bhc Wins Second Trial Against BBQ in Multi-Billion Lawsuit Battle

▲Termination of Product Supply Contract ▲Termination of Logistics Supply Contract ▲Three Trade Secret Infringement Lawsuits
Court Also Rules in Favor of bhc in All Three Appeals

[Asia Economy Reporter Kim Daehyun] In the lawsuit battle between chicken franchises Genesis BBQ and bhc over 'trade secret infringement' and 'termination of product and logistics service contracts,' bhc won all rulings again in the second trial.

On the 24th, the Seoul High Court Civil Division 4 (Presiding Judges Lee Kwangman, Kim Seona, Cheon Jiseong) ruled in favor of bhc in the appeal trial of the product supply payment lawsuit filed by bhc against its competitor BBQ, stating "the contract was terminated due to the defendant's fault." The logistics service fee lawsuit had the same outcome.

However, the appellate court calculated the amount BBQ must pay to be less than in the first trial. While maintaining the first trial's judgment on unpaid amounts to be paid to bhc before contract termination, the court limited the damages after contract termination to 80%. This was because the court determined the contract termination date to be around June 2023, five years earlier than the first trial.

Accordingly, the court ruled that BBQ must pay bhc approximately 700 million KRW for product supply fees and about 500 million KRW for logistics service fees as unpaid amounts. The damages for contract termination were calculated at approximately 11.1 billion KRW related to product supply and about 7.6 billion KRW related to logistics services. The actual payment amount will increase further with accrued delay damages.

Previously, BBQ sold its former subsidiary bhc to a US-based private equity fund in 2013, signing a contract that "bhc will supply logistics services and ingredients to BBQ affiliates for 10 years," and also sold the logistics center. Additionally, an exclusive product supply contract was signed to "receive sauces, powders, etc., from bhc for 10 years."

Subsequently, BBQ terminated the logistics service contract and product supply contract in 2017, citing that trade secrets such as new menu development information were leaking during the logistics supply process from bhc.

In February 2018, bhc filed a lawsuit claiming "BBQ unilaterally terminated the contract causing damages." BBQ countered, stating "bhc's unfair actions destroyed the trust relationship fundamental to the contract, making it impossible to expect the contract's continuation," denying liability for damages.

On this day, the Seoul High Court Civil Division 4 also dismissed all of BBQ's claims in the appeal trial of the trade secret infringement prohibition lawsuit filed against bhc, consistent with the first trial.

Initially, BBQ claimed damages estimated at 700 billion KRW but filed a lawsuit claiming 100.1 billion KRW for the time being. The first trial of the trade secret infringement lawsuit stated, "Based solely on the plaintiff's claims and submitted evidence, it cannot be considered that the legal requirements for trade secrets are met," and "there is insufficient proof of the elements of an illegal act, making it difficult to recognize liability for damages."