[Victory] Law firm Veat wins a maintenance fee claim lawsuit representing a SW wholesale plaintiff.

Law firm Veat (hereinafter 'Veat') obtained a victory for the plaintiff in a case where A Co. (plaintiff), operating a SW wholesale business, filed a ‘claim for unpaid maintenance fees’ against B Co. (defendant), which operates a program development and maintenance business, in relation to a data management program (hereinafter 'C Program') maintenance contract concluded between them.

​​1. Overview of the Case

​A. Plaintiff's Filing of a Main Claim for Maintenance Fee

​A Co. (hereinafter 'plaintiff') and B Co. (hereinafter 'defendant') entered into a contract to perform installation and maintenance for two years regarding C Program, and the plaintiff performed all maintenance work for C Program for two years according to the contract. However, the defendant failed to pay the service fees for November and December 2015, and also failed to pay the fees for additional service work carried out in conjunction with this contract. Accordingly, the plaintiff filed a lawsuit claiming costs incurred for two pieces of service work and delayed damages against the defendant.

​B. Defendant's Filing of a Counterclaim for Damages

​In response, the defendant claimed that the plaintiff had entered into a contract by falsely representing itself as a partner of the C Program manufacturer when it was not, and thus failed to receive appropriate program upgrades, and filed a counterclaim against the plaintiff seeking damages for breach of contract and delayed damages.

​2. Review of the Issues

​Accordingly, Law firm Veat carefully examined the scope of installation and maintenance of C Program, which is the content of the contract, focusing on the contract signed between the plaintiff and the defendant.

​It was primarily examined whether ▲the contract included a provision that the plaintiff should be registered as a partner of the C Program manufacturer, and ▲whether the scope of maintenance included updates or upgrades of C Program.

​Veat comprehensively reviewed the wording of the contract document, industry practices related to maintenance work, and similar precedents, and concluded that the defendant’s claim was unfair, focusing on the purpose of this contract, 'maintaining C Program in a good condition through preventive maintenance and maintenance when failures occur'.

​That is, ▲the content of this contract is closer to 'pure technical support work' and is different in nature from 'renewal work' ▲the defendant was notified and allowed to choose whether to include the cost of the work when including update work ▲it is difficult to recognize that the wording of the contract inherently includes a large-scale update or upgrade in order to maintain a good condition ▲there is no evidence to recognize that 'renewal work' was performed during the contract period, and C Program was not maintained in a good condition or failures occurred ▲there was no objection to the condition of C Program during the contract period ▲there is no evidence to recognize that the plaintiff deceived the defendant into entering into this contract by representing itself as a partner of the C Program manufacturer. It argued and proved these points.

​3. Conclusion and Implications

​The Central District Court of Seoul accepted all the facts argued by Veat and simultaneously rejected the defendant’s counterclaim, ordering the defendant to pay the plaintiff the full amount of unpaid fees and delayed damages, resulting in a complete victory for the plaintiff.

​With the advent of the big data era, new businesses are emerging to manage companies’ data, servers, and programs related to them. Various data management programs are appearing, and business contracts related to installation, operation, maintenance, and upkeep of these programs are also increasing. However, due to the volume and complexity of data and the ambiguity of the scope of work, it is difficult to prove fault in litigation.

​This case is evaluated as a representative study case for IT companies to review precautions and setting of the scope of work when concluding data management work contracts.

​Law firm Veat is composed of IT specialized lawyers selected by the bar association and lawyers with engineering backgrounds, and provides professional legal services for IT-related disputes based on extensive experience in software-related litigation. Please contact Law firm Veat if you are preparing for an IT law-related lawsuit.

​Thank you.

Law firm Veat