SOUTH KOREA Law and Practice Contributed by: Ho Joon Moon, Sung Min Kim, Allen Hyungi Ryu and Joon Sung Hong, Lee & Ko
Specific Considerations for the Transfer of Intellectual Property to or from Foreign Entities The transfer of intellectual property to foreign enti - ties that may pose a threat to the national security of South Korea (in particular, any investment that might hinder the manufacture/production of defence materi - als, might pose a risk of leakage of state secrets and/ or National Core Technology, etc) may be prohibited or restricted by the MOTIE upon review of the foreign investment committee. 8.2 Licensing v Assignment of IP Rights From the IP owner’s perspective, licensing the IP to the JV is strategically beneficial as assignment of IPs requires registration and recovering IP ownership is often difficult, even with an agreement for purchase- back of the IP rights. Partial assignment is not recommended, as co-own - ership of IPs may restrict certain uses of the relevant IPs (consent is required for any transfer or licensing of the IPs from the assignee). From the JV’s perspective, assignment of IPs is rec - ommended as the licence to use the relevant IPs may be unenforceable in the event that the underlying IPs are assigned/transferred to a third party (unless the third party agrees to and acknowledges the validity of the licence), and the JV should register the licence for the relevant IPs. 8.3 ESG Considerations in JVs ESG has become a salient issue in South Korea as the country continues to make efforts towards conforming to global standards and improving its presence and influence in global discussions. Furthermore, certain global ESG requirements such as RE100 have rapidly become a real issue for South Korean companies’ overseas business operations (particularly in the USA and the EU). In early 2023, the Ministry of Environment issued a correction order to a South Korean company regard - ing an allegedly false advertisement, where one of its products was advertised as being carbon-neutral when, in reality, only some of the product’s carbon footprint had been neutralised by the carbon emission rights purchased by the company in the market. This
was among the first administrative sanctions imposed on the advertising of petrol products as carbon-neu - tral products. In 2021, the Supreme Court ruled that the representa - tive director of a company is liable for damages in connection with their lack of knowledge about the company’s concerted behaviour. This is recognised by the market as the South Korean judiciary’s steps towards more developed ESG practice. Furthermore, the Financial Services Commission has announced its plans to require a company group with assets of over KRW2 trillion to issue sustainability reports. While sustainability reporting is conducted on a voluntary basis under the current regulatory scheme, the authors are witnessing a steady increase of com - panies opting to publish such reports, in recent years. The South Korean Congress is also contemplating the introduction of various ESG-related laws (require - ments for human rights and environment/supply chain due diligence, etc). Namely, the Carbon Dioxide Capture, Usage and Stor - age Act (CCUS ACT) was passed on 9 January 2024 and took effect from 7 February 2025. Although CCUS technology is globally recognised as a bridge technol - ogy for achieving carbon neutrality by 2050, CCUS- related regulations were dispersed across more than 40 different laws, and captured carbon dioxide was considered as waste under the Waste Management Act. Business entities seeking new business oppor - tunities in the CCUS industry should closely observe the changes in the business landscape following the implementation of the CCUS Act. Moreover, the Serious Accident Punishment Act (SAPA), which was enforced only against corpora - tions with at least 50 or more employees for the past two-year grace period, has also been expanded to be applicable to small-sized businesses (businesses with five to 49 regular employees) since 27 January 2024. The expansion of scope of SAPA enforcement requires all businesses with fewer than 50 employees to establish and implement SAPA-compliant safety/ health management systems.
137 CHAMBERS.COM
Powered by FlippingBook