HR and Labor Affairs
[Labor and Employment] A case where the court judged that a foreign editor, who was employed by a securities company to correct and edit English reports, corresponds to a publishing professional set out under Major Group 2 of the Korea Standard Classification of Occupations, and thereby exempt from fixed-term contracts as an exception among fixed-term workers
1. Case summary(1) The subsidiary participant ("participant company") of the defendant was represented by us, Barun Law LLC (attorneys in charge: Lee Kyung-sub, Jung Sang-tae, Lee Da-sol). The participant company is a securities company, which employed a foreign editor to correct and edit English reports issued for the company’s overseas clients. (2) Background of the case and details of the lawsuit - The plaintiff joined the participant company as a specialist (contractor) on February 24, 2020 and worked as an editor for the Research Assistance Team of the company’s Research Center. Then, on or around January 29, 2021, the plaintiff was given notice of his/her termination of employment due to low performance appraisal results (“Termination Disposition”). - The plaintiff argued that the Termination Disposition corresponds to unfair dismissal and thereby filed an application with the labor relations commission for relief for unfair dismissal, but the application was dismissed. Thereafter, the plaintiff filed a lawsuit with the Seoul Administrative Court. 2. DecisionOn October 14, 2021, the 14th Division of the Seoul Administrative Court dismissed the plaintiff’s claim, holding, “The plaintiff corresponds to a publishing professional set out under Major Group 2 of the Korea Standard Classification of Occupations and since the plaintiff’s income corresponds to the upper 25 percentile, the plaintiff is an exception among fixed-term workers as the plaintiff can be employed for a period of more than two (2) years as a fixed-term worker, and in light of the decrease in the quantity of English reports issued and the plaintiff’s low performance appraisal results, the participant company’s decision to refuse renewal of the plaintiff’s contract term is deemed reasonable.” 3. Our argument and roleWe thoroughly analyzed the legal principles concerned with determining a specialist under the Major Group 2 of the Korea Standard Classification of Occupations as well as the background facts of the plaintiff, such as the employment terms (circumstances behind the plaintiff’s employment, annual salary), the plaintiff’s performance of his/her given task, and thereby actively argued and substantiated that the termination notice given to the plaintiff is just based on the fact that (1) the plaintiff corresponds to “Finance and Insurance Related Professionals n.e.c.” and “Publishing Editors” under the Major Group 2 of the Korea Standard Classification of Occupations, and (2) that the participant company had reasonable cause to select the plaintiff for notice of non-renewal of employment term, as the company is recognized for having had the reason to reduce its editors. 4. MeaningThis case involved an occupation that is not clearly classified in the Korea Standard Classification and an issue whether such occupation can be considered as an exception with respect to fixed-term workers. We were able to prove that the “essential details and nature of an occupation” should be the most important factors considered when examining to see whether the relevant occupation corresponds to such exception and it is a meaningful case as we successfully demonstrated that the employment terms, including salary, set out under the Korean Dictionary of Occupations published by the Korea Employment Information Service, can be used as a basis of judgment. ㅁAttorneys in charge: Lee Kyung-sub, Jung Sang-tae and Lee Da-sol
2021. 12. 03
Corporate Legal Affairs
[Corporate Secretarial] A case where the dissolution resolution of a foreign insurance company was approved by the Financial Services Commission
1. Case summaryThe main business objective of company D, a foreign insurance company, is to manage funds to provide legal costs and to pay insurance benefits. However, the company suspended its business from 2015. It terminated all remaining contracts in 2021 and sought to dissolve and liquidate the company after obtaining approval from the relevant authorities, as the prescriptive period on the right to claim for insurance benefits came to an end. We represented company D in dealing with the above matters.
2. Our role and meaningApplication for approval of dissolution of a company based on a dissolution resolution was an unusual case that had no precedent. Foreign Attorney Paul Shin and Attorneys Jo Eun-ju and Kim Mi-rae represented company D and closely cooperated with the Financial Supervisory Service and the Financial Services Commission to prepare for and closely review the plans on dissolution and the application for approval of the dissolution resolution. Based on such efforts, company D was able to obtain approval of the dissolution resolution from the Financial Services Commission. ㅁAttorneys in charge: Paul Shin, Jo Eun-ju and Kim Mi-rae
2021. 12. 03
[Criminal] In a criminal case on physical assault filed by a party to a divorce case, the court acknowledged that the alleged act of physical assault corresponds to a justifiable act that does not go against social norms and thereby the defendant was found not guilty
1. Case summaryThe accuser and the accused were in a married relationship, and the accuser, who had been hiding his/her act of infidelity, was accused by the accused of his/her unfaithful acts. When accused, the accuser handed over his/her smartphone to his/her spouse, unaware of the fact that photos of his/her unfaithful doings still remained in the deleted photos folder, and as such, the photos were discovered by the spouse. When the accused got up to leave with the accuser’s smartphone, the accuser immediately followed the accused to get his/her phone back, and physical acts occurred between the accuser and the accused in that process. Thereafter, the accuser and the accused negotiated on the terms of their divorce, but when the two could not reach an agreement, a civil lawsuit for divorce was filed, and the accuser filed charges against the accused for physical assault. 2. DecisionBucheon Branch of Incheon District Court rendered a ruling (2021Gojeong178) as the below and found the accused not guilty. - “The act of physical assault was a passive act, focused on not to have the relevant smart phone taken away, rather than an active act, focused on exercising one’s force over the victim.” - Therefore, the act of physical assault was carried out in a way that resulted in minimum infraction as it only sought to protect the smart phone, which contained the relevant evidence, from the victim, who committed the act of infidelity, and in consideration of the degree of the assault and all other circumstances, the act corresponds to a justifiable act that does not go against the social norms prescribed under Article 20 of the Criminal Code. 3. Our role and implicationsThe crime of assault is a crime that stands just by exercising force over another person’s body, and thereby substantiation of the crime is not very difficult, and criminal charges for assault are commonly filed before or after a divorce suit as it becomes possible to criticize the actions of the perpetrator of the assault once the crime of assault is recognized. Also, recognition of exclusion causes of illegality, such as acts of self-defense or justifiable acts, is very limited, it is difficult to defend against charges of assault, even if the criminal charges have been filed with a different purpose or such charges lead to excessive intrusion of the state’s right to punish. As such, it is difficult to come up with appropriate means of defense. We cited the Supreme Court Judgment No. 2012Do11204, which sets out that “passive acts of defense do not go against the social norms,” and defended the accused on the legal principles set out under this case law, and persuaded the court that the physical acts that occurred in the process where the accused tried not to have the smart phone taken away correspond to a passive at of defense. As a result, the court rendered a ruling finding the accused not guilty. ㅁAttorneys in charge: Chung Yang-hun and Choi Ye-eun
2021. 12. 03
IP
[Intellectual Property] We were granted an interim injunction relief to prohibit posting imitated photos in a case regarding the production and publication of photos imitating fashion stylist photos by an online fashion shopping mall
1. Case summaryAn online fashion shopping mall (the "petitioner") hired a number of MDs and (i) analyzed market trend, (ii) selected products that would attract consumers, (iii) conceived styling ideas with invited models by assembling fashion items, and (iv) took and produced stylist photos by carefully discussing with a photographer and the models and then posted the photos on its online shopping mall website. The fashion stylist photos require significant cost and time to produce. Fashion shopping malls are sensitive to changes in fashion trend, and consumers make purchases on the basis of stylist photos posted on the websites without seeing actual products. Thus, fashion stylist photos are a competitive element that can differentiate products. A company that does business in the same category of business as the petitioner produced and posted photos imitating stylist photos of the petitioner by assembling identical or similar products with models who have similar appearance/poses and similar settings as those hired and adopted by the petitioner. The number of photos allegedly imitating the petitioner’s photos was as many as 68. 2. DecisionThe Seoul Central District Court accepted the petitioner’s claim for interim injunction to prohibit the respondent from posting the imitated photos, delivering the decision that the fashion stylist photos produced by the petitioner constituted “achievements, etc. made through significant investment or efforts” defined in Subparagraph (k) of the Unfair Competition Prevent Act, and the respondent’s alleged act of posting photos imitating the petitioner’s stylist photos constituted an “act of violating another’s economic interests through unauthorized use for its business operation in a way violating fair commercial practices or competition order.” 3. Our role and implicationA work is a form of expression, not an idea. If a separate photo is produced by borrowing an idea element such as a concept rather than a reproduction of the photo itself, there is a limit to being protected by copyright even if the similarity between the photos is recognized. For example, in the so-called “Solseom Photo Case”, the Seoul High Court ruled that even if the subject was the same, there was no copyright infringement. We cited Subparagraph (k) recently newly established in the Unfair Competition Prevent Act, and substantiated that (i) fashion stylist photos cost a lot of money and time to produce, and were a very important factor in competition between clothing shopping malls, so they constituted achievements, and (ii) the number of photos imitated by the respondent was not small, and the extent of infringement was extensive as the photos were exposed in Instagram and fashion apps. As a result, we successfully obtained an injunction banning the posting of photos on the website and Instagram. This case will serve as a reference for protecting economic infringement by proving the Unfair Competition Prevention Act in a case where the legal remedies are insufficient due to the unclear nature of the copyrighted work. ㅁAttorneys in charge: Chung Yang-hoon and Kim Dong-hyun
2021. 12. 03
IP
[Intellectual Property] We represented a start-up that manufactures teaching aids and textbooks and obtained a decision on the dismissal of an application for an injunction against infringement on the grounds of violation of a non-competition agreement, violation of trade secrets, and imitation of product form
1. Case summaryThe creditor is a company that sells teaching aids and textbooks, and the debtors are an individual who resigned from the creditor and established a company, and the company. The creditor applied for an injunction against the debtors to prevent them from manufacturing, selling and operating business. The main assertions of the creditor are as follows. ① The debtors violated the non-competition agreement by manufacturing products imitating the form of the creditor’s products. ② The debtors used the trade secrets of the creditor to produce teaching materials, textbooks and catalogs. ③ The debtors violated the Unfair Competition Prevention Act by manufacturing products imitating the form of the creditor’s products. 2. Issues and the court’s decisionThe Seoul Northern District Court rendered a decision that the application for injunction should be rejected (2021Kahap20104), ruling as follows: - (Alleged violation of the non-competition agreement) The application for injunction filed on the ground of the violation of the non-competition agreement has no merits because (i) it is difficult for the court to find that the debtor started business with information that he had obtained when he had worked for the creditor, (ii) the meaning and validity of the non-competition agreement should be dealt with by a hearing of merits, (iii) even if the creditor suffered damage due to the debtors’ violation of the non-competition agreement, the damage is recoverable through monetary damages. - (Alleged infringement of trade secrets) Since the creditor’s products are teaching aids, teaching materials, and equipment manufactured to be used in domestic education courses, they are bound to have similarities with other teaching aids, teaching materials, and equipment distributed in Korea in terms of operational principle and product form. - The manufacturing method, materials, specific dimensions, manuals, catalog images, etc. of the creditor’s products are difficult to be considered as information that is not normally available, and it cannot be regarded that the creditor makes a mark that can be recognized as confidential or imposes an obligation to keep confidential on a person having access to the information. Thus, the allegation of infringement of trade secrets has no merits. - (Alleged violation of Subparagraphs (i) and (j) of the Unfair Competition Prevention Act) In the provision prohibiting an act of imitating the form of a product under Subparagraph (i), the subject of protection should be a thing that is standardized as well as particular enough to be recognized as a specific product through its appearance itself, and “achievements, etc.” prescribed as the subject of protection in Subparagraph (j) should be appreciated that economic interests infringed by unauthorized use do not fall in the public domain available to anybody. - According to the creditor’s assertions, the debtors cannot be considered that they imitated the form of Korean paper art and felt craft manufactured by the creditor, and it is hard to see that Korean paper craft and felt craft subject to this case are the products made through significant efforts or investment. - It is hard to conclude that the creditor developed the other products, and it appears that the debtors manufactured the products by using information that they had obtained through other channels. Thus, the alleged violation of the Unfair Competition Prevention Act does not constitute. 3. Our role and implicationWe argued and substantiated that (i) if the non-solicitation agreement was intended to excessively limit the freedom to choose an occupation, an alleged violation of the agreement should be determined in a very careful manner; (ii) if similarity in product form and operating principle is inevitable due to the characteristics of the items (similarity among teaching materials used in the elementary, middle and high school curriculum), it cannot be considered as violating the Unfair Competition Prevention Act only with partial similarity in product form; (iii) the act of imitating product form has room to be applied only to products with a specific form. The decision is meaningful in that it clearly affirms the application limitation of a non-competition agreement and the Unfair Competition Prevention Act. □ Attorneys in charge: Chung Yang-hoon and Choi Ye-eun
2021. 12. 03
Corporate Finance
[Corporate/Finance] A case in which we successfully overturned the district court’s decision and obtained a decision from an appeal court that the claims made by a plaintiff should be dismissed for the reason that the requirement of obtaining a prior consent from certain shareholders to key management matters of a company was ineffective because it violated the equal shareholder principle in a lawsuit filed by a holder of redeemable convertible preferred shares for the redemption payment of KRW4.3 billion and a penalty for the violation of a share purchase agreement
1. Case summaryThe plaintiff was a company acquiring 200,000 redeemable convertible preferred shares worth of KRW2 billion in terms of the issuance price from a defendant engaging in manufacturing and selling computer systems. The defendant was a company issuing the redeemable convertible preferred shares. Another defendant A (“Mr. A”) was the representative director of the defendant and agreed to hold a joint liability with the defendant. The defendants made an agreement with the plaintiff that they would obtain a prior written consent in the case of a right issue at a low price, the issuance of special corporate bonds and an increase or decrease in paid-in capital. The plaintiff made the claims for the early redemption of redeemable convertible preferred shares worth of KRW4.6 billion and the payment of a penalty, alleging that the defendant had violated the obligation. The district court admitted most of the claimed amount (i.e, KRW4.3 billion) in favor of the plaintiff. 2. Decision and basisThe appeal court judged that (i) since the agreement to force the defendant to obtain the plaintiff's written consent on major business matters and the early redemption and penalty agreement as sanctions in case of violation gives the plaintiff the right to exercise absolute influence over the management of the defendant, guarantees the return of the invested capital and is likely to result in issuing a class share just like a “golden share”, which grants discriminatory and strong power to the plaintiff, the agreement is void in violation of the principle of equality of shareholders, (ii) the breach of the obligation to notify in advance in the case of capital increase is a relatively minor matter, so granting the right to request early repayment and the right to claim penalty for the breach is against good customs and other social norms, and therefore, the obligation is void in violation of social customs and norms; and (iii) unless the defendant’s liability is not found, the claim against Mr. A, who agreed to be jointly labile for the defendant’s obligation on the premise that the defendant was found to be liable, is also unacceptable. 3. Our argument and roleRather than challenging the application scope of the prior written consent obligation and the prior notice obligation, which were main issues in the district court, we converted the main issue in this case to an issue of validity. We aggressively clarified that the obligations violated the principle of equality of shareholders and violated capital adequacy required for a stock limited company. Consequently, we were able to obtain a decision in which the validity of the relevant clauses was denied. Further, we argued that Mr. A’s joint liability for the defendant was based on the existence of liability to be held by the defendant. As a result, we were also able to draw a conclusion that Mr. A did not have any obligation towards the plaintiff. 4. ImplicationThis case is meaningful in that it clearly identifies that the principle of equality of shareholders under the Commercial Code works as a limit to private autonomy between an investor and a company. In addition, this case is likely to have a significant influence over an interference clause pertaining to the exercise of management rights that are incorporated into an investment agreement to be executed between equity investors and a company. □ Attorneys in charge: Noh Man-kyeong, Kim Dae-hee and Kim Hyeon-Seong
2021. 12. 03
