Kakao Faces Series of Lawsuits this Year

by Agatha Austria / Sep 04, 2016 11:35 AM EDT

South Korea's largest company providing instant messaging services suffers from series of lawsuits this 2016.

Kakao Corp. continues to improve its services through the expansion of its online to offline (O2O) and mobile-based innovative services. The company aims to incorporate its services and technology to the country's finance and transportation sector. Further, Kakao is seeking to penetrate lifestyle services particularly house cleaning, beauty, maid and parking services.

Business Korea reported that the Financial Supervisory Service (FSS) data reveal that Kakao and its subsidiaries faced 20 lawsuits filed from the beginning of this year to June. Litigation costs have already amounted to US $3.3 million.

However, Kakao's expansion resulted to several legal trials with rivals.

Recently, NHN Entertainment Corp., country's top online game developer sued the company due to patent infringement of the programming interface of friend application. Management subsidiary of NHN, K-Innovation accused Kakao Game to have unlicensed use of API technology which allows users playing games to check their friend lists and do a comparison of rankings and game scores, Korea Joongang Daily reported.

Spokesperson of the sure said that they "will take an advantageous position when it comes to claiming patent rights in the face of global companies." Both companies will be at trial on Sept. 18.

The company is also sued by individual users including Mr. Sohn who accuse Kakao for illegally using his works on their site. Mr. Chung also complained that the company leaked his personal information while the government sought him with warrant.

However, Kakao remains positive in the midst of these controversies and trials. Spokesman stated that "We don't think the lawsuits would have major adverse effects on company management."

During the second quarter of the year, Kakao declared an operating profit totalling to US 23.7 million. This includes the $7.66 million profit of subsidiary, Loen Entertainment.