SAP Begins to Target South Korean Businesses Regarding Violation of Copyright

SAP, which is a global SW business, is carrying out an omnidirectional ‘copyright attack’ that has targeted many huge corporations in South Korea.

SAP is arguing that they exceeded in using SW license and demanded them to pay up to $177 million (200 billion KRW) per business. It is confirmed that LG Chemicals, LG Uplus, Coway, GS Caltex, and Hyundai Heavy Industries Co., Ltd. already paid huge amount of settlement to SAP.
Some legal experts brought up a possibility of violation of Fair Trade Act by SAP by saying that it made contracts that are excessively advantageous to itself. Although businesses were looking into reporting SAP to Fair Trade Commission (FTC), they are being hesitant about it due to uncertainty of an outcome of a lawsuit and burden from reports being publicized. “Even if there are no reports, ex officio investigation is possible if it is seen as a social issue.” said FTC.
According to an industry on the 13th, SAP has been bringing up a problem regarding ERP (Enterprise Resource Planning) SW copyright to major corporations in South Korea since last year. It is arguing that more people are using its SW compared to the number of people that they agreed upon on their contracts. SAP is the number one business in South Korean ERP market and its market share was 39.5% in 2014. 

SAP had carried out audits on each business and sent out official documents stating that they exceeded amount of ERP use. Depending on how much they exceeded, it is demanding them to purchase additional licenses that cost up to whopping $177 million (200 billion KRW) per business.
It is confirmed by The Electronic Times that LG Chemicals, LG Uplus, Coway, GS Caltex, and Hyundai Heavy Industries Co., Ltd. already purchased additional licenses. LG Chemicals, LG Uplus, Hyundai Heavy Industries Co., Ltd ., GS Caltex, and Coway spent $11.5 million (13 billion KRW), $2.65 million (3 billion KRW), $3.53 million (4 billion KRW), $7.06 million (8 billion KRW), and $7.06 million (8 billion KRW) respectively.
Industries are saying that significant amount of corporations other than these 5 corporations are in similar situations. International grievance mediation between SAP and Korea Electric Power Corporation that has recently become an issue is identical to a situation that these businesses are in.
“SAP requested purchase of additional licenses through its official document and SAP and South Korean businesses are finalizing this situation through settlements.” said an anonymous representative for one of these businesses. “Significant amount of businesses are in same situation.”
Parts that SAP have issues with are ‘indirect assess’ and ‘multi-logon (single ID being used by many people)’. Out of these two, SAP has an issue with indirect assess that has people use ERP data through different systems. 

SAP is indicating that corresponding businesses are indirectly assessing ERP while contracts do not allow this, and corresponding businesses are purchasing additional integrated license called ‘Single Matrix’ as they bite the bullets.
“Industries in foreign countries are pointing out that SAP’s demands for purchase of additional licenses based on indirect access are SAP’s new business model” said a representative for an industry.
South Korean businesses were looking for countermeasures through law firms. Law firms believed that SAP expanded range of use of license for their own advantages and that there is a high chance that SAP violated Fair Trade Act. However these businesses decided not to report to FTC and are finalizing this situation through settlements due to uncertainty of outcome of lawsuits, burden from popularization, and financial burden from exchange of SAP’s ERP with other product.
“These businesses believe that it is economically more feasible to pay settlements rather than to report SAP to FTC.” said a lawyer who is familiar with Fair Trade Act. “Since no business wants to make a first move and there is a chance of high social impact, FTC needs to carry out an ex officio investigation.” 
“Although we will definitely look into this situation if there is a report, an ex officio investigation needs to be done after considering the magnitude of an act and possible effects on markets.” said a high-ranking official of FTC. “We will carry out an ex officio investigation once this issue becomes a larger issue and when SAP’s suspicion begins to stand out.” 

Regarding this, SAP states that it had carried out a fair action and did not violate Fair Trade Act.
“A problem regarding ‘indirect access’ such as binging on ERP data is emerging in few countries such as South Korea and China where there are SI (System Integration) businesses.” said a representative for SAP Korea. “Although there can be disagreements due to different point of views, we believe that we have not violated a law since both parties agreed on such part when we were signing on contracts.”
Staff Reporter Yoo, Seonil | [email protected]