Case Studies
[Veat’s Startup Legal Walk] Virtual Assets and Financial Legislation
For nearly two and a half years, the boom in virtual assets (cryptocurrencies) has been hitting Korea. Numerous internet bulletin boards that had been filled with “Gaza” memes are still eye-catching. In the IT industry, even at that time, although people had already gained some concept of cryptocurrencies, the legal sector did not. Despite the fact that prices doubled overnight, it was impossible to understand an asset that behaved so erratically, and it was also impossible to put it within the legal framework. In this situation, the government began to prepare measures to completely withdraw ‘Virtual Mark’ from Korea, which was still causing this bizarre situation. After two and a half years, what is it like now? Even in Korea, many discussions took place, and despite being small, there were also results. Even within the fierce demand to recognize virtual assets as an effective asset, there was a difficult first step to acknowledge the financial value of virtual assets. And soon, the Legal Framework on Reporting and Use of Specific Financial Transaction Information (Specific Financial Transaction Law) was enacted. It provided specific guidelines for businesses engaging in virtual asset businesses. Most legal framers realized that after the 2018 crypto boom, they first encountered virtual assets, and given the initial negative perception, it was necessary to create this level of regulation. Nevertheless, there is a virtual asset legal framework that needs to be further developed. This is the legal framework to include virtual assets in the ‘financial’ domain. Next year’s Specific Financial Transaction Law, despite its name, is difficult to consider as a law that has placed virtual assets in the ‘financial’ domain. The Specific Financial Transaction Law requires virtual asset businesses to ensure customer identity verification and transparent asset management, and to possess an ISMS (Information Security Management System) to manage assets entrusted by customers. However, it does not include the content that could develop virtual assets as a new field of finance. Virtual assets are distinguished from other technologies such as artificial intelligence and augmented reality in that they have pioneered a new financial domain that did not previously exist. The United States has been focusing on regulatory efforts to regulate virtual assets as one area of finance by way of the Securities and Exchange Commission (SEC). Should there be predictability in regulation? It is not easy to create a regulatory framework that harmonizes with traditional financial law, especially given the situation where no one had previously known about this new concept. Particularly given the situation where the whole nation was swept up in investment mania in 2018, it is even more necessary. After two and a half years since ‘Gaza’ frenzy, it is now time for Korea to allow virtual assets to grow as one branch of a new finance. Of course, it is not about allowing unlimited virtual asset finance. However, like the SEC, it is necessary to publish the criteria for determining whether it is a regulatory target, and to apply it uniformly to the entire financial law if it is a target of regulation. We expect the formation of this legal framework. ‘Predictability in regulation’ will open an opportunity for Korean virtual asset companies to lead the new financial markets that are coming.
[Consultation] Review of Sales Agent Agreement Utilizing Influencers
Law firm Veat conducted a review of sales agent agreements utilizing influencers. A, an online electronic commerce company, commissioned a review of sales agent agreements utilizing influencers in anticipation of running a campaign with influencers. In response, Veat conducted a comprehensive review of all contractual terms, including liability regulations under the “Product Liability Act” and refund regulations under the “Electronic Commerce Act,” as well as clarifying the rights and obligations of each party and ensuring there were no unfair or overly disadvantageous provisions in these sales agent agreements, and delivered its opinion. Amidst the rapid growth of online electronic commerce, including social media marketing, the sale of goods through influencers has become an effective method of campaign. To ensure successful campaign execution, it is essential to execute a sales agent agreement between the supplier and the sales agent beforehand, and clearly specify responsibilities and refund regulations based on the sold goods, to avoid potential disputes later on. Please contact Law firm Veat anytime if you need legal advice regarding sales agent agreements and related laws. Thank you. Law firm Veat.
[Veat] Beyond Regulation, Towards the Future! ‘Regulatory Sandbox’ Talk 1
[Consultation] Legal issues to check in advance when entering a global business]
A Company is establishing a U.S. subsidiary, B Company, and inquired Law Firm Veat regarding legal risks associated with the corporate structure between the Korean and U.S. entities, as well as regarding global service terms and conditions and personal information processing policies. Law Firm Veat responded by conducting a legal risk review of the corporate structure between A Company and B Company, and drafted and provided global service terms and conditions, as well as reviewed B Company’s personal information processing policy regarding GDPR (General Data Protection Regulation) and CCPA (California Consumer Privacy Act). GDPR (General Data Protection Regulation) GDPR, enacted on May 25, 2018, is the personal information protection law of the EU (European Union). It focuses on strengthening the rights of data subjects and corporate responsibility, as well as clarifying the requirements for transferring personal information outside the EU. CCPA (California Consumer Privacy Act) CCPA, also known as the “California-style GDPR,” is a personal information protection law issued for California. It applies to organizations conducting business in California that meet one of the following three conditions: 1) annual total sales exceeding $25,000,000, 2) collecting or selling personal information of 50,000 or more consumers, households, or devices, 3) when consumer personal information sales generate more than 50% of the company’s annual revenue. While similar to GDPR, it differs in that it does not require the legality of personal information collection consent, etc. Violations of GDPR can result in fines and administrative sanctions, with significant violations potentially incurring penalties of up to 4% of the company’s global annual revenue or €20 million, whichever is greater. Additionally, violations of CCPA can lead to fines imposed by the California Attorney General, and consumers have the right to seek compensation and class action lawsuits. While less comprehensive than GDPR, the CCPA’s penalty ceiling is unlimited, requiring global service companies to exercise particular caution. Law Firm Veat has established a personal information protection team led by Partner 변호사 백승철 and Partner 변호사 조은별, who have been appointed as legal advisors to the Personal Information Protection Committee since 2020. Based on their experience providing comprehensive legal advice on GDPR and CCPA compliance, the firm offers legal advisory opinions to companies preparing for global services. If you require legal advice regarding GDPR and CCPA, please contact Law Firm Veat. Thank you.
[Consulting] Drafting investment agreements for accelerators investing in early-stage companies.
Veat provides investment agreements to use by accelerators that invest in early-stage companies. Accelerator A, which invests in seed stage (Seed Series) investments in early companies, commissioned the drafting of an investment agreement. Therefore, Veat drafted the investment agreement, carefully adjusting it to preserve the characteristics of investment in early companies, while ensuring that ▲the company's managerial autonomy is guaranteed and ▲the authority of the initial investors is not diminished. In the case of investment in early companies, there are often many cases where investors believe in the company’s vision and growth rather than immediate profits. Because the criteria and philosophy for judging the future value of these companies vary among investors, the assistance of experienced professionals who can well reflect these criteria in the investment agreement is needed. Veat has experience conducting various investments and M&A together with several venture capital firms (Venture Capital) and accelerators. If you need advice regarding the drafting and review of investment agreements, please contact Veat Law Firm. Thank you. Veat Law Firm
[Notice] Privacy Policy Revision Notice
[Consultation] Will a website creation contract termination result in a penalty fee being charged?
A company, Veat, was preparing to launch a new website and had signed a website design · development contract with company B to proceed with the website development. However, the deliverables from company B did not meet the level requested by Veat at the time of contract signing, and Veat wanted to terminate the contract. Accordingly, Veat requested legal advice from Law firm Veat to proceed with the amicable termination of the website design contract with company B. Law firm Veat reviewed the website design contract based on it, examining 1) whether it would be possible to receive the deliverables previously worked on by company B, and 2) whether a penalty clause would be incurred or other disadvantages would arise upon termination of the website design contract. In particular, Law firm Veat divided the review into cases where amicable agreement could be reached based on the wording of the contract and cases where it would be difficult, and provided legal advice to help Veat achieve a smooth agreement. In the case of website design contract termination, amicable agreement can also be achieved depending on whether the outsourcing development agreement is clearly written based on the content agreed upon by the parties to the contract. Conversely, if the outsourcing development agreement is vaguely written, it may lead to a legal dispute. If you are currently preparing to draft an outsourcing development agreement or are preparing to terminate a website design contract, please contact Law firm Veat. Thank you. Law firm Veat
[Legal review of business cooperation agreement between A, a software development company]
Law firm Veat conducted legal review of the business cooperation agreement to receive a request from A, a software development company, regarding the business cooperation agreement for the partnership agreement with B, a partner company. A was launching a new solution in collaboration with B, its partner company. Accordingly, Law firm Veat drafted a business cooperation agreement that accurately reflected the agreed-upon terms regarding the scope of cooperation, the roles of the parties, profit distribution, and intellectual property rights for joint results, prior to signing the partnership agreement with B. When jointly developing and launching software, it is advisable to clearly specify R&R in the contract. If you need a legal review to ensure that the agreements reached between the contracting parties are specifically reflected in the business cooperation agreement, please contact Law firm Veat. Thank you.
[Consultation] What if you are using our company's trademark abroad?
Law firm Veat conducted a legal review regarding response plans when domestic trademarks are identically copied and used overseas by companies that have registered trademarks with the Korean Intellectual Property Office and are preparing for overseas expansion. A Co. is a startup providing educational content platform services and had registered trademarks with the Korean Intellectual Property Office, with plans to expand overseas. However, A Co. discovered that a company was using its logo identically overseas and inquired to Law firm Veat to investigate potential sanctions and response plans against foreign companies. Law firm Veat advised on comprehensive response plans, including methods for registering domestic trademarks in overseas markets, arguments for and against claiming patent rights, and the possibility of sanctions if a foreign company is providing similar services in Korea to A Co. There have been increasing instances of foreign trademark brokers causing damage, such as a foreign company registering a trademark of a Korean company that is leading the “Hallyu” (Korean Wave) trend overseas, and then selling trademark rights to the Korean company when it enters the Chinese market. Trademarks operate on the principle of “territoriality” – meaning that the state’s legislative, judicial, and administrative jurisdiction is only valid within its own territory. Therefore, even if a trademark is registered domestically, it does not necessarily have the same effect overseas. If you are planning to expand overseas, it is advisable to consider methods for registering domestic trademarks in foreign markets. If you need legal advice regarding trademark infringement, please contact Law firm Veat. Thank you. Law firm Veat
[Consultation] Review of Product Supply Joint Business Agreement Contract
A Co., Ltd., which operates sports-related businesses, commissioned Veat Law Firm to review the joint venture agreement before collaborating with B Company to procure products. Accordingly, Veat Law Firm analyzed the underlying business agreement to first clarify