(1) Reasons for Proposal

This Partial Amendment aims to require a non-disclosure agreement for technical data if provided in a transaction effected on consignment and commission premised on mutual trust, ban any unfair use or disclosure of technical data, introduce a punitive damages system, prepare a basis to estimate damages and corrective actions and reduce the burden of proof for small and medium enterprise victims in a damages lawsuit, and thereby strengthen the remedies for technology theft for such enterprises.

(2) Major Provisions

A. Specify the definition of technical data (Articles 2, subparagraph 9 and 24-2 (1))

1) Include the phrase “confidential” in the definition of technical data to specify that technical data meeting confidential requirements are subject to protection.

2) Add that technical data subject to the technical data bailment system should not necessarily be kept confidential.

B. Require a non-disclosure agreement for technical data if provided (Articles 21-2 (1) newly inserted, 40 (1), and 43 (2) 2 newly inserted)

1) Require a non-disclosure agreement if the commissioned enterprise provides technical data to the commissioning enterprise, and impose administrative fines of up to 10 million won on any person who does not enter such an agreement.

2) Request the submission of documentation to investigate the status of transactions effected on consignment and commission, or enter the office of the investigated enterprise to examine whether a non-disclosure agreement is signed.

C. Ban any unfair use or disclosure of technical data (Articles 25 (1), 25 (2), 25 (3) newly inserted, and 43 (2) 3 newly inserted)

1) Since no specific misappropriation behavior is defined in law even though a ban on the misappropriation of technical data is stated, create a ban on any unfair use or disclosure of technical data and ban any behavior where the commissioning enterprise puts the commissioned enterprise at a disadvantage for notifying such behavior to any relevant authority.

2) If the commissioning enterprise demands technical data from the commissioned enterprise, add what the commissioning enterprise should provide in writing, and impose administrative fines of up to 10 million won fines on any person who does not provide such written documentation.

D. Reduce the burden of proof by requiring the presentation of a specific pattern of behavior and order the submission of documentation (Articles 40-4 and 40-5 newly inserted)

1) Require the commissioning enterprise to present its specific pattern of behavior for any violation of the law as argued by the commissioned enterprise in a lawsuit for damages regarding a ban on any unfair use or disclosure of technical data.

2) Prepare a basis for the court to order the other party to submit any documentation required to estimate damages as requested by the party.

E. Introduce punitive damages and estimate damages (Article 40-2)

1) Prepare a basis to impose liability on the commissioning enterprise to compensate up to three times the actual damages incurred by the commissioned enterprise if the commissioned enterprise suffers any damages as a result of the commissioning enterprise’s unfair use or disclosure of technical data.

2) Add things to consider by the court to estimate damages in a lawsuit for damages, and prepare a basis for methods to calculate and estimate damages.