdue payments from the Korean licensees. We are often disappointed at seeing license agreements that are simply form agreements from U.S./European Law firms or agreements drafted by Korean law firms with Korean and foreign attorney hacks. Sorry to call fellow attorneys hacks, but after reading one of the license agreements from one of the "ubiquitous big firms," the term is even too kind, since the fee paid for a simple regergetated form was outrageous.

For you foreign attorneys in Korea reading this, don't just use an agreement given to you by a Korean attorney or borrowed from a license agreement from an inhouse form book (we all know that book), but use a little creativity and your legal education.

If the company is a large respected company with numerous executed license agreements, often the problem is resolved with a letter and a call, however, the less cash flush will often skip town and will require you to hire an attorney to attach assets.

Save you money and spend some time and resources on drafting a Korean-tailored license agreement.

Here are a few tips for those that wish to forego the use of an attorney (not advisable, but I do love giving free advice.)

  1. Front-load the payments and expect not to get the last few payments;
  2. Have clauses requiring the payment of expenses for collection etc.;
  3. Have fire prevention etc. clauses;
  4. Make the agreement compelling enough for the Korean company to continue with the agreement. Think up some unique teasers, while still maintaining your option not to renew;
  5. Use a Korean-tailored agreement and not just a form American or European license agreement;
  6. Translate the agreement into Korean in order to avoid misunderstandings;
  7. Do a background check on the company;
  8. If you smell a stinky fish, you found a stinky fish. Don’t be desperate; someone else will want what you have, unless you also have your own stinky fish to sell.
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SeanHayes@ipglegal.com