Trade secret Infringers may be prosecuted as criminals in addition to civil litigations. The Korean UCPA stipulates that anyone who illegally acquires trade secret of others or uses or discloses to a third party a misappropriated trade secret may be imprisoned up to ten (10) years or fined in an amount of KRW50,000,000 (approximately US$50,000) or two (2) to ten (10) times of the monetary gains. The fine may amount to the 10 times of the value of the stolen trade secret. In Hyundai Motors case, two former engineers were punished to 3.5 years imprison and US$3 million fines respectively.
Further, the Korean Supreme Court held that the act of divulging trade secret to the competitor for the purpose of gaining economic benefit by former employees shall be punished as criminal violation of the fiduciary duty under the Criminal Code. Besides UCPA, trade secrets misappropriations may be prosecuted under the criminal code, too.
In addition to criminal sanction on individuals, companies may be punished by fine that is KRW50,000,000 (approximately US$50,000) or two (2) to ten (10) times of the value of the stolen trade secrets or monetary gains of infringers.
Criminal Procedure of South Korea
1. Initiation of Investigation
Investigation is initiated upon discovery of the possibility that a crime may have been committed. The ultimate responsibility in all investigative procedures is in the hands of the prosecutor. Based on collected evidences, the prosecutor assess the validity of the judgment that a crime has occurred, and take appropriate measures upon this ascertainment.
2. Booking, Arrest & Detention
Booking denotes the formation of a criminal case after initiation. An individual subject to investigation becomes a criminal suspect once a criminal charge has been determined by the investigation agency. In principle, prosecutors or police officers must obtain a warrant issued by a judge to arrest a suspect; however, there exist certain exceptions to these warrant requirements in cases that necessitate "Emergency Arrest" and "Arrest of Flagrant Offender". The prosecutor may detain the arrested suspect with a warrant of detention issued by the judge upon request by the prosecutor within 48 hours from the time of arrest. A suspect may request a preliminary hearing prior to detention, and an arrested or detained suspect may request a review of legality to the court. Through such process, the suspect may be released.
3. Prosecution
4. Trial and Sentencing
A judge hears trial upon motions filed by prosecutors. Sentencing occurs when defendants are found guilty of their charges. The punishment may include death penalty, imprisonment and fine, etc.
Trade Secret Protection in South Korea
1. What is Trade Secret under Korean law?
“Trade secret” under Article 2.2 of the UCPA of Korea means technical or business information that: (i) has not been publicly disclosed, (ii) has an independent economic value, and (iii) has been maintained as secret with substantial effort. The clause of article 2.2 of the UCPA is : "trade secret" means information, including a production method, sale method, useful technical or business information for business activity, that is not known publicly, is the subject of considerable effort to maintain its secrecy and has independent economic value.
2. What is misappropriation or infringement of trade secret under Korean law?
Article 2.3 of the UCPA further stipulates that any of the following acts shall constitute an act of trade secret misappropriation:
(i) acquisition of a trade secret through theft, deception, coercion or other improper means (hereinafter referred to as “act of improper acquisition”), use or disclosure, to a third party, of the acquired trade secret (including disclosure thereof to a third party while maintaining its secrecy);
(ii) acquisition of a trade secret, with the knowledge that an act of improper acquisition was involved with respect to the trade secret or failing to know thereof due to gross negligence, use or disclosure thereof to a third party;
(iii) use or disclosure, to a third party, of a trade secret, with the knowledge gained subsequent to its acquisition that an act of improper acquisition was involved with respect to the trade secret or failing to know thereof due to gross negligence;
(iv) use or disclosure, to a third party, of a trade secret by a person who has a fiduciary duty not to use or divulge the trade secret under a contractual relationship and the like;
(v) acquisition, use or disclosure, to a third party, of a trade secret with the knowledge that the trade secret was disclosed in violation of the fiduciary duty referred to in item (iv) above or failing to know thereof due to gross negligence; and
(vi) use or disclosure, to a third party, of an acquired trade secret with the knowledge gained subsequent to its acquisition that the trade secret was disclosed in violation of the fiduciary duty referred to in item (iv) above or failing to know thereof due to gross negligence.
We can assume that the meaning or scope of misappropriation under Korean law is almost the same as those of misappropriation under American UTSA. Namely, the key points of misappropriation under Korean law include (1) acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means; or (2) disclosure or use of a trade secret of another Without express or implied consent by a person who used improper means to acquire Knowledge of the trade secret; or (3) at the time of disclosure or use, knew or had reason to know that his knowledge of the trade secret was (i) derived from a person who had utilized improper means to acquire it; (ii) acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use; or (iii) derived from a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use; or (4) before a material change of his position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or mistake.
3. Remedies for Trade Secret Misappropriation
(1) Injunctive Relief
(2) Damages
A. Actual loss (including lost profits where applicable),
B. Unjust enrichment, and/or
C. Reasonable royalties.
(3) Criminal Sanctions
(2) Damages
A. Actual loss (including lost profits where applicable),
B. Unjust enrichment, and/or
C. Reasonable royalties.
(3) Criminal Sanctions
Statistics of KIPO - IP Applications Trend Over Three Years in Korea
Statistics of KIPO - IP Applications Trend Over Three Years in Korea
12 Months Grace Period in Korea
Article 30 of the Korean Patent Act provides 12 months grace period for disclosed inventions. In inventor or his assignee may obtain a patent through filing an application for the disclosed invention within 12 months from the date of novelty destroying event.
The disclosure of an invention as novelty destroying event might be done by an inventor, his assignee or a 3rd party. If an inventor or his assignee disclosed the invention, they may obtain a patent under the grace period scheme. However, in case the invention was disclosed through patent publications such as A1 publication or B1 publication in any country which was filed by an inventor or his assignee, the grace period may not be applied and thus the applicant finally lost an opportunity to obtain a patent in Korea. Therefore, patent specification publications are critical exceptions to grace period under then Korean patent law.
In other hand, where a 3rd party disclosed the invention without permission of an inventor or his assignee, an inventor or his assignee may file an application for the disclosed invention within 12 months from the date of disclosure. An applicant must prove that the invention was disclosed by a 3rd party against his intention.
An applicant must submit a written document claiming grace period benefit to KIPO when filing a patent application. Further, within 30 days from the filing date, an applicant must submit evidence supporting his claims to the novelty destroying event.