LIN NEWS
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LIN NewsChina Enacts Administrative Regulations and Judicial Interpretations for New Company Law Effective July 1As we introduced in our January 2024 newsletter, China's New Company Law was amended and took effect on July 1. However, there are many cases where the investment obligations under the New Company Law are burdensome in practice, and there are some unclear aspects of the application of the New and Old Company Laws in practice, so China has enacted administrative regulations and judicial interpretation, which were promulgated in June, to ease the burden of implementing the New Company Law and partially resolve questions. 1. Administrative Regulations Related to the Investment Period As we introduced in our January 2024 newsletter, the New Company Law requires that a company's shareholders pay up their capital in full (for limited liability companies only) within five years from the date of incorporation. However, in consideration of the reality that the above amendment makes it burdensome to pay the capital in full, the “Regulations on the Implementation of the Capital Registration Management System of the Company Law” (hereinafter referred to as the “Capital Registration Regulations”) have been further enacted to establish a three-year transitional period for the above five-year investment period, the main contents of which are as follows: 1) For limited liability companies established before June 30, 2024, if the remaining contribution period exceeds five years from July 1, 2027, the company's articles of association must be amended no later than June 30, 2027 to adjust the remaining contribution period to within five years, and the shareholders must pay in full the capital within the adjusted period (joint-stock companies are omitted here as foreign-invested enterprises in China rarely take this form), 2) If the contribution deadline or registered capital of a company is significantly abnormal, the competent department may require adjustment in consideration of the company's business scope, management status, shareholders' contribution capability, main business, asset size, etc, 3) After the adjustment of shareholders' capital contribution amount, contribution method, contribution period, etc. is made, the company shall make a public announcement on the National Business Credit Data Disclosure System within 20 business days. 2. Judicial Interpretation on the Application of the Company Law The Supreme People's Court of China has issued a judicial interpretation regarding applying the New and Old Company Laws in civil and commercial dispute cases (the “Regulations on Temporal Effect Regarding the Application of the Company Law,” hereinafter referred to as the “Judicial Interpretation on the Company Law”). The Judicial Interpretation of the Company Act once again emphasized the “non-retroactive principle” of the law and stipulated cases in which the new Company Act is applied retroactively, including: 1) Cases where the legislative purpose is better served by applying the New Company Law: - A shareholder who was unable to attend the shareholders' meeting because the procedures of the shareholders' meeting prior to the enforcement of the New Company Law were not lawful may exercise his/her right to request the shareholders' meeting resolutions to be canceled. - In the event of a dispute between shareholders regarding unequal capital reduction prior to the enforcement of the New Company Law, unless agreed by all shareholders or otherwise agreed between shareholders, apply the equal capital reduction principle under the New Company Law. - In other cases where it is favorable to the company's compliance, protection of minority shareholders, principle of capital integrity, etc. 2) Cases where there is no explicit provision in the old Company Law: - Liability allocation between the transferor and transferee in the event of a transfer of shares corresponding to unpaid capital whose contribution period has no yet expired - Exercise of the right of other shareholders to purchase shares if the controlling shareholder of a limited liability company abuses the rights of shareholders and infringes on the interests of the company or other shareholders - Liability of controlling shareholders or actual controllers who are not directors in the execution of the company's affairs - Other disputes regarding the new provisions of the New Company Law 3) Cases where there are special provisions: - In principle, the Old Company Law applies to liquidations prior to the enforcement of the New Company Law, but the New Company Law applies to liquidations based on reasons that occurred within 15 days prior to the enforcement of the New Company Law. * * * LIN’s China Team provides comprehensive one-stop legal services for Korean companies entering China and doing business in China. If you have any questions regarding the above, please do not hesitate to contact our China Team at +82 02 3477 8695.2025.02.19
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Recruitment PersonnelNew RecruitmentsWe are pleased to welcome Beom Jin Park (Partner), Chae Yun Kim (Partner), and Woohyuk Sky Ju (Foreign Legal Consultant (US)) as new members of our Firm. 1. Beom Jin Park, Partner - Korea University, B.A. in Economics - University of Michigan Ann Arbor, Ross School of Business, M.B.A. - Chungnam National University, School of Law, J.D. - Bar Examination (4th) - Seoul National University, Center for Financial Law Former) Samsung Corning Corporation Former) Citibank Korea, Card Division Former) Coca-Cola Business Solution Inc. Former) Shinhan Bank, Business Planning Team / Shinhan Financial Group, Future Strategy Research Center Former) Lim, Chung & Suh Former) Jehyun, Partner Former) E-UM Private Equity, Compliance Officer Current) Lin Mr. Park joined Samsung Group in 1999 and worked at Samsung Corning Co., Ltd., handling HR, strategic planning, and tasks related to Corning Incorporated in the United States. In 2004, he moved to the U.S. and obtained a Master of Business Administration (MBA) from the University of Michigan Ann Arbor, one of the top 10 business schools in the country. During his MBA program, he completed industry-academia cooperation projects and internships at Coca-Cola Business Solution Inc. and Citibank (Card Business) in the United States, transitioning his career into the financial sector. In 2006, he worked in the Business Planning Team at Shinhan Bank and the Future Strategy Research Center of Shinhan Financial Group. During his tenure at Shinhan Bank, he was involved in consulting projects aimed at developing strategies for banks and financial holding companies in response to the global financial crisis in 2008 and the implementation of the Capital Market Consolidation Act in 2009. He handled important tasks such as formulating strategies for long-term growth of the bank and initiatives for green banking. He also co-authored reports with the Financial Supervisory Service for publication. After pursuing graduate studies in law to deepen his understanding and expertise in financial regulation and legal matters, Mr. Park was admitted to the Korean Bar in 2015. Starting his career at Lim, Chung & Suh, he gained experience in various civil litigation cases, including claims for damages against investment management companies. In the same year, he moved to Jehyun, a law firm, specializing in finance and transactions, where he worked until 2023. During this period, he served clients such as banks, financial investment companies, asset management companies, specialized credit finance companies, savings banks, and public power companies, providing legal advice on domestic and international real estate project financing, renewable energy project financing, asset securitization, syndication, distressed debt acquisition financing, as well as legal advice on fundraising and various development projects, corporate governance, and related litigation. At Lin, Mr. Park plans to leverage his diverse experience and unique strengths to primarily engage in transaction advisory services such as project finance and structured finance in real estate and development projects. 2. Chae Yun Kim, Partner - Seoul National University, Graduate School of Anthropology - Bar Examination (41st) - Judicial Training Institute (31st) - Northwestern University, School of Law, LL.M. Former) Head of Legal Department, KB Kookmin Bank Current) Lin Ms. Kim started her legal career as an in-house counsel at KB Kookmin Bank and served as team head of legal team, general manager of legal department, and head of legal division for 21 years. There, she worked on various legal advisory and litigation matters for the bank and its affiliates, including regulatory law issues, financial transactions, internal control, consumer protection, and domestic and international litigations. Ms. Kim also assisted in reviewing issues related to virtual asset transactions and establishing internal control procedures. Additionally, for several years, Ms. Kim supported the board of directors and management in decision-making by advising on various cases and issues arising from internal corporate governance, HR, labor, and corporate law. Ms. Kim also handled disputes between companies and various stakeholders, including shareholders, creditors, and customers, and provided creative solutions to minimize losses. At Lin, based on her broad knowledge and integrated practical experience, Ms. Kim will demonstrate a high level of expertise in corporate legal advisory, financial, and wealth management fields. 3. Woohyuk Sky Ju, Foreign Legal Consultant (US) - Chief Financial Officer Academy (CFO Strategy Course) at Seoul National University, 23rd Class - Korea Military Academy, Batch 61 - Military History - Bachelor of Business Administration, Korea Educational Development Institute - Texas Southern University, J.D. (Thurgood Marshall School of Law, Juris Doctor) Former) U.S. Attorney / Head of International Business Team at Law Firm Hanjoong Current) Mentoring and networking expert advisor for Startup Leapfrog Package, Gyeonggi Center for Creative Economy & Innovation Current) Expert advisor on international contracts/claims at the Korea International Trade Association Current) Advisor in the field of technology/management at the Gyeonggi Center for Creative Economy & Innovation (Advisory Committee Member) Current) Export consulting expert, Korea Agro-Fisheries & Food Trade Corporation Current) Lin Mr. Ju was the head of the International Business Team of Law Firm Hanjoong and has been practicing in the cross-border sector for about 14 years, primarily in the areas of international trade and immigration (immigration/visa for individuals and companies). He is currently an advisor in charge of international contracts/claims at the Korea International Trade Association (KITA), where he advises on trade disputes, and an expert in charge of corporate export consulting at Korea Agro-Fisheries & Food Trade Corporation. In particular, as part of a legal support project for startups, he has recently been providing preventive legal support for the establishment and operation of overseas subsidiaries, joint ventures, crowdfunding, foreign exchange transactions, international contracts, and import/export trade for a number of promising companies as an expert in the field of technology/management and as an advisor to the Gyeonggi Center for Creative Economy & Innovation in Pangyo Techno Valley. He is also an immigration (immigration/visa) expert who is familiar with entry & exit and waiver (non-immigration & immigration) application procedures in the field of immigration & international law for a client who has a record such as criminal violation, illegal immigration, smuggling, and false reporting/perjury, etc. At Lin, Mr. Ju plans to leverage his practical skills and experience to effectively utilize the rich international network of Lin’s international legal team, creating synergies. 4. New Associates We are pleased to announce the addition of Ho Jun Shin (7th Bar Examination), Yuna Kim (9th Bar Examination), Jin Hwan Seong (9th Bar Examination), Sang Hoon Lee (9th Bar Examination), Hyeonjun Choi (9th Bar Examination), Sun-A Yoon (U.S. Attorney, Washington, D.C.), and Han A Ryu (Australian Attorney) to meet the growing demand of our clients. Going forward, Lin promises to continuously recruit verified talents in various fields to ensure customer satisfaction.2024.01.31
Copyright Law Issues and Major Dispute Cases Regarding Generative AI
Generative AI, a technology that generates text, images, music, video, and more through large-scale data learning, is advancing at a frightening pace, with amazing results in areas of creativity that were once thought to be impenetrable to AI. This has led to a number of disputes between copyright holders and businesses providing generative AI technology.
Among them, the lawsuit between the New York Times, OpenAI, and Microsoft regarding LLMs in the U.S. and the lawsuit between Getty Images and Stability AI in the U.K. regarding image generation AI using a diffusion model are noteworthy. In this article, while focusing on these two cases, we will discuss the copyright law issues and implications to consider when utilizing AI.
1. LLM - The New York Times v. OpenAI
1.1 Copyright Law Issues
In late 2023, the New York Times filed a lawsuit against OpenAI and Microsoft in the U.S. District Court for the Southern District of New York, alleging copyright infringement on the grounds that the defendants' GPT-based services were created by copying massive amounts of New York Times articles for training and, under certain prompting, they produced outputs nearly identical to the articles used for training.
The issue of infringement of reproduction rights in collecting data for training was, in fact, somewhat settled by Authors Guild v. Google, Inc. 804 F.3d 202 (2d Cir. 2015). Although this case is not related to AI learning, Google's act of scanning books and storing the scanned copies thereof for its book search service was recognized as fair use, and we believe that the same can be applied to the collection and use of data for training of generative AI.
Unlike book search services, one possibility where fair use might not apply is when reproduction rights are infringed through near-exact reproduction of the learned data. OpenAI argued that the New York Times was able to output New York Times articles verbatim after numerous prompting attempts in a manner that violated its terms, and that this was merely an overfitting problem in AI technology. In other words, because GPT has a “substantial non-infringing use,” the development of, and provision to users of, GPT does not constitute aiding and abetting copyright infringement. The U.S. Supreme Court had previously held that Sony's manufacture and sale of Betamax videotape recorders did not constitute copyright infringement of motion pictures [Sony Corp. of America v. Universal City Studios, Inc. 464 U.S. 417, 456 (1984)].
1.2 Other Issues
Although not at issue in U.S. litigation, our copyright law recognizes the rights of database producers (hereafter referred to as “database rights” for convenience). The Copyright Act makes it an infringement of database rights to reproduce a substantial part of a database or to reproduce it repeatedly or systematically (Article 93 of the Copyright Act), applying mutatis mutandis fair use provisions (Article 94(1), Article 35-5 of the same Act). It is difficult to find a case law to refer to, but if the purpose of protecting databases under the Copyright Act is based on the selection, arrangement, and individual accessibility of data, it is reasonable to conclude that there is no infringement of database rights or that it constitutes fair use unless the set of collected data for learning has those characteristics.
Other interesting issues in the U.S. litigation include whether GPT's so-called hallucinations, in which it describes articles not written by the New York Times as if they were written by the New York Times, constitutes trademark dilution or tarnishment, and whether reducing traffic to the New York Times website by summarizing and showing the website's content in search results constitutes unfair competition.
2. Image Generation - Getty Images v. Stability AI
2.1 Issues
Among the image generation models, the diffusion model is designed to gradually add noise to an image for training and, conversely, learn to remove the noise based on a specific prompt, resulting in an image that satisfies a specific prompt from the noise.
Getty Images provides a service that allows users to search for images and then license and use the images they want, so it has a large collection of high-quality images and text data detailing the content of those images. Stability AI used the image and text data obtained by crawling the Getty Images website for training and made “Stable Diffusion,” which is now one of the most widely used diffusion models for image generation.
Getty Images filed a lawsuit against Stability AI in the United Kingdom in May 2023, and later filed a lawsuit in the United States when jurisdiction issues were raised. The lawsuit also deals with similar issues as the New York Times case. Whether Stability AI can claim fair use with the same logic as OpenAI and Microsoft will likely depend on the facts of the case, and the nature of the work at issue, which is images rather than text, may also have some influence.
2.2 Issues Outside the Lawsuit
While not highlighted in the above lawsuits, there is a widespread distribution of modules in diffusion model communities that are either clearly infringing or highly controversial, even under fair use doctrine. In addition, the widespread use of technologies that either very specifically constrain the conditions of the image to be output (e.g. ControlNet) or use the image itself as a prompt (e.g. IPAdapter) has made the “AI generated it automatically and didn't intend to infringe” defense less viable.
3. Implications
These two lawsuits are representative of the ongoing disputes between creators and AI, and their outcomes are expected to have a significant impact on the AI industry and the business operations that utilize it, warranting close attention.
As the technologies that enable generative AI rapidly advance, become less expensive, and become more popular, more companies are utilizing these technologies, and they need to understand exactly what the legal issues are and what steps they need to take to avoid the associated risks.
While not a legal issue, we also expect to see more social discussions on whether creating with AI can be recognized as art, and how we accept and utilize AI technology.
For complete coverage, please refer to the original article below. Thank you.
The Law Times
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https://www.lawtimes.co.kr/LawFirm-NewsLetter/201296
LIN Represented a Coalition of Five Activist Funds against Samsung C&T
While "activist funds" that exercise voting rights demanding improvement in corporate governance and shareholder return policies are emerging as a hot topic, a coalition of five activist funds, including British asset management company City of London, Whitebox Advisors in the U.S., and Korea's Anda Asset Management, have submitted proposals as shareholders to Samsung C&T with the so-called "wolf pack" strategy.
Although their proposals were rejected, they received favorable evaluation for achieving a modest reduction in the undervaluation of Samsung C&T, leading to a rise in stock price. In addition, the activist fund coalition expressed their intention to maintain long-term holdings, citing their high assessment of Samsung C&T.
LIN served as legal counsel for the activist fund coalition.
LIN's attorney Hyun Su Do said that while Samsung C&T's performance was outstanding, shareholders continued to see losses, and also argued that inefficient capital allocation, weak corporate governance, and unclear strategies are the reasons. Although all proposals from activist funds were ultimately rejected, LIN established itself as a competitive law firm in corporate control disputes through its representation of these funds.
Attorney Hyun Su Do of LIN (30th class of the Judicial Research and Training Institute) from Kim & Chang is in charge of advisory work in various fields such as mergers and acquisitions (M&A), direct investment, corporate governance, joint ventures (JV), capital markets, and financial transactions.
Attorney Jong Sik Kim (37th class of the Judicial Research and Training Institute) and U.S. Attorney Milosz Zurkowski, who served as legal representatives of the activist fund coalition along with attorney Do, are also from Kim & Chang. Attorney Kim is handling various tasks such as M&A, antitrust, general corporate advisory, corporate control disputes, medical law, and litigation to name a few. Attorney Zurkowski provides advice on all areas of business, including establishing foreign companies in Korea and complying with labor laws. He specializes in overseas asset managers' registration of domestic offshore funds.
In addition, LIN is currently acting as Jung jae Lee’s legal representative in the corporate control dispute between Jung Jae Lee and Raemongraein. Attorney In Chul Kang, Yu Na Kim, Su Hyung Hong, Ji Yeon Hwang are working on the case along with attorney Do. Among them, attorney In Chul Kang was appointed as a prosecutor in 1995 and became a judge in 1999, and then served as a senior judge in the Seoul Southern District Court, Seoul Central District Court, and Seoul Northern District Court. In particular, in April this year, he successfully led the Constitutional Court's decision on the unconstitutionality and nonconformity to the Constitution of the statutory reserve system.
For more details, please refer to the original articles below.
Bloter
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https://www.bloter.net/news/articleView.html?idxno=622954
LIN Launches GR Team with Former Lawmakers Won Yoo-Cheol and Lee Hoo-Sam
With the recent appointment of Won Yoo-Cheol, former leader of the Future Korea Party, and Hoo-Sam Lee, former member of the Democratic Party of Korea, as advisors, LIN has officially launched its Government Relations (GR) Team, which provides strategic one-stop total solutions for government and parliamentary regulations in line with the diversification of the corporate regulatory environment.
The LIN GR Team will support responses to the executive branch and the National Assembly regarding bills and provide advice regarding witness appearances at the parliamentary inspection of state affairs, and Won and Lee will provide advice on, inter alia, responses to government regulation, legislation, and parliamentary inspection of state affairsbased on their experience as members of the National Assembly.
Advisor Won is a five-term lawmaker, who has served as chairman the floor leader and acting chairman of the ruling party, chairman of the Future Korea Party, and vice governor for political affairs of Gyeonggi Province. Advisor Lee held key positions, such as vice chairman of the Democratic Party’s Central Policy Committee, and served as CEO of Airport Railroad from 2021 until this year.
LIN’s GR Team is headed by Kim Jong-Sik (37th class, the Judicial Research and Training Institute), formerly of Kim & Chang, and includes Koo Tae- Eon (24th class, Judicial Research and Training Institute), who serves on the Economic Regulatory Innovation Task Force under the Deputy Prime Minister for Economy, Kang Min-Gu (5th Korean Bar), former aid to a National Assembly member, Eom Kwang-Sup , former director of the Board of Audit and Inspection of Korea, and Eom Se-Yong , former head of the legal department of the Korea Exchange.
This year, LIN also hired advisor Park Jae-Gyu, a former standing member of the Korea Fair Trade Commission, Sung Hae-Kyung (33rd class), who oversaw external affairs at Hyundai Card, and Bae Tae-Joon (37th class), a former part-time deputy spokesperson for the Democratic Party of Korea.
"LIN"s GR Team plans to provide strategic legal services to companies facing regulatory challenges ahead of the first parliamentary inspection of national affairs of the 22nd National Assembly,” said a member of LIN.
For the full coverage, please see the original article below.
The Law Times
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https://www.lawtimes.co.kr/news/201129
