Recent Developments

On October 20, 2023, Lee & Ko successfully represented Brain Asset Management Co., Ltd. and KY Private Equity Co., Ltd. in their acquisition of approximately 9.21% of the preferred shares of SK Pharmteco Inc., originally a wholly-owned subsidiary of SK Inc. prior to the acquisition, based in Delaware, USA (the “Target”) through (i) Opus 1st Inc., a special purpose company established by an institutional PEF with Brain Asset Management and Korea Development Bank as its general partners, (ii) Brain SP Generalized Private Investment Trust No. 45 and Brain SP Generalized Private Investment Trust No. 46, each an investment trust established and managed by Brain Asset Management, and (iii) Opus 4th Inc., a special purpose company established by institutional PEFs with KY Private Equity as their general partner ((i) through (iii) collectively, the “Investors”) (collectively, this “Transaction”). 

This Transaction was a pre-IPO transaction in anticipation of a public listing of the Target shares on the Nasdaq market, and aside from the high deal value of USD 300,210,071 as the aggregate purchase price, the deal structure itself was quite complicated as it involved issues such as the establishment of multiple investment trusts and special purpose companies as investment vehicles. This Transaction also involved the execution of a shareholders agreement to coordinate the commercial understandings between the Investors and SK Inc., the original shareholder, and there were further complex issues to be resolved in light of the regulations and procedures under the Financial Investment Services and Capital Markets Act, the Monopoly Regulations and Fair Trade Act and the Foreign Exchange Transactions Act, as well as tax issues both in and out of Korea and antitrust filing issues in the US and EU. Despite these complexities, Lee & Ko was able to provide effective advice to reach a successful consummation of this Transaction within a short period of time. Lee & Ko was involved in the Transaction and served as transaction counsel in all aspects of this Transaction, from the selection of preferred bidders at the auction stage through the review of transaction structure, establishment of PEFs and special purpose companies, foreign exchange report filings, tax review, antitrust filing review, preparation/negotiation of the share subscription agreement and shareholders agreement, execution and closing.

Lee&Ko has been representing Novartis AG, a global pharma company, in dozens of lawsuits related to its blockbuster heart failure drug Entresto® and advising on various regulatory matters.

Entresto is not only the first standard treatment in 30 years for heart failure, a leading cause of human mortality, but also a blockbuster drug which achieved global sales of $4.64 billion by 2022.

Since the beginning of 2021, dozens of generic companies have filed invalidation actions as well as scope confirmation actions against patents covering Entresto, seeking to bring generic drugs to market sooner. While simultaneous patent litigations are currently pending in the U.S., Europe, India, and other parts of the world, Lee&Ko has been able to successfully defend the patentee in the Korean market for Entresto against infringing generics until now through strategic litigation based on deep expertise which also includes independent discovery of supporting evidence such as data from the Cambridge Structural Database.

As the first case involving a supramolecular compound, the case, requires solving complicated technical issues through evidence interpretation and legal analysis in a completely new technical area.  This will set an important precedent for future cases involving highly technical issues in a completely new technological sector.

Lee & Ko has advised the Korean Government and global battery businesses on the proposed guidance on the interpretation of “foreign entity of concern” (FEOC) requirements for Section 30D clean vehicle credit of the Internal Revenue Code, released by the U.S. Department of Energy and the Department of the Treasury on December 1, 2023.

Considered one of major achievements of the Biden Administration, the Inflation Reduction Act of 2022 has profound impacts on both exports to and investments in the United States by Korean battery manufacturers with competitive edges in the global market. Lee & Ko’s prompt advices help Korean companies considering cooperation with Chinese counterparts, who may fall within the definition of FEOCs, to develop and operate strategies that can satisfy IRA requirements.

In the context of the introduction of the IFRS17 and the K-ICS and the consequential emphasis on sound management of insurance capital, the exploration of co-insurance has emerged as a strategic avenue. Subsequently, around 2020, regulatory foundations for co-insurance transactions were incorporated into insurance supervisory regulations. In March 2023, the financial regulatory authorities further supplemented this framework by formulating comprehensive guidelines for the handling of co-insurance operations.

Distinguished by asset transfer and asset retention models, insurance companies have traditionally favored the simplicity of the 'asset transfer' structure in their co-insurance transactions. However, “S Insurance” has recently engaged Lee & Ko to explore the initiation of co-insurance policies employing a relatively intricate yet less liquidity-burdening 'asset retention' structure, distinguishing itself from prevailing practices with foreign reinsurers.

Lee & Ko played a pivotal role in providing legal counsel, meticulously reviewing transactional conditions, and advising the client in a direction that aligns with the compliance parameters of the fundamental asset retention co-insurance structure and the aforementioned operational guidelines. This signifies a noteworthy contemplation of the less conventional asset retention co-insurance structure within the South Korean landscape.

Despite the pivotal role actuaries play in shaping insurance terms, premiums, and ensuring accounting transparency, there is currently no distinct and independent legal framework governing the actuarial profession in South Korea. Instead, pertinent regulations are integrated into the Insurance Business Act and its subordinate statutes. Notably, a regulatory vacuum exists concerning actuaries associated with public pension institutions and other financial entities beyond insurance companies.

The Insurance and Reinsurance Practice Group at Lee & Ko has collaboratively engaged with the firm's legislative consulting team to amalgamate the collective expertise of accomplished attorneys and professionals in representing the Institute of Actuaries of Korea. The firm conducted an exhaustive analysis of legislative precedents, delving into legislative intentions, aiming to deliver optimal advice tailored to the client's needs throughout the legislative process. Consequently, in November 2023, Ms. Joo Kyung Yoon of the People Power Party, a member of the 21st National Assembly, submitted the draft of the Actuary Law, marking the initiation of the legislative process.

Lee&Ko successfully defeated the generics’ challenge against Boryong’s patent covering Dukarb®, which is a domestic blockbuster drug, before the IPTAB and subsequently the IP High Court. On November 30, 2023, the IP High Court ruled in favor of the patentee in all 10 cases, including both scope confirmation actions and invalidation actions, filed by dozens of generic companies, including Arlico pharmaceuticals, against the Dukarb® combination product patent. 

Dukarb tablet, as a combination of Kanarb® (fimasartan) with amlodipine, is a blockbuster drug that has shown excellent antihypertensive effects and generated sales of KRW 40 billion in 2022. In 2021, more than 45 domestic generic companies filed scope confirmation actions and invalidation actions to assert non-infringement and invalidity of the Dukarb® patent, but the patentee prevailed in all cases. The generic companies subsequently filed 10 appeal cases to the IP High Court, but the IP High Court upheld the decisions of the IPTAB on November 30, 2023.

The generic companies alleged invalidity of the patent at issue on various grounds such as novelty, inventiveness, lack of the description requirement, and incomplete invention, while simultaneously claiming non-infringement on the grounds of compound differentiation and salt change. Therefore, it was essential for the patentee to present a consistent and strategic response to the various claims made by different generic companies. Despite unfavorable case precedents on combination drug patents, Lee & Ko successfully argued for inventiveness of the patent at issue by focusing on the synergistic effects of the combination product. Likewise, in the negative scope confirmation action cases, Lee & Ko presented persuasive claim construction and equivalent infringement based not only on the claim language but also on the specification and the common technical knowledge of the pharmaceutical industry. Ultimately, Lee & Ko prevailed in all 10 cases, again demonstrating the team’s expertise in healthcare and IP.

Lee & Ko’s Antitrust and Competition Practice Group conducted a mock dawn raid and comprehensive antitrust risk assessment of a multinational corporate group (“Group A”) under the Monopoly Regulation and Fair Trade Act (“MRFTA”). 

During the mock dawn raid, Lee & Ko’s Antitrust and Competition Practice Group used the same methods and procedures as the Korea Fair Trade Commission (“KFTC”) in its investigations and offered additional solutions for deficiencies that were discovered during Group A’s response to the mock dawn raid.

In addition, Lee & Ko’s Antitrust and Competition Practice Group collected materials and conducted interviews with key executives and employees of Group A’s three affiliate companies. Using the information gathered during the mock dawn raid, Lee & Ko’s Antitrust and Competition Practice Group confirmed the compliance of the companies with the MRFTA and provided measures for improving compliance in necessary areas. 

The mock dawn raid conducted by Lee & Ko’s Antitrust and Competition Practice Group is invaluable as it helps to prevent executives and employees with limited knowledge and experience on the MRFTA from committing acts during a dawn raid that could be considered obstruction and providing guidance on cooperating with a KFTC investigation while protecting the right to defense. Group A utilized the mock dawn as an opportunity to check and strengthen compliance management in all areas of its business. 

Following the recent reorganization of the KFTC in separating its investigation and policy divisions, establishing proper procedures for responding to KFTC dawn raids is of the utmost importance as the investigative function of the KFTC has been strengthened through the reorganization and led to an increase in the number of dawn raids. 

Lee & Ko’s Antitrust and Competition Practice Group actively utilizes its extensive expertise in responding to large-scale dawn raids to ensure companies are prepared for dawn raids, and more importantly, thoroughly and comprehensively managing MRFTA related risks. 

Lee & Ko’s Antitrust and Competition Practice Group represented Aurelius Group affiliate, Truffle UK BidCo One Ltd., in filing the merger notification for the acquisition of 80% of the shares of in-flight meals producer and seller LSG Sky Chefs Korea Co., Ltd.

The Aurelius Group has been engaged in global investments (with a focus on Europe), and this acquisition marked its entry into investing in the Korean market as part of a long-term investment strategy, which focuses on acquiring companies with potential for improving and developing operations. As this was a large investment made by Aurelius Group in Korea, the determinations by the Korea Fair Trade Commission (“KFTC”) on the definition of the relevant market and potential restrictions on competition were important issues. 

Lee & Ko’s Antitrust and Competition Practice Group effectively explained in the merger filing notification that (i) the market for the investment business and the market for the production and sales of in-flight meals is a conglomerate merger involving products that are non-complementary and cannot be substituted, (ii) the Korean investment market is fragmented with many businesses engaged in fierce competition, and (iii) there are strong competitors in the Korean in-flight meal production and sales market. As a result, the KFTC issued unconditional approval 7 days after the submission of the merger filing notification. 

On June 8, 2023, LG Chem executed a Business Transfer Agreement to sell its Diagnosis business to Korea IVD Holdings Co., Ltd, an affiliate of Glenwood Private Equity Co., Ltd. As counsel for LG Chem, Lee & Ko advised on all aspects of the transaction, including transaction structuring and the preparation, negotiation and finalization of the transaction documents.

This transaction initially began as an auction process with multiple potential purchasers. Once Glenwood PE was selected as the preferred bidder, various complicated issues arose in connection with the carve-out business transfer, but Lee & Ko provided efficient advice during the negotiation/discussion sessions to enable the parties to execute the definitive agreements efficiently. Eventually, the transaction has been successfully closed on October 4, 2023.

As a Carve-out deal, not only this transaction required the transfer of contract relationships, employees, permits, assets, rights, and obligations to the purchaser, but also the preparations for the purchaser to acquire permits and for the divestiture of the factory site by the closing date. During the closing process, Lee & Ko was involved in the divestiture of the factory site, review of all environmental permits, temporary joint use of physical facilities. It is evaluated that Lee&Ko led to a successful transaction through prompt and thorough consultations across a wide range of areas, including negotiation and conclusion of several addendum agreements.