A violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Fraud)

A

Defendant

Law Firm GU

Attorney GV

Law Firm (LLC) B

C, D, and GD

Law Firm (LLC) GR

Attorneys GW, GS, and GT

Seoul High Court Decision 2014No529 Decided October 31, 2014

April 23, 2015

The judgment below is reversed and the case is remanded to Seoul High Court.

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. The summary of the facts charged of this case is that the royalty revenue in the column of "reported or omitted report amount" as stated in the annexed list of crimes in the judgment below (hereinafter referred to as "amount omitted in report of this case") was prevented from exercising the royalty claim amounting to 40% of the omitted amount of report of this case by deceiving the victim by omitting or reducing it, even though it was the royalty revenue to be reported to the victim by F in order to settle the royalty amount to be paid by F in accordance with the productization license agreement between F Co., Ltd. (hereinafter referred to as "F") and the victim pursuant to the productization license agreement between the victim.

The lower court found the Defendant guilty of all the facts charged in the instant case on the ground that the entire omitted amount of the report in the instant case constituted the royalty income to be reported and settled by the victim under the instant master agreement based on the evidence adopted by the lower court.

2. However, we cannot agree with the above judgment of the court below for the following reasons.

A. According to evidence legitimately employed by the lower court, F under the instant posters cannot enter into a license agreement with a third party without the victim’s approval (Article 3); F shall not, as evidence of the permission for commercialization rights, apply for necessary stamps in accordance with the form determined by the victim (which shall include license, consumer price, royalties ratio, etc. to be entered) and shall not be attached to the delivered stamps or transfer them to a third party (Article 5); F may, in principle, request the victim to submit a report on the actual results of the instant posters to the third party on the issuance of the certificates at the time of delivery of the certificates (Article 6(3); F may, in its name, quantity of the each product manufactured and sold for three months, on the last day of March, September, December (hereinafter referred to as “the date of collection”); and the victim may separately request the victim to submit a report on the change in the production and sale price and sale price of the relevant products; and if the victim violated the Financial Services Commission’s order to sell and sell the products at the end of July, 1997).

B. In full view of the foregoing facts, F’s obligation to pay royalties to the victims is incurred when F submitted an application for issuance of stamps according to the fixed procedure under the instant posters contract and received the stamps from the victims, and the amount of royalties must be calculated according to the heat and quantity per sheet per each document of the documentary evidence delivered. The F’s duty to report under Article 17 of the instant posters contract should, in principle, be calculated according to the heat and quantity per sheet per sheet per document of the documentary evidence delivered as above.

It is limited to reporting necessary information to the victim in assessing royalties.

Meanwhile, examining other provisions of the instant posters contract, even if we examine the other provisions, there is no provision that if the company that received the gift by entering into a re-permission agreement with another Liber City without the victim’s permission, or by delivering the gift to a business entity other than the Liber City permitted in the application for issuance of the gift certificate violates the provisions dealing with the gift under the instant posters contract, such as selling and distributing the gift using the stamp in violation of the regulations on handling the gift certificate, the fact of the violation shall be reported on its own. However, according to Article 26(5) of the instant posters contract, the victim may claim a penalty equivalent to the desired consumer price of the pertinent product if the above violation was committed by F, but there is no provision that F should settle the royalties acquired by entering into a re-permission contract with the victim differently from the payment of penalty without the victim’s permission, so it is difficult to view that the above violation is also included in the scope of the obligation to report under Article 17 of the instant posters contract related to the obligation to pay the gift certificate as above.

Ultimately, even if F violated the instant posters contract with a third party without the victim’s permission, such as concluding a re-authorization agreement with a third party or using a premium in violation of the regulations on the handling of documentary evidence, and thereby obtaining a royalty revenue, F does not have any obligation to settle and pay the royalty income arising from the offense, separate from the obligation to pay a penalty to the victim, or to cancel the marina contract or to compensate for damages, and it is difficult to view that F has a duty to report the fact of the violation of the above contract and the fact that the income arising from the offense occurred to the victim. Thus, the Defendant’s failure to report such fact to the victim cannot be deemed as deceiving the victim.

C. Nevertheless, the lower court found the Defendant guilty of all of the charges of this case on the ground that: (a) the F entered into a license agreement with a third party for commercialization rights without the victim’s consent; (b) the gift income, which was delivered to the third party who entered into a license agreement for commercialization rights; and (c) the inventory certificate which was not used by the F, issued before 2007, was delivered to other Sclar, and delivered to the other Sclar; and (d) the royalty income, the royalty income, the royalty rate of which was lower, and the gift rate of which was granted by converting the gift to other items with the gift higher than the royalty rate; and (b) the gift income, such as the gift income, which was delivered and received by the F, constitutes the royalty income that the F shall settle to the victim under the instant license agreement; and (c) the royalty income, which was received by F, in violation of the provisions for handling the gift agreement, constitutes the royalty income that the F shall report the royalty income to the victim acquired in violation of the instant license agreement.

In so determining, the lower court erred by exceeding the bounds of the principle of logic and experience and free evaluation of evidence, or by misapprehending the legal doctrine on deception in fraud.

3. Therefore, without examining the remaining grounds of appeal, the judgment of the court below is reversed, and the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Lee Jae-soo

Justices Kim Yong-deok

The Chief Justice Park Jae-young

Justices Kim Gin-young