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Lineage lawsuits and more, this week in Korean news

Gamasutra rounds up the week's biggest reports on South Korea's booming online games market from local news site This Is Game, including jail time for the developers who allegedly leaked Lineage III trade secrets, and more.

Eric Caoili, Blogger

April 20, 2012

4 Min Read

[Gamasutra rounds up the week's biggest reports on South Korea's booming online games market from This Is Game, the leading English-language site about the country's game industry.] In our latest round-up of news from South Korea's online games space, we look at NCSoft's Lineage III (pictured) lawsuits over leaked trade secrets, NHN's new developer programs, upcoming game ratings changes for the country, and more. Former Lineage III devs found guilty, sentenced to jail for leaking trade secrets The Supreme Court of Korea upheld a previous decision that found several former members of NCSoft's Lineage III development team guilty of leaking trade secrets and giving its source code to TERA creator Bluehole Studio when they joined the company. The court handed down tougher punishments for some of the developers than what was given after the original criminal trial ended in 2009. One developer, who once headed a department for the game's development, was sentenced to one and a half years in prison, with two years of probation. Another former manager, who was previously found not guilty, was sentenced to eight months in prison and two years of probation after NCSoft's appeal. Other former team members were fined between $6,100 to $8,800. "Leaking trade secrets is an important issue of life or death for the company," said a representative from NCSoft. "This judgment from the Supreme Court could establish a good precedent to people who work at IT companies where resignations and changing jobs are common." NCSoft has also sued Bluehole Studio in civil court. It's seeking $5.7 million in damages and is awaiting a decision. NCSoft previously won the first trial over the matter, but Bluehole Studio managed to have the case dismissed in a second trial. NHN announces developer programs, mobile social game platform NHN, owner of popular online game portal Hangame, announced two new partner programs designed to support small and mid-sized developers. Its Project Finance initiative is designed to help studios complete games that are still early in development. The company will select 10 games during the second half of the year for Project Finance, offering up to ₩150 million ($132,000) to help fund projects. For mobile titles, it will provide an additional ₩80,000 ($70,000). NHN will exclusively publish the games that participate in this program. NHN's new PRE50+ program is designed to help fund games that have just launched or are about to launch, and require continuous updates. The company will provide an advance based on their sales or expected sales, and once the advance is repaid, it will take a 30 percent share from revenues. It also announced a new mobile social game platform from its internet services/search portal subsidiary Naver. It noted that 14 million users already connect to Naver's mobile site daily. Game Rating Board outlines upcoming privatization of ratings South Korea's Game Rating Board has detailed how it will transfer its game classification duties to a non-government company in the coming months. Starting July, a private company will handle ratings for all games, with the exception of adult and arcade titles. The organization said it has finished writing a manual for its guidelines and procedures, which it will transfer to the company. The country's Ministry of Culture, Sports, and Tourism will select the company that will serve as the new ratings board. The Game Rating Board believes that the rating system will be faster and more convenient for publishers and developers once it's privatized. Supreme Court rules that virtual currency profits from businesses should be taxed The Supreme Court of Korea ruled that if someone makes a profit by selling virtual currency, they should pay taxes on those profits because they are running a business. The issue came up after a Mr. Yun made $350,000 in six months by re-selling virtual currency from Lineage during the first half of 2004. South Korea's taxation office ordered him to pay around $104,000 as income tax and VAT that year. Yun files a lawsuit against the office and insisted, "Virtual money is not subject to taxes because it does not have the value as one's property. Virtual money is just an electrical code within an electric game itself." Yun lost his case and his appeal before it was brought to the Supreme Court, which ruled against him. It noted that according to Korea's VAT law, he needs to have a business license and pay taxes if he makes more than $10,555 However, he lost a case at the courts of the first and second instance and Supreme Court. Finally, he needs to pay the tax. Supreme Court looks Virtual money as goods and the act of 'repeating trade' as a business. By VAT law in Korea, he/she needs to have a business license and pay a tax if someone makes an income more than ₩16 million ($10,155) by trading something more than 10 times within six months. [This story was written with permission using material from ThisIsGame Global, the leading English-language site about the South Korean game industry.]

About the Author(s)

Eric Caoili


Eric Caoili currently serves as a news editor for Gamasutra, and has helmed numerous other UBM Techweb Game Network sites all now long-dead, including GameSetWatch. He is also co-editor for beloved handheld gaming blog Tiny Cartridge, and has contributed to Joystiq, Winamp, GamePro, and 4 Color Rebellion.

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