LG CNS, an affiliate of LG Group, has become mired in a licensing dispute with Microsoft.

The conflict between the two sides began when Microsoft took issue with its operating system Windows being used on a subway train information system developed by the Korean firm.

The Korean ICT firm, which developed an integrated computer system with several subsystems, supplied the end product using Windows to its business partner EPP, an advertisement company, in 2007.

The ad firm installed the system at Seoul’s subway platforms in subway lines 1, 3 and 4.

The U.S. tech giant filed a complaint against EPP in 2011, claiming that the Korean ad firm had violated the Service Provider License Agreement, a licensing program for organizations that requires them to license software for customer use including hosting services, or using Windows in public places.

“Simply put, MS wants to charge more since the system was used for unspecified people or the public,” said an LG CNS official, adding, “But we already paid the due service fee.”

The software giant demanded 5.3 billion won ($5.2 million) in the lawsuit, worth what the ad company expected to earn during the past years and would rake in for the next 10 years with the Microsoft system.

After settling the case by pledging to pay 2.5 billion won, EPP then filed a lawsuit against LG CNS last July on charges of supplying inappropriate products and asked the company to share the settlement payment.

Apparently bewildered by the complaint by the small domestic firm, LG CNS hinted that it would bring the matter to court.

“LG already paid due service fees to Microsoft, and now the software behemoth has asked for more money, arguing based on the SPLA that EPP made profits through the displaying system exposed to the public,” the LG CNS official said.

It was not the first time for Microsoft to raise a licensing issue in Korea.

In 2011, Microsoft belatedly requested a small food manufacturer to pay extra fees for food-production line workers who did not even use PCs.

The software firm also argued that the Defense Ministry illegally used one of its software products, filing a claim for 210 billion won in compensation.

“Foreign ICT firms including MS seem to take advantage of licensing standards which are unclear and not specified to its partners,” said an official who once had business relations with Microsoft.

“The global software and hardware firms are intentionally targeting domestic firms to make up for their declining profits in their businesses,” he added.

By Kim Young-won

(wone0102@heraldcorp.com)