Plaintiff (Law Firm Hanma, Attorney Oh Jeong-han et al., Counsel for the plaintiff-appellant)

Orto Korea Co., Ltd. (Law Firm above, Attorney Abnormalization)

Suwon District Court Decision 2010Gahap23497 Decided May 3, 2012

October 30, 2012

1. The judgment of the court of first instance is modified as follows.

A. The Defendant (Counterclaim Plaintiff) against the Plaintiff (Counterclaim Defendant)

1) 26,681,181 won and the interest thereon shall be paid with 5% interest per annum from December 23, 2010 to January 10, 2013 and 20% interest per annum from the following day to the date of full payment;

2) The procedure for cancellation of the registration of the transfer of a patent right, which was completed by the Korean Intellectual Property Office No. 2009-016182 on August 7, 2009 with respect to the patent right listed in the attached list No. 1, and the procedure for cancellation of the transfer of a utility model right, which was completed by the Korean Intellectual Property Office No. 2009-0161894 on August 7, 2009 with respect to the utility model right listed in attached

B. The Plaintiff (Counterclaim Defendant)’s remainder of the main claim and the Defendant (Counterclaim Plaintiff)’s counterclaim are dismissed, respectively.

2. The total costs of the lawsuit shall be borne by the Plaintiff (Counterclaim Defendant) and the remainder by the Defendant (Counterclaim Plaintiff) respectively.

3. Paragraph 1-A(1) may be provisionally executed.

1. Purport of claim

(a) Main claim;

1) The Defendant (Counterclaim Plaintiff; hereinafter “Defendant”) primarily against the Plaintiff (Counterclaim Defendant; hereinafter “Plaintiff”)

A) 235,380,000 won and interest thereon shall be paid at the rate of 20% per annum from the day following the delivery date of the copy of the complaint of this case to the day of complete payment; and

B) Disposition 1-A. 2

2) Preliminaryly, the Defendant shall pay the Plaintiff the said money, and grant a non-exclusive license for each right listed in the separate sheet.

(b) Counterclaim;

The plaintiff shall pay to the defendant 200,000,000 won with interest rate of 20% per annum from the day after the delivery date of the counterclaim of this case to the day of complete payment.

2. Purport of appeal

A. Purport of the Plaintiff’s appeal

Of the part concerning the principal lawsuit of the first instance judgment, the part against the plaintiff shall be revoked. In the first instance judgment, (1) (b) and (2) of the principal lawsuit shall be the conjunctively.

B. Purport of defendant's appeal

The part against the defendant among the part concerning the principal lawsuit in the judgment of the court of first instance is revoked and the plaintiff's claim corresponding to the revoked part is dismissed. All of the part concerning the counterclaim in the judgment of the court of first instance shall be revoked.

1. Basic facts

The court's explanation on this part is identical to the part of "1. Basic Facts" among the grounds of the judgment of the court of first instance, and thus, it is acceptable to accept this part in accordance with the main sentence of Article 420 of the Civil Procedure

2. Determination on the main claim

(a) Obligation to pay royalties;

1) In full view of the facts without dispute, the statement 13-8 of the evidence 13-3-8 of the first instance court, part of the testimony of the non-party 3 of the witness of the first instance court, the results of the plaintiff's first instance court's inquiry into the Korea Non-Binding Co., Ltd., and the purport of the pleadings in the first instance court as a whole, the defendant can recognize the fact that the defendant has sold the 300mm cutting machines around October 2009, about 3, 2009, about 4, around April 2010, 2500mm 2, 1800mm cut (each cut was 1) around April 209, 209, around 12, 2009, about 308,623,6320 won in total, about 00-1200, 300-6,300-6,304mm in total, 300-6304mm in total.

According to the above facts of recognition, the Defendant is obligated to pay to the Plaintiff the royalty of KRW 15,431,181 for the machinery used by the Defendant under the contract of this case (=308,623,632 won x 5% x less than won) and the royalty of KRW 9,750,00 for the machinery sold by the Defendant x 5% x 25,181,181 won (=15,431,181 won + 9,750,000 won for the machinery sold by the Defendant).

2) As to this, the Defendant asserts that, as the Plaintiff paid monthly pay, the Plaintiff’s personnel expenses should be deducted from the production cost, and that the Plaintiff was not obligated to pay royalties with respect to the machinery sold after the termination of the instant contract due to the Plaintiff’s retirement of the Defendant Company (including the Defendant’s assertion in reference to the documents submitted as of January 2, 2013, which was the date of closing the argument at the trial; hereinafter the same shall apply).

However, there is no evidence to prove that the Plaintiff and the Defendant agreed to deduct the Plaintiff’s personnel expenses from the production cost, which serves as the basis for royalties, while entering into the instant contract, and there is no evidence to support that the Plaintiff agreed to obtain the Plaintiff’s personnel expenses from the production cost, not from the Plaintiff’s production cost (if the Plaintiff did not manufacture each of the above machinery as the Defendant’s employee, it appears that the Defendant was using other employees or the Defendant manufactured the outsourcing, and in such a case, it seems that the cost was included in the production cost). The royalty under the instant contract is a kind of royalty for the patent right and utility model right (hereinafter “the instant patent right, etc.”) that the Plaintiff transferred to the Defendant under the instant contract, as seen in paragraph (c)(2) below, and even if the Defendant sold it after retirement of the Plaintiff, it cannot be exempt from the Plaintiff’s obligation to pay royalties insofar as the Plaintiff’s patent right, etc. had been granted by manufacturing

Therefore, all of the defendant's arguments are without merit.

(b) Obligation to pay wages;

The facts that the Plaintiff’s annual salary was KRW 36,00,00 are as seen earlier. In full view of the entries in Eul’s evidence No. 6, and Nonparty 4’s testimony and the overall purport of the pleadings by Non-Party 1 witness of the first instance trial, the Plaintiff can be recognized as working for the Defendant Company from October 1, 2010 to the 15th day of the same month. As such, the Defendant is liable to pay the Plaintiff wages of KRW 1,50,000 (=36,000,000 + 12 months ± 2).

C. Obligation to transfer or cancel the patent right of this case

1) Cancellation and restitution of the instant contract

According to the statement in Gap evidence No. 4, around October 27, 2010, the plaintiff notified the defendant to pay royalties to the defendant at KRW 24,130,00,000 and together with the cost list, which is the basis for the calculation. Nevertheless, the defendant may recognize the fact that he did not pay royalties to the plaintiff. The fact that the plaintiff's purport of the claim and the application for change of the cause of the contract of this case was delivered to the defendant on June 7, 2011, including the plaintiff's expression of intent to cancel the contract of this case, is clear in the record.

Therefore, the contract of this case was rescinded by the plaintiff's intention of cancellation due to the defendant's default. Thus, the defendant is obligated to implement the procedure for cancellation of registration of transfer in the name of the defendant with respect to the patent of this case, etc. to the plaintiff,

2) Judgment on the defendant's assertion

(A) justifiable grounds for non-performance of obligation to pay royalties;

Although the Defendant did not perform the obligation to pay royalties to the Plaintiff, the Defendant did not perform the obligation to pay royalties. However, in order to pay royalties to the Plaintiff, the Defendant must accurately calculate the manufacturing cost according to Article 6 of the instant contract. The Defendant did not submit to the Plaintiff a accurately calculated calculation statement of the cost of each machine because the Plaintiff in charge of the preparation of a list of goods purchased from materials, such as machinery design and parts, and the manufacture of machinery, could not accurately calculate the manufacturing cost of each machine. The Defendant failed to pay royalties to the Plaintiff on October 27, 2010; ② the Plaintiff requested the Defendant to pay royalties to the Defendant on or around October 27, 2010; however, the Defendant calculated royalties with 5% of the manufacturing cost, which are the five% of the manufacturing cost, and filed an excessive claim to the Plaintiff on the grounds that it did not perform the obligation to pay royalties to the Plaintiff due to the Plaintiff’s failure to perform the obligation to pay the penalty for breach of contract under the instant contract.

In light of the above, even if there are circumstances that make it difficult for the Defendant to accurately calculate the cost of production or manufacture as the Defendant’s assertion, the Defendant could sufficiently grasp the content of the plan by demanding the Plaintiff to submit the above drawings, etc., but there is no evidence to acknowledge that the Defendant demanded it to the Plaintiff, such as the order sheet, estimate by seller, detailed statement of transactions, and completed machinery, etc. In addition, even if the Plaintiff notified the Defendant to pay 10% of the cost of production or manufacture as royalty in violation of the terms of the contract in this case, it is difficult for the Defendant to accurately calculate the cost of production or manufacture and submit it to the Defendant, barring any circumstances that the Plaintiff would not receive it, the Defendant would not be liable for the Defendant’s failure to pay it as above (see, e.g., Supreme Court Decision 15,431,181, Dec. 31, 2007).

B) Cancellation of contract due to breach of incidental duty of care

The defendant asserts that since 100 million won shall be paid to the plaintiff as the price for the patent right of this case (each right listed in the attached list) and the transfer registration is fully vested in the defendant, the obligation to pay royalties to the plaintiff is merely an incidental duty in the contract of this case and thus, the contract of this case cannot be rescinded due to the non-performance.

According to the reasoning of the evidence No. 1, No. 8, and Non-Party 3’s testimony and pleading, the Plaintiff and the Defendant concluded the contract of this case, and acknowledged the fact that the Plaintiff transferred to the Defendant as a total of approximately KRW 60 million, including production facilities, and approximately KRW 40 million. In addition to the aforementioned basic facts, the Plaintiff transferred not only the patent right of this case, etc., but also the production facilities, equipment, materials, and fixtures, and equipment necessary for business to the Defendant under the contract of this case, and determined KRW 100 million with the proceeds of the transfer. The Plaintiff appears to have considerable value solely on the basis of the price of the above materials, production facilities, and equipment, including the above materials and production facilities, (i) there is no sufficient evidence to acknowledge that the above materials were not valuable as non-used materials, but also on the premise that the Plaintiff would have no value in return for the transfer contract of assets such as 100 million, and (ii) there is no reason to view that the Plaintiff would be no value in return for the sale of the above materials or equipment.

(d) Reorganization;

The Defendant is obligated to pay to the Plaintiff damages for delay calculated at the rate of 26,681,181 won (=25,181,181 + wages of 1,500,000 won +) and the amount of damages for delay calculated at the rate of 5% per annum prescribed by the Civil Act from December 23, 2010 to January 10, 2013, which is deemed reasonable for the Defendant to dispute over the existence and scope of the obligation to perform as to the patent from the date of delivery of a copy of the complaint of this case, as requested by the Plaintiff. The Defendant is obligated to pay damages for delay calculated at the rate of 20% per annum as stipulated by the Act on Special Cases Concerning the Promotion, etc. of Legal Proceedings from the next day to the date of full payment, to the date of filing a claim for cancellation of patent transfer registration with the Korean Intellectual Property Office completed on August 7, 2009-182, and each of the claims for cancellation of utility model rights is not subject to the Plaintiff’s registration of cancellation.

3. Judgment on the counterclaim

A. The defendant's assertion

The Plaintiff asserts that the Plaintiff is obliged to provide all the data necessary for the business stipulated in Paragraph 5 of the instant contract, and that, despite having to work at the Defendant Company for more than three years, no data other than the basic data on the website has been contaminated, and that, on October 2010, the Plaintiff voluntarily retired, and thus, the Plaintiff is obliged to pay KRW 200,000,000,000 to the Defendant

B. Determination

1) First of all, there is no sufficient evidence to prove that the Plaintiff did not provide the Defendant with the data necessary for the business, and instead, considering the overall purport of the pleadings in each of the evidence Nos. 7 and Nos. 9 and 10 (including each number, if any), the Plaintiff can only be recognized as having changed the phone number and facsimile number of KSM, which the Plaintiff was his/her representative, to the name of the Defendant Company, and transferred the website data, the current customer, and the list of customers to the Defendant Company.

2) Next, as seen earlier, the Plaintiff agreed to work at the Defendant Company for at least three years, comprehensively taking account of the Plaintiff’s written evidence Nos. 6, Eul’s written evidence Nos. 12 and 13, witness Non-party 4 and 5 of the first instance court, and the Plaintiff’s personal examination result of the first instance court, the Plaintiff served at the Defendant Company from August 1, 2009 to October 15, 201, and from February 201, it can be recognized that the Plaintiff served in the Defendant Company “Mau” company.

Article 16 of the Labor Standards Act provides that a labor contract shall be null and void in violation of the Labor Standards Act, and Article 15 of the same Act provides that "the term of the labor contract shall not exceed one year, except where the term is not fixed and the period required for the completion of a certain business is fixed." Article 15 of the same Act provides that "(i) a labor contract which determines the working conditions which fall short of the standard prescribed in this Act shall be null and void only in that part. (ii) The term of the labor contract in this case shall be one year, and the term of the labor contract in this case shall be one year, and the plaintiff has worked for the defendant company for a certain period." Thus, the plaintiff's defense is justified.

In regard to this, the defendant's above three-year working period falls under "the period required for the completion of a certain project" as the time required for the defendant to obtain the transfer of technology, etc. concerning non-ferrous metal specification and materials from the plaintiff, but there is no sufficient evidence to acknowledge that the above three-year working period constitutes "the period required for the completion of a certain project", and the contract of this case does not provide for trade secrets or technology transfer to the defendant in addition to the transfer of the patent right of this case, and the defendant does not specify the contents of the technology to be transferred by the plaintiff in addition to the disclosed technology such as the patent right of this case, etc., it is difficult to regard the above three-year working period as "the period required for the completion of a certain project", and therefore, the above three-year working

3) Therefore, the defendant's counterclaim of this case is without merit.

4. Conclusion

The plaintiff's main claim, among the claims filed by the plaintiff, shall be accepted within the scope of the above recognition, and all of the remaining main claims and the defendant's counterclaims shall be dismissed without merit. However, since part of the judgment on the main claim of the judgment of the court of first instance, among the main claims of the judgment of the court of first instance, is unfair in conclusion, each appeal filed by the plaintiff and the defendant is partially accepted, and the judgment of the

[Attachment]

Judges Dok-won (Presiding Judge) Jink-Jak Jin-Jin Park