K&P Law Firm successfully represented South Korean Company A in a trademark license contract dispute against Chinese Company B, securing a favorable judgment. Company A holds the trademark rights for “Trademark X,” while Company B is a Chinese company that entered into a five-year license agreement with Company A in February 2022. Under the contract, Company B was authorized to manufacture clothing using “Trademark X” and sell exclusively through a specific Chinese online shopping platform called “Poizon.” Company B was required to pay royalties as a percentage of total sales, with a guaranteed minimum annual amount.

However, Company B failed to pay some of the royalties due in 2023 and violated the contract by selling products on other platforms including Taobao and JD.com, which were prohibited under the agreement. When Company A demanded cessation of sales on other platforms, Company B failed to take any action even after 10 days had passed. Furthermore, Company B unilaterally notified contract termination without justifiable cause. Article 5 of the contract contained a penalty clause requiring payment of five times the minimum guaranteed royalty for such violations. When Company A filed a lawsuit claiming unpaid royalties and penalty fees, the Seoul Central District Court ruled in favor of Company A. This case encompasses various legal issues including the importance of trademark license contract drafting, governing law and jurisdiction, and foreign service problems.

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