Firm Profile > Lee & Ko > Seoul, South Korea

Lee & Ko > Firm Profile

• Premier full-service law firm in Korea
• Founded in 1977, and comprising more than 700 professionals, organized into 8 practice groups with 40 specialty teams
• One-stop service for all legal needs, based on efficient collaboration among highly specialized team
• Emphasis on responsiveness and practical solutions
• 8 major practice groups: (i) corporate and M&A, (ii) banking, finance and securities, (iii) litigation (both civil and criminal) and alternative dispute resolution (iv) tax and customs, (v) antitrust and competition, (vi) labour and employment, (vii) intellectual property and (viii) white-collar crime
• 40 specialised teams: Within the firm’s seven major practice groups there are approximately 40 highly specialised teams of legal professionals including the following: anti-corruption and FCPA; antitrust and competition; aviation; banking; bankruptcy, insolvency and corporate restructuring; capital markets and securities; class actions and consumer claims; construction; consumer goods and services; corporate and M&A; corporate governance; derivatives; dispute resolution; energy; entertainment; environment; finance (acquisition finance, asset finance, project finance, structured finance); foreign direct investment; healthcare; industry and manufacturing; infrastructure; insurance; intellectual property; internal investigations; international practice (Chinese, European, Japanese practice); international trade; investment funds; labour and employment; maritime and shipping; overseas investment; private equity and venture capital; privatisation; product liability; real estate; regulatory compliance; tax and customs (tax consulting, audits, dispute resolution, transfer pricing); technology, media and telecommunications; and white-collar crime.

Recognition and Awards

• “Impact Deal of the Year” – Asialaw (2020)
• “Aviation and Shipping Firm of the Year” – Asialaw (2020)
• “Patent Contentious Firm of the Year” – MIP (2020)
• “Copyright Firm of the Year” – MIP (2020)
• “Elite Law Firm” – Global Competition Review (2020)
• “Best Firm in South Korea” – Euromoney (2019)
• “Korea Deal Firm of the Year” – Thomson Reuters (2019)
• “Labour and Employment Law Firm of the Year” – Thomson Reuters (2019)
• “Projects, Energy and Infrastructure Law Firm of the Year” – Thomson Reuters (2019)
• “Regulatory and Compliance Law Firm of the Year” – Thomson Reuters (2019)
• “TMT Deal of the Year” – Thomson Reuters (2019)
• “M&A Deal of the Year” – Thomson Reuters (2019)
• “Korea TMT Firm of the Year” – The Asian Lawyer (2019)
• “Dispute Resolution Firm of the Year” – Asialaw (2019)
• “Korea Patent Firm of the Year” – Asia IP Awards (2019)
• “Korea Trademark Contentious Firm of the Year Award 2019” – MIP (2019)
• “Korea Finance Firm of the Year” – The Asian Lawyer (2018)
• “Behavioural Matter of the Year (Asia-Pacific, Middle East and Africa)” – Global Competition Review (2017)
• “Transfer Pricing firm of the Year” – Euromoney ITR Asia Tax Awards (2016)
• Tier 1 in all or a majority of practice areas by Asia Pacific Legal 500, IFLR 1000, Asialaw Profiles and Chambers Asia

Press Releases

South Korea

23rd January 2017

KFTC Enhances the Predictability and Clarity of Decisions but Potentially Increase the Overall Administrative Fine Levels

Facing continued criticisms that the existing rules allowed overly broad discretion to the Korea Fair Trade Commission (the “KFTC”) in setting the amount of administrative fine, the KFTC amended the Notification on Detailed Standards for Imposition of Administrative Fine (the “Notification”). The amendments (the “Amendments”) were passed by the KFTC’s full Committee of Commissioners on December 21, 2016, and came into effect on December 30, 2016.

Legal Developments

Sweeping Changes to the Korean Criminal Procedures Starting in the New Year

5th January 2021 A series of legislations affecting the criminal law landscape in Korea have been enacted since the end of 2019 e.g., ‘Corruption Investigation Office for High-Ranking Officials Act’, ‘Prosecutor’s Office Act’ and ‘Criminal Procedure Act’, followed by the establishment of subsidiary laws and regulations. In addition, with the passage of the amendment bill of ‘High-Ranking Official’s Crime Investigation Agency Act’ in December 10_th, sweeping changes to the overall law enforcement system are expected.

The KFTC rules that the Practice of Tying Patented LNG Technology with Engineering Assistance Services is Illegal

22nd December 2020 On November 25, 2020, the Korea Fair Trade Commission (the “KFTC”) imposed a fine of USD 11 million on Gaztransport & Technigaz (“GTT”), a multinational engineering company headquartered in France, for abusing its market dominance in liquefied natural gas (LNG) container tank technologies (the “LNG Technology”). Although GTT argued that the tying of its patented LNG Technology together with its container tank engineering assistance services (the “Engineering Services”) is inseparable, the KFTC determined that this tying is illegal. The KFTC decision reaffirms the principle that there are limits to the activities of a market dominant patent holder. This case is summarized in greater detail below.

Bill to Amend the Monopoly Regulation and Fair Trade Act Passed by the National Assembly

22nd December 2020 In August 2018, the Korea Fair Trade Commission (the KFTC) drafted a bill to substantially amend the Monopoly Regulation and Fair Trade Act (the MRFTA) and submitted the amendment bill to the National Assembly in November 2018. However, only certain portions of the amendment bill which dealt with procedural regulations were passed by the National Assembly on April 29, 2020, and the remaining portions of the amendment bill automatically expired without further action at the end of the term of the 20^th National Assembly in May 2020.

Korea introduces new law strengthening protection against intentional infringement of IP rights

27th October 2020 Following the July 2019 amendment to the Patent Act introducing punitive damages for patent infringement, the Korean National Assembly has since passed additional legislation to strengthen the protection of IP rights. The new legislation includes amendments to the Trademark Act, the Design Protection Act and the UCPA (Unfair Competition Prevention and Trade Secret Protection Act), introducing punitive damages for trademark and design infringement and idea theft, as well as an amendment to the Patent Act, removing the requirement of a complaint from the injured party to initiate a criminal case for patent infringement. The amendments to the Trademark Act, Patent Act and Design Protection Act will become effective October 20, 2020, and the UCPA amendments April 21, 2021. All of the amendments will be applicable to infringing acts or thefts arising after the amendments go into effect. A brief summary of the amendments follows:

KFTC Announces the Proposal for the “Fair Intermediation Transactions on Online Platform Act”

27th October 2020 One of the most significant changes brought upon by COVID-19 is the increase in contact-free transactions, which triggered rapid increases in the market concentration of the online platform industry. In response to such changes, the Korea Fair Trade Commission (the KFTC) proposed the “Fair Intermediation Transactions on Online Platform Act” (the Online Platform Act) to enhance the transparency and fairness in online platform transactions.

Proposed Pharmaceutical Affairs Act Amendment Regarding Patent-Approval Linkage System

2nd September 2020 On August 20, 2020, the Ministry of Food and Drug Safety (“MFDS”) announced a proposed amendment to the Pharmaceutical Affairs Act (“PPA”) aimed to address certain deficiencies in the Patent-Approval Linkage System that went into effect in 2015.  Key features of the proposed amendment may be summarized as follows.

Key Tax Law Amendments in the Draft 2020 Tax Revision Bill

24th August 2020 On July 22, 2020, the Ministry of Economy and Finance publicly released the 2020 draft Tax Revision Bill (the ‘Draft Bill’).

Amendments to the Personal Information Protection Act and Credit Information Use and Protection Act

17th August 2020 Amendments to the Personal Information Protection Act (‘PIPA’) and Credit Information Use and Protection Act (‘Credit Information Act’) that were promulgated on February 4, 2020 took effect on August 5, 2020, along with their respective implementing regulations that were also amended to reflect the changes in the two laws. By balancing the need for the protection of personal information against the need for its wider use, the amended laws aim to pave the way for a data-driven economy. In practice, the sweeping nature of the amendments are expected to bring about significant changes in the way personal information is processed in Korea. I.  Amendments to the PIPA and the Enforcement Decree of the PIPA The amendments to the PIPA include, among others:

1. the introduction of pseudonymized information and the legal basis for using pseudonymized information for research and statistical purposes without the data subject’s consent;
2. the introduction of the compatibility concept;
3. the transfer of the Act on the Promotion of Information and Communications Network Utilization and Information Protection’s (‘Network Act’s’) personal information-related provisions to the PIPA; and
4. the elevation of the Personal Information Protection Commission’s (‘PIPC’s’) status to the sole supervisory authority responsible for the enforcement of the PIPA (accordingly, personal information protection matters that are currently handled by multiple agencies (i.e., the Ministry of the Interior and Safety and the Korea Communications Commission) will all be handled by the PIPC instead).Meanwhile, the amendments to the Enforcement Decree of the PIPA that have been adopted include, among others:

1. the specification of rules regarding the use and management of pseudonymized information such as the security measures which must be implemented and the specification of the procedures for combining pseudonymized information among different entities;
2. the specification of the standards used to determine compatibility;
3. the transfer of the personal information-related provisions in the Enforcement Decree of the Network Act to the Enforcement Decree of the PIPA; and
4. the addition of certain types of information to the scope of ‘sensitive information.’Further details on the above changes are provided below. (1) Use of Pseudonymized Information (A) Security Measures for Pseudonymized Information Under the amended PIPA, the stringent consent-oriented regulations on processing have been relaxed, allowing data handlers to process pseudonymized information without the consent of the data subject for purposes including statistical compiling, scientific research, and record preservation for the public interest. However, in order to minimize the risk of re-identification and any other harm that may be caused to data subjects in relation to the processing of pseudonymized information, the PIPA requires that anyone who processes pseudonymized information must implement certain statutorily-prescribed security measures. The amended Enforcement Decree of the PIPA specifies these security measures as follows:

1. The same security measures that are required with respect to general personal information must be implemented for pseudonymized information as well. In other words, the security measures stipulated under the ‘Standards of Personal Information Security Measures’ must be taken. (The ‘Standards of Personal Information Security Measures,’ which is an implementing regulation of the PIPA, sets forth the detailed security measures that must be applied to general personal information under the PIPA.)
2. Pseudonymized information and additional information (i.e., information which can be used to identify a specific individual by restoring the pseudonymized information to its original state) must be stored separately, and access rights to each of these two types of information must also be segregated in order to prevent the re-identification of the pseudonymized information through the use of the additional information.(B) Restriction on Combining Pseudonymized Information Although the amended PIPA promotes the use of pseudonymized information, combining pseudonymized information between different entities is restricted in that the process may be conducted only by professional institutions designated by the PIPC (‘Specialized Agencies’) or by the head of a pertinent central administrative agency, which currently is a requirement unique to Korea. Also, the combined information may only be transferred out of the Specialized Agency after obtaining the approval of the head of the said institution. The detailed process and method of combining pseudonymized information is stipulated in the amended Enforcement Decree of the PIPA. Under the amended Enforcement Decree of the PIPA, an entity that wishes to combine pseudonymized information (‘Applying Entity’) must first submit its request/application to the Specialized Agency. After the Specialized Agency combines pseudonymized information in a way that makes the specific data subject unidentifiable, the Applying Entity must pseudonymize or anonymize such combined information in a space where technical, organizational and physical measures necessary for the secure processing of personal information have been implemented, installed at the Specialized Agency. The Applying Entity must obtain the approval of the Specialized Agency in order to be able to export the combined information, in which case the Specialized Agency applies the following criteria in determining whether to grant the request:

1. the purpose for which the pseudonymized information has been combined is related to the information to be exported;
2. there is no likelihood that an individual might be identified due to such export of information; and
3. measures are taken to ensure the security of the information to be exported.Once the Specialized Agency approves the export request, they may bill the Applying Entity for the costs associated with the combination and export of the pseudonymized information. More details on the combining and removal of pseudonymized information will be provided in the ‘Public Notice on the Combination and Removal of Pseudonymized Information’ to be issued by the PIPC.   (2) Compatibility Provision - Standards for the Further Use and Provision of Personal Information within the Scope Reasonably Related to the Original Purpose of Collection The amended PIPA allows data handlers to use or provide personal information to a third party without the consent of the data subject if the scope of such further use or provision is within the scope reasonably related to the original purpose of the collection. As such, the amended Enforcement Decree of the PIPA provides detailed standards on what qualifies as ‘reasonably related to’ (i.e., compatible with) the original purpose of collection. In making this determination, the following factors are to be considered:

1. the processing is related to the original purpose for which the personal information was collected;
2. the processing was foreseeable in light of the circumstances surrounding the collection of such personal information or the customary practice of processing such personal information;
3. the processing does not unfairly infringe the rights and interests of the data subject; and
4. whether pseudonymization, encryption, or other necessary safeguards to ensure the security of the personal information have been implemented.The amended Enforcement Decree of the PIPA also requires that (i) the data handler disclose the standards which form the basis on which the above factors are assessed in its privacy policy and (ii) the Chief Privacy Officer check whether the further use and provision of personal information occurs in accordance with these standards.   (3) Others (A) Transfer of Network Act’s Personal Information-related Provisions to the PIPA Prior to the PIPA’s amendment, regulations on the processing of personal information by information and communications service providers and recipients of personal information provided by such information and communications service providers were set forth in the Network Act. However, in line with the transfer of such provisions to the PIPA, the personal information-related provisions under the Enforcement Decree of the Network Act have also been transferred to the Enforcement Decree of the PIPA. Examples of such provisions include those on the implementation of security measures, method for confirming the legal guardian’s consent, method of notification and report of personal information leakages, destruction of personal information of inactive users (i.e., users who have not shown any account activity for at least 1 year), notification of personal information usage details/records, and criteria for calculating penalty surcharges. (B) Expanded Scope of Sensitive Information Under the amended Enforcement Decree of the PIPA, (i) biometric data such as fingerprint, iris, and face and (ii) race and ethnicity data are newly added to the scope of sensitive information, which was previously defined to just include information on an individual’s ideology, creed, membership of a labor union or political party, political view, health, sexual preferences, genetic information, and criminal records. (C) Additional Developments Following the enforcement of the amended PIPA and its Enforcement Decree, the PIPC is expected to issue more practical guidance on the standards for pseudonymization and combining pseudonymized information through the ‘Pseudonymization Guidelines’ and ‘Guidelines on the Combination and Export of Pseudonymized Information,’ respectively. The current ‘Manual on Personal Information Protection Laws, Guidelines, and Public Notices’ will also be updated to reflect the recent amendments to the PIPA and its Enforcement Decree.   II.  Amendments to the Credit Information Act and the Enforcement Decree of the Credit Information Act   The amendments to the Credit Information Act are broader and more diverse than the amendments to the PIPA as they include provisions on data protection as well as the regulatory system for the use and management of credit information (please see our previous newsletter for more information). This newsletter will discuss the provisions in the amended Credit Information Act and the amended Enforcement Decree of the Credit Information Act relating to data protection which may be enforced by the Financial Services Commission (‘FSC’)/Financial Supervisory Service (‘FSS’) (if provisions apply to financial companies) or the PIPC (if provisions apply to non-financial companies which process personal credit information). Thus, the Credit Information Act will apply ahead of the PIPA where an entity processes personal credit information regardless of whether such entity is in the financial sector or not. As in the case of the amended PIPA, the amended Credit Information Act also provides legal grounds for the processing of pseudonymized information without consent and introduces the compatibility concept. However, the amended Acts may differ, in terms of the permitted scope of data processing without consent and other details in application, so companies are advised to review closely these differences when processing pseudonymized information. Also, unlike the amended PIPA, the amended Credit Information Act contains provisions (taking effect from February 4, 2021) which (i) grants data subjects the right to request financial companies and public institutions to transmit their personal credit information to other financial companies (i.e., the right to data portability) and (ii) streamlines (simplify and visualize) the consent process so that data subjects may provide their informed consent more easily. Accordingly, the amended Enforcement Decree of the Credit Information Act contains detailed provisions related to the processing pseudonymized information, the right to data portability, and streamlining of the consent process. For this newsletter, we summarize in greater detail below the provisions related to the processing of pseudonymized information as follows:   (1) Security Measures for Pseudonymized Information Similar to the amended PIPA, the amended Credit Information Act requires the implementation of certain security measures to ensure the safety of pseudonymized information. Accordingly, the amended Enforcement Decree of the Credit Information Act sets forth detailed standards of such security measures and measures necessary to prevent pseudonymized information from being combined with additional information. However, there are certain important differences between the measures required under the respective Acts. For example, with respect to the specific security measures which must be taken for pseudonymized information, if the Credit Information Act applies then security measures prescribed by the ‘Regulations on the Supervision of Credit Information Businesses’ (issued under the Credit Information Act) will need to be implemented as opposed to the security measures prescribed by the ‘Standards of Personal Information Security Measures’ (issued under the PIPA). As such, it would be advisable for companies to review closely these differences when processing pseudonymized information.   (2) Restriction on Combining Pseudonymized Information Similar to the amended PIPA, the amended Credit Information Act provides that the combination of pseudonymized information managed by different data handlers may be performed only by a Specialized Agency. However, because the details on the combination process and the Specialized Agencies permitted to combine pseudonymized information are different under the amended PIPA and the amended Credit Information Act, it will be important to confirm which law applies to the situation at hand to ensure the request for the combination of pseudonymized information is made to the appropriate Specialized Agency.   (3) Retention Periods for Pseudonymized Information The amended PIPA and the amended Enforcement Decree of the PIPA do not impose any particular restrictions on the retention of pseudonymized information. Thus, unlike in the case of ordinary personal information, there is no requirement to retain pseudonymized information only for the minimum duration necessary to achieve the purposes of processing. On the other hand, the amended Enforcement Decree of the Credit Information Act provides that pseudonymized information may be retained past the retention period of ordinary personal credit information only when retention is within a pre-determined retention period set after considering the following:

1. 1. level of administrative, physical, and technical protection needed to protect the pseudonymized information and additional information;
   2.  effect on the credit information subject in the event re-identification takes place through the pseudonymized information;
   3.  possibility of re-identification from the pseudonymized information; and
   4.  the purpose for the processing of the pseudonymized information and the minimum duration necessary to achieve such purpose.The FSC published additional guidance on the safe processing of anonymized data and pseudonymized information through its ‘Guide to the Processing of Anonymized and Pseudonymized Information in the Financial Sector’ on August 6. Meanwhile, the ‘Regulations on the Supervision of Credit Information Businesses,’ which further specify certain matters prescribed by the amended Enforcement Decree of the Credit Information Act, are also expected to be soon published by the FSC.  

If you have any questions regarding this article, please contact below:   Kwang Bae PARK (kwangbae.park@leeko.com) Hwan Kyoung KO (hwankyoung.ko@leeko.com) Sung Hee CHAE (sunghee.chae@leeko.com) Kyung Min SON (kyungmin.son@leeko.com)   For more information, please visit our website: www.leeko.com  

Key Tax Law Amendments in the Draft 2020 Tax Revision Bill

17th August 2020 On July 22, 2020, the Ministry of Economy and Finance publicly released the 2020 draft Tax Revision Bill (the ‘Draft Bill’). Amidst the increasing risk of a global recession caused by the COVID 19 pandemic, the Draft Bill aims to: (i) promote investment and spending; (ii) enhance tax benefits to low-income earners and mid-sized and small-sized enterprises; and (iii) provide tax incentives for job creation in order to minimize the negative economic impact of COVID 19. The Draft Bill is also seeking to harmonize the Korean tax system to changes occurring in the global economy, to ease compliance burdens, and to avoid double taxation. A summary of some key tax law proposals in the Draft Bill is provided below.

Important Upcoming Changes to the Korean Electricity Business Act regarding Solar Farm Developments

5th August 2020

There have been recent amendments to the Electricity Business Act (‘EB Act’) (the main Act governing the granting of permits required to develop and operate renewable energy projects in Korea) that are likely to affect a large majority of potential investors in Korean solar farm projects. As is discussed below, the legislative amendments are due to take effect in October of this year and there is currently scope for interested parties to make submissions in respect to some of the more important potential exceptions to be enacted. There are a number of changes, however, the most significant change includes a prohibition on the sale or acquisition of a solar farm business prior to the relevant business reaching commercial operation. Although the changes were introduced in March 31, 2020 the relevant exceptions to the most important rule change have only recently been published for public comment. Given the importance and potential impact of the changes, Lee & Ko has prepared a brief summary of the anticipated changes and draft exceptions. Further, and for convenience, we have also included the relevant details on how to make submissions (below).

Important Upcoming Changes to the Korean Electricity Business Act regarding Solar Farm Developments

16th July 2020

There have been recent amendments to the Electricity Business Act (‘EB Act’) (the main Act governing the granting of permits required to develop and operate renewable energy projects in Korea) that are likely to affect a large majority of potential investors in Korean solar farm projects. As is discussed below, the legislative amendments are due to take effect in October of this year and there is currently scope for interested parties to make submissions in respect to some of the more important potential exceptions to be enacted. There are a number of changes, however, the most significant change includes a prohibition on the sale or acquisition of a solar farm business prior to the relevant business reaching commercial operation. Although the changes were introduced in March 31, 2020 the relevant exceptions to the most important rule change have only recently been published for public comment. Given the importance and potential impact of the changes, Lee & Ko has prepared a brief summary of the anticipated changes and draft exceptions. Further, and for convenience, we have also included the relevant details on how to make submissions (below).

News Alert – Recent Amendment to Korean Patent

16th July 2020

New hybrid approach covering full scope of infringing sales (lost profits + reasonable royalty)

 On May 20, 2020, the Korea National Assembly approved a bill to amend the Patent Act, adopting a so-called hybrid damages approach – where a patentee will be entitled to seek a royalty, as additional damages, for sales that exceed the patentee’s production capacity.  Lost profits for infringing sales up to the patentee’s production capacity will remain in place.  

COVID-19 Outbreak: Managing Legal Issues from the Korean Law Perspective

16th July 2020 While Korea has had considerable success in containing and curtailing the first wave of the novel coronavirus outbreak (‘COVID-19’), the ongoing spread of the pandemic continues to disrupt the global economy, significantly impacting businesses and companies in all industries worldwide.  As a result, businesses and companies both within Korea and throughout the world are increasingly confronting a wide range of legal issues – including, for example, whether the concept of force majeure, the doctrine of frustration of contract or hardship may be invoked upon as an excuse under a contractual relationship.  In addition, discussions on whether recent governmental regulations and restrictions intended to contain the COVID-19 outbreak may in and of itself be qualified as a force majeure event (or an event that gives rise to the application of the doctrine of frustration of contract or hardship) is also being considered as a separate but important related topic as well.

Latest Supreme Court Decision Sets New Standards for Inventiveness

17th June 2020

Benefit of invention now a more important factor for inventiveness

On May 14, 2020, the Supreme Court held, for the first time, that even if there are no facially apparent difficulties in combining certain prior art technologies to arrive at a particular patented invention, such combination would not be easy and thus inventiveness of the claim at issue should not be denied where the benefit of the claimed invention is hard to predict.

Amendments to the Pharmaceutical Affairs Act to Strengthen Administrative & Criminal Sanctions for Data Manipulation Related to Applications for Regulatory Approvals

19th May 2020 On April 7, 2020, an amendment to the Pharmaceutical Affairs Act (the ‘PAA’) came into effect to provide a statutory basis for administrative and criminal sanctions to be enforced against companies that have obtained regulatory approval for a drug product through deceitful or otherwise improper means.

Amended Act on Reporting and Using Specified Financial Transaction Information Now Governs Virtual Assets

13th March 2020 The amendment to the Act on Reporting and Using Specified Financial Transaction Information (hereinafter, the “Specified Financial Information Act”), which defines cryptocurrency as a “virtual asset” and focuses on a reporting system for cryptocurrency exchanges, was ratified in the National Assembly’s plenary session on March 5, 2020.

Recent Decision by the Tax Tribunal Regarding Application of the Flat Tax Rate to Foreign Employees

11th March 2020 Application of the flat tax rate to “a foreign employee who worked in Korea for a period which ended before January 1, 2014, and recommenced working in Korea after January 1, 2014”

Implementation of Pre-approval System for Cross-border M&A for Companies with National Core Technology

24th February 2020 The Act on Prevention of Divulgence and Protection of Industrial Technology (the “Act”) provides for the protection of national core technologies held by Korean companies, research institutes, professional institutions and universities (each a “Protected Entity”) and prevention of their leakage. The Act was revised as of February 21, 2020 and the revised Act was went into effect on the same day. The revised Act introduces hurdles for any foreign investor seeking to obtain control over a Protected Entity (whether through a direct investment, merger or joint venture) (“Triggering Transaction”) by introducing new pre-approval and pre-notification requirements. For a Protected Entity that holds any national core technology developed with national R&D funding, the pre-approval requirement applies, which in principle prohibits any Triggering Transaction and provides for limited exceptions. For a Protected Entity that holds any national core technology developed without national R&D funding, the pre-notification requirement applies, which in principle allows any Triggering Transaction with exceptional cases for blocking it. Any foreign investor or company seeking to obtain control over a Korean company with a strong technology portfolio would need to diligence on whether any such technology is classified as a national core technology and, if so, whether it was developed with national R&D funding and assess whether any exception may be applicable.

New Supreme Court Decision Constrains Patentee’s Strategic Use of Correction Petition in Pending Patent Case

6th February 2020 On January 22, 2020, the Supreme Court ruled, en banc, that if a petition to correct a patent specification or drawings is granted after the conclusion of the appellate phase of a patent invalidation action, the decision granting such petition cannot be a ground for retrial under Article 451, Paragraph 1, Subparagraph 8 of the Civil Procedure Act.  In doing so, the Court reversed all prior Supreme Court decisions that remanded the case for a retrial based on the same ground (Supreme Court En Banc Decision No. 2016Hu2522).

Major Amendments to the Credit Information Act Passed by National Assembly

23rd January 2020 On January 9, 2020, amendments to the Credit Information Use and Protection Act (“Credit Information Act”) were passed during a plenary session of the National Assembly. These amendments to the Credit Information Act (“Amendments”) were passed in tandem with respective amendments to the Personal Information Protection Act ("PIPA”) and the Act on Promotion of Information and Communications Network Utilization and Information (“Network Act”). The PIPA, the Network Act, and the Credit Information Act are collectively referred to as Korea’s 3 major data privacy laws (“Three Data Laws”). The main objectives behind the Amendments are (1) promotion of the data economy in the financial sector by, inter alia, establishing the statutory basis for the analysis and utilization of big data, (2) reform of the legal framework for the regulation of industries related to credit information by, inter alia, introducing the concept of credit information self-management (“MyData”) and revamping the existing system for regulating credit bureaus (“CBs”) that carry out credit evaluations of individuals, and (3) reinforcement of data protection in the financial sector by, inter alia, introducing the right to request transmission of personal credit information and the right to challenge decisions based on profiling. The Amendments are expected to serve as a catalyst for the increased utilization of big data and convergence of data in the financial sector, and lead to the emergence of innovative services (e.g., customized financial services catering to the needs of individual customers) and new industries related to data (e.g., MyData services, non-financial CBs). In addition, the Amendments have been designed to enhance interoperability with the European Union’s General Data Protection Regulation (“GDPR”) as well as the data protection regulations of other countries and thus, are expected to facilitate the processing of data by Korean companies when they conduct business abroad. The Amendments are expected to go into effect in late July or early August of this year (which will be 6 months from their promulgation date). Key provisions of the Amendments are summarized below. 1. Key Provisions of the Amendments

• In line with the aforementioned amendments to the PIPA, the Amendments also introduce the concepts of “pseudonymized information”, “pseudonymization”, and “anonymization”. Please refer to our newsletter dated January 14, 2020 (“Major Amendment to the Personal Information Protection Act Passed by National Assembly”) for more information on these concepts.
• The Amendments permit credit information handlers to provide personal credit information to third parties without the consent of personal credit information subjects to the extent such provision is not inconsistent with the original purpose of collection after considering factors such as the circumstances surrounding the collection of personal credit information, the potential impact to personal credit information subjects, and whether necessary safeguards have been implemented to ensure the security of personal credit information.
• The Amendments breakdown CBs into subcategories (whereas under the current Credit Information Act, CBs are defined rather broadly without such distinction) such as “CBs for individuals,” “CBs for sole proprietorships,” and “CBs for corporations” while relaxing regulatory entry barriers for each subcategory. In addition, CBs are no longer prohibited from engaging in other types of commercial enterprise so long as there is no risk of harming credit information subjects or undermining the soundness of credit transactions due to such commercial endeavors.
• The concept of MyData services will be introduced which will allow individuals to, among other things, conduct integrated searches of their own credit information as well as carry out credit and asset self-management.
• The consent system will be streamlined (simplified and visualized) to enable credit information subjects to provide their “informed consent” and a rating system will be introduced for the use of information, such that different ratings will be assigned to the use of information depending on the risk(s) and benefit(s) associated with such use so that credit information subjects can make informed decisions when providing their consent (taking effect within 1 year from the promulgation date of the Amendments).
• Credit information subjects will be granted the right to challenge (i.e., request explanations and raise objections) decisions based on profiling (i.e., automated processing of data to evaluate certain things about an individual).
• Credit information subjects will be granted the right to request financial companies and public institutions to transmit their personal credit information (i.e., right to data portability of personal credit information) to other financial companies (taking effect within 1 year from the promulgation date of the Amendments).
• The maximum amount of punitive damages that may be imposed on financial companies and other credit information handlers in connection with the leakage of personal credit information has been increased to 5 times (from the current 3 times) the amount of proven damages.

2. Implications for companies likely to be affected by the Amendments

• With the introduction of the concepts of pseudonymized information and anonymized information, companies are advised to review the scope of data processing that will be permitted under the amended Credit Information Act without the need to obtain consent as well as the methods to utilize pseudonymized information, safeguards to prevent the combination of data, and ex post facto control measures.
• In light of the expected changes in the legal framework for the regulation of CBs, companies planning to expand into the CB business are advised to carefully consider the conditions for entry into this business segment, potential synergies with their existing business, and growth opportunities as well as constraining factors.
• With the introduction of MyData services, the Amendments will serve to minimize entry barriers for Fintech companies. Accordingly, companies planning to provide MyData services are advised to begin preparations in advance to obtain necessary licenses and approvals.
• Companies are advised to pay special attention to the changes to the legal provisions governing consent and the newly created rights that will be granted to credit information subjects under the amended Credit Information Act. In particular, financial regulatory authorities are expected to establish and announce corresponding amendments to consent forms and other detailed measures prior to the effective date of the amended Credit Information Act and thus, companies are advised to continue monitoring related developments on this front.
• Given that the Financial Services Commission has announced its intention to hold future discussions to canvass public opinion for corresponding amendments to the implementing rules (e.g., the Enforcement Decree of the Credit Information Act) of the Credit Information Act, companies are advised to closely monitor the amendment process and to provide their input as necessary to promote their business interests.
• Companies are also advised to closely review the amendments to the PIPA and the Network Act that were passed by the National Assembly along with the Amendments, and make the necessary preparations to their practices in light of the changes that are expected to occur once these amendments take effect.

If you have any questions regarding this article, please contact below: Kwang Bae PARK (kwangbae.park@leeko.com) Jongsoo (Jay) YOON (jay.yoon@leeko.com) Hyun Koo KANG (hyunkoo.kang@leeko.com) Hwan Kyoung KO (hwankyoung.ko@leeko.com) For more information, please visit our website: www.leeko.com

Korean Tax Law Adopts New Simplified Transfer Pricing Rules relating to Low Value-adding Intra-group Services

20th January 2020 With the recent pre-announcement of a draft amendment to the Enforcement Decree of the International Tax Coordination Law (“EDITCL”), Korean tax law is expected to adopt simplified transfer pricing requirements relating to “low value-adding intra-group services”, as laid out in Action 10 of the OECD BEPS Report.

Major Amendment to the Personal Information Protection Act Passed by National Assembly

15th January 2020 On January 9, 2020, amendments to Korea’s 3 major data privacy laws (“Three Data Laws”), i.e., Personal Information Protection Act (“PIPA”), Act on the Promotion of Information and Communications Network Utilization and Information Protection (“Network Act”), and Credit Information Use and Protection Act (“Credit Information Act”), were passed at a plenary session of the National Assembly of Korea.

Greater Reforms for Promoting Work-Life Balance – Changes to the Gender Equal Employment….

18th October 2019

Greater Reforms for Promoting Work-Life Balance – Changes to the Gender Equal Employment and Work-Life Balance Support Act

Starting 1 October 2019, employees would benefit from significant changes to the Gender Equal Employment and Work-Life Balance Support Act (“GEEA”), particularly concerning paternity leave and workhours reduction for childcare and family care. These changes are also expected to have material implications for employers with regard to general compliance obligations and require employers to review their practices in engaging employees and other workforce flexibility measures to adapt to the legislative changes. We have summarized the notable changes as follows.

Korea strengthens protection of national core technology and industrial technology (Amendment of the Prevention of Divulgence and Protection of Industrial Technology Act)

2nd October 2019 On August 20, 2019, an amendment of the Prevention of Divulgence and Protection of Industrial Technology Act (hereinafter “PITA”) was passed and shall come into effect on February 21, 2020. The new amendment is likely to affect technology companies as the scope of national core technology and industrial technology under PITA is broadly defined by the Ministry of Trade, Industry and Energy (MOTIE).

Lee & Ko successfully represents Big Hit Entertainment against unauthorized use of BTS’ photos

20th August 2019 Lee & Ko, on behalf of Big Hit Entertainment (“Big Hit”), obtained the first-ever decision in Korea to recognize the entertainment companies’ right to independently request for injunction against those who free-ride on the customer attractiveness that is based off of popularity and fame of the artists managed by the companies. This landmark decision is expected to serve as an important pedestal in protecting the legitimate interest of entertainment companies (domestic as well as international) that manage famous artists and entertainers and remain vulnerable to unfair competition of free-riders.

First- Ever Decision by the Supreme Court of Korea …

15th August 2019

First- Ever Decision by the Supreme Court of Korea to Find Copyright Infringement in the Selection, Arrangement or Combination of Game Elements

Key International Tax Law Amendments in the Draft 2019 Tax Revision Bill

14th August 2019 On July 25, 2019, the Ministry of Economy and Finance publicly released the 2019 draft Tax Revision Bill (the “Draft Bill”). The Draft Bill is expected to be sent to the National Assembly on September 3, 2019 for deliberation and adoption.

Russian Court’s Judgment Recognized for Enforcement in Korea

15th May 2019 Recently, based on the premise that requirements for “mutual guarantee” or “reciprocity” in relation to the recognition and enforcement of foreign judgments can be allowed between Russia and Korea, a District Court of Korea rendered its decision which allowed a judgment concluded by a Russian court to be enforceable in Korea (see Changwon District Court, Decision 2018Gahap51099 held on January 17, 2019).

Korean National Assembly Passes “Blind Hiring” Bill to Reform Hiring Culture

13th May 2019 Recently, the National Assembly of Korea passed legislative amendments to the Fair Recruitment Procedure Act (“FRPA”) as part of the reform efforts to address the country’s recruitment culture. The latest amendment – dubbed the “blind hiring” bill – expands the FRPA to prohibit any type of recruitment irregularities (e.g., improper solicitation, coercion, pressure) and, more importantly, bars employers from asking jobseekers to provide any information unrelated to the position and the applicant’s merit. The amended FRPA will go into effect starting July 17, 2019.

Korean Financial Supervisory Service Mandating Disclosure of Transaction Documents When Filing Repor

13th May 2019

Korean Financial Supervisory Service Mandating Disclosure of Transaction Documents When Filing Report on Material Facts

In light of the recent amendment to the internal policies of the Financial Supervisory Service of Korea (FSS), companies that file a “Report on Material Facts” on or after April 29, 2019, will also be required, as a matter of principle, to disclose the underlying transaction documents in full.

Successful Challenges to Korean Health Insurance Regulator’s 13-Year Old System…

5th April 2019

Successful Challenges to Korean Health Insurance Regulator’s 13-Year Old System of Automatic Reduction of Original Drug Price

The Seoul Administrative Court and the Seoul High Court issued orders suspending the automatic reduction of the price of the original drug “A” upon generic entry claiming patent non-infringement and the automatic reduction of the price of the original drug “B” upon generic entry claiming patent invalidity, respectively. The automatic price reduction of the original drug B has been continuously suspended since the Administrative Commission’s suspension order issued in April 2018.

Korean Supreme Court Confirms Licensee’s Standing to Challenge Patent Validity

12th March 2019

On February 21, 2019, the Supreme Court of Korea issued an en banc decision overruling its prior precedents on the issue of whether a licensee who is continuing to make royalty payments under an existing license agreement nevertheless has standing to challenge the validity of the licensed patent. In short, the Korean Supreme Court held that absent special circumstance, a patent licensee is an “interested party” eligible for challenging the validity of a licensed patent, despite the lack of any threat or potential threat posed by the patent holder against the licensee’s right to use the patented invention. (Supreme Court En Banc Decision No. 2017Hu2819).

Amendments to the KFTC Merger Review Guidelines

12th March 2019

The Korea Fair Trade Commission (the “KFTC”) recently amended its Guidelines for Merger Review (the ”Guidelines”), which took effect from February 27, 2019. The Guidelines now provide for particular issues relating to “innovation markets” and “big data” that will be considered during the KFTC’s review of mergers within R&D-intensive (i.e. innovative) industries.

Korea strengthens protection against IP infringement and unfair competition (Amendment of the Patent

20th February 2019

Korea strengthens protection against IP infringement and unfair competition (Amendment of the Patent Act and the Unfair Competition Prevention Act)

On December 7, 2018 the Korea National Assembly approved a bill to amend the Patent Act and the Unfair Competition Prevention and Trade Secret Protection Act (“UCPA”). Highlights of the proposed amendments include stronger penalties for patent infringements and further relaxation of the burden of proof for patent holders. The amendments are to be effective on July 9, 2019.

Key Changes to Korean Labor Standards Act in 2019

19th February 2019

Key Changes to Korean Labor Standards Act in 2019

In 2018, Korea experienced major reforms to the employment laws including, but not limited to, the Labor Standards Act. For example, many employers scrambled – many are still struggling – to adjust their work hour structures to comply with the new 52-hour work hour limit. In 2019, legislative reforms and amendments proposed in 2018 have taken effect. For your information, we have highlighted two major changes in the employment law landscape for 2019.

Korean TR, Finally and Officially Coming Soon

19th February 2019

Korean TR, Finally and Officially Coming Soon

Korea is finally adopting a trade repository (“TR”), which is an infrastructure that collects and stores data related to over-the-counter (“OTC”) derivatives transactions. The Financial Services Commission (“FSC”) has decided to implement the TR system by making amendments to the Regulations on Financial Investment Business (which is aligned with Article 166-2(2) of the FSCMA), instead of making amendments to the Financial Investment Services and Capital Markets Act (“FSCMA”) or its Enforcement Decree, and has approved the amendment as of January 31, 2019. As a result, the TR is expected to be activated in July, 2020 as scheduled. Korea is introducing the TR system in order to improve transparency and systematic risk management in its OTC derivatives market as part of its effort to adhere to the G20 accord.

Direction of Financial Regulatory Environment of Korea in 2019: Legislation Supporting Financial Inn

13th February 2019

Direction of Financial Regulatory Environment of Korea in 2019: Legislation Supporting Financial Innovation and Reform of Supervisory System

For 2019, it is expected that the financial regulatory/legislative environment will see further developments along two key tracks, with one track consisting of the enactment of special laws favoring new business initiatives aimed at promoting innovation in the financial business sector, and the other track consisting of legislative activity aimed at reforming and improving the existing financial supervisory system to promote greater efficiency and integration.  The following specific examples of legislation are representative of the overall direction planned for the financial regulatory environment in the year ahead.

Korean Financial Regulators Advance Legislation to Introduce Regulatory Sandbox to Spark FinTech

17th January 2019

Korean Financial Regulators Advance Legislation to Introduce Regulatory Sandbox to Spark FinTech

The 2018 year in review in Korea was notable for the sluggish overall economy, uncertainty surrounding the geo-politics and impact on Korea due to the global trade wars, on-going concerns related to the lack of jobs and unemployment, increased taxes and burdens for businesses and families, and no meaningful improvement or clarity in the current situation for 2019. In response, the Korean National Assembly passed a legislation called the Financial Innovation Support Act (the “FinISA”) on December 7, 2018 to spark the financial services industry in conjunction with FinTech products and services. The FinISA, which will soon take effect in March 2019, is intended to lay the legal foundation to introduce a regulatory sandbox for innovative financial services, where FinTech firms test their new products and services without certain regulatory oversight pursuant to exemptions for a limited period of time (“Sandbox”). As the FinISA exempts or defers application of existing finance-related regulations for new financial technology, products or services with the purpose of fostering the creation of innovative and new financial products and services, it will also support the stabilization of such services in the financial services market at the end of the testing period and is expected that the FinISA will support a revitalization of the FinTech industry which experienced sluggish growth in recent times. In particular, as companies and investors become more interested in security tokens and Security Token Offerings (“STO”) which are regulated by the Financial Investment Services and Capital Markets Act (the “FSCMA”), there have been on-going discussions and debates as to whether the FinISA could lead to a breakthrough in the crypto-asset industry based on blockchain technology. Crypto assets encompasses those assets which utilize blockchain technology where the asset is digitalized by utilization of cryptography, peer-to-peer networks and a public ledger of verified transactions resulting in a ‘units’ of such a crypto asset without any involvement by middle-persons or brokers (e.g., cryptocurrency.

Flying Under the Radar

9th January 2019

Flying Under the Radar: Companies Must Increase Awareness of the Potentially Dormant and Disruptive Changes to the Minimum Wage in Korea

Korea has experienced unprecedented yearly increases to the statutory minimum wage since 2017 in addition to changes in the applicable legislation. While companies are aware of the more patent impacts of the recent major changes to the Labor Standards Act and have initiated proactive measures to ensure legal compliance, companies often overlook the impacts of the significant changes to the statutory minimum wages and associated legislation until it is too late. And as an employer may face criminal sanctions (i.e., imprisonment up to 2 years or criminal fine not exceeding KRW 20 million) for unpaid wages, companies must be aware of the changing legislation related to the statutory minimum wage and – as with changes to the Labor Standards Act – take proactive measures to ensure continued legal compliance.

New Legislation: Amendment to the Enforcement Decree of the Act on External Audit of Stock Companies

9th January 2019 New Legislation: Amendment to the Enforcement Decree of the Act on External Audit of Stock Companies

The amendment to the Act on External Audit of Stock Companies (the “Act”) and the enforcement decree thereof (the “Enforcement Decree”), whose key feature pertains to the external audit and disclosure requirements for limited liability companies, became effective as of November 1, 2018. Certain provisions relating to the category of targets of external audits will become effective with respect to the fiscal years that commence on or after November 1, 2019. Therefore, for the majority of companies whose fiscal years begin on January 1 and ends on December 31 of each year, the revised category will become effective with respect to the fiscal year that begins on January 1, 2020.

New Proposed Tax Law Amendments Provide Clarification on the Taxation of Foreign Funds

26th November 2018

On July 30, 2018, the Korean Ministry of Economy and Finance (“MOEF”) announced the proposed tax law changes/amendments for 2019 and beyond (“Proposals”). The Proposals are expected to be reviewed and finalized by the Korean National Assembly in December 2018.

Some key Proposals that should be of great interest to private equity funds and other investors relate to the Korean taxation of a foreign collective investment vehicle, referred to as an Overseas Investment Vehicle (“OIV”) in the Korean tax law. An OIV is broadly defined as an overseas vehicle that raises funds through an investment offering, manages investment assets, derives value from the acquisition and disposition of such assets, and distributes such derived value to its investors. Consequently, partnerships, limited liability companies and other types of collective investment vehicles (e.g., trusts) would likely be included in the definition of OIV.

The key provisions of the Proposals in relation to an OIV that will impact tax planning for foreign funds are summarized below.

KFTC to Expand Scope and Penalties of Korea’s Antitrust Enforcement Regime

22nd November 2018

Korea’s competition authority, the Korea Fair Trade Commission (the “KFTC, has announced a proposal to expand its existing enforcement authority to the courts and prosecutors through a full-scale reform of the Monopoly Regulation and Fair Trade  Act, Korea’s primary competition statute. If all proposed reforms are passed by the National Assembly as currently drafted, the impact on the Korean economy and antitrust enforcement will require companies doing business in Korea to tighten their risk management and compliance measures, as the scope and penalties of Korean antitrust enforcement would be broadened.

The Use of Dispatch Workers: Ironing Out Yet Another Wrinkle for its Successful Implementation

27th February 2017

From a purely employer’s perspective, foreign companies operating in Korea are often frustrated (or at times, even amazed) at some of the protections provided to employees under the Korean employment laws. A few of the most difficult legal requirements include the strict just-cause requirement for termination, the durational limits on the use of fixed-term (contract) employees, the statutory severance obligation, and the statutory allowances for overtime, night-time, and holiday works. In light of such requirements and to minimize the burden of potential employer liabilities, many foreign companies may naturally wonder: How can we structure our workforce so that we can preserve an increased degree of flexibility when managing our personnel?

Korea’s New Supreme Court Case Excludes Mileage From Vat Taxation:

27th February 2017

Used mileage points interpreted as sales allowance deductible from tax base

If a business operates a customer loyalty program together with other business, in which the amount of mileage points granted for the customers’ primary transaction is deducted from the purchase price of the customers’ secondary transaction and those customers only have to pay the remaining price, the amount deducted from the purchase price during the secondary transaction should not be additionally included as the value of supply(i.e. should not be subject to VAT) of the secondary transaction(Summary of Supreme Court 2015 du 58959, 2016. 08. 26.).

Comparative Guides

• South Korea: Mergers & Acquisitions

  Published: March 2020

  Authors: Ki Wook Kang Kyung Chun Kim Won Joon Jang

  This country-specific Q&A provides an overview to Mergers & Acquisitions laws and regulations that may occur in South Korea.

• South Korea: Technology

  Published: July 2020

  Authors: Soon-Yub Samuel KWON Hyunjun KIM Yonghwan Chee

  This country-specific Q&A provides an overview to Technology laws and regulations that may occur in South Korea.

• South Korea: Fintech

  Published: October 2020

  Authors: Jongsoo Yoon Hyunkoo Kang

  This country-specific Q&A provides an overview to Fintech laws and regulations that may occur in South Korea.

• South Korea: Patent Litigation

  Published: October 2020

  Authors: Hui Jin Yang Tae Hyung Kim Hayoun Chun Esther Inhae Chung

  This country-specific Q&A provides an overview to Patent Litigation laws and regulations that may occur in South Korea.

• South Korea: Employment & Labour Law

  Published: March 2020

  Authors: Sang-Hoon Lee Jae-Hoon Choi William Kim

  This country-specific Q&A provides an overview to Employment & Labour Law laws and regulations that may occur in South Korea.

• South Korea: Energy – Oil & Gas

  Published: November 2020

  Authors: Jin Kim Sun Young Yang

  This country-specific Q&A provides an overview to Energy – Oil & Gas laws and regulations that may occur in South Korea.

• South Korea: Private Equity

  Published: January 2021

  Authors: Daehoon Koo Kyuseok Park Hyungmin Joo

  This country-specific Q&A provides an overview to Private Equity laws and regulations that may occur in South Korea.