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| On top is the logo for Hankook Tire's holding firm, Hankook Technology Group, and on bottom is the logo for Hankook Technology. |
By Nam Hyun-woo
Hankook Tire will be banned from using corporate name "Hankook Technology Group" for its holding firm, following a court decision that the tire maker used the name held by a separate auto parts firm for "unfair purposes."
According to the Seoul Central District Court, Friday, it granted Kosdaq-listed firm Hankook Technology's request for an injunction banning the Hankook Tire holding firm from using the name.
In May last year, Hankook Tire's holding firm, Hankook Tire Worldwide, changed its name to Hankook Technology Group, citing the change was to reflect its desire to expand its business domain to cover various automobile sectors.
The move came even though there is a separate firm named Hankook Technology. Hankook Technology was founded in 1997 as Vision Telecom and listed on the tech-heavy Kosdaq in 2001. After taking the current name in 2012, Hankook Technology has been engaged in the business of manufacturing in-vehicle infotainment systems and solar panels, but has no relation with Hankook Technology Group, which is listed on the main KOSPI bourse.
Despite Hankook Technology's complaint that the tire maker was attempting to "steal" the name by "abusing its market awareness," Hankook Tire pushed ahead with the change, saying there would be "no legal problems."
According to last week's decision, however, there were problems, said analysts and officials familiar with the issue.
The court said the two sides' corporate name are identical in both Korean and English except for "Group," which is an indistinctive word to separate two companies. This caused confusion among investors, with reports on both firms mixed up at portal websites frequented by investors, the court said.
According to a survey requested by Hankook Technology, 95.8 percent out of 1,000 car owners across the country said the name gives the impression that two companies are either the same company or affiliated firms, the court cited in the written decision.
The court also said "it is difficult to reverse the assumption that Hankook Technology Group has an unfair purpose of hurting Hankook Technology's businesses," citing the Hankook Technology has already built its reputation in the automobile component industry, while the Hankook Tire spent 22 months to prepare the name change.
Following the decision, Hankook Technology Group will be banned from using the name on any type of material. Those materials will be stored in a place designated by Hankook Technology. Also, the holding firm has to change its name on the KOSPI, as it could cause confusion among investors.
"We will come up with a suitable response after a thorough review of the court decision," Hankook Tire said.
Hankook Technology Group generated 33.8 billion won ($27.4 million) in operating profit for the first three months ended March 31, 2020, down 27 percent from 46.39 billion won a year earlier.
There have been a number of cases where similar corporate names apparently misled investors. On November 22, SK Group's cosmetics material unit, SK Bioland, saw its share price rising to the daily limit of 30 percent after a separate SK Group unit, SK Biopharmaceuticals, won U.S. Food and Drug Administration approval for a drug. SK Group said the companies have no relation to each other.
