While small-medium enterprises continue to suffer from technology usurpation by large enterprises, there is still a lack of effective punishment and relief. It is difficult for small-medium enterprises to engage in damage claims against the large enterprises, since they fear contract cancellation and/or cutoff of business dealings. And even if they do engage in such claims, the damages are difficult to prove, and often the damages granted fall short of the huge legal fees and actual loss suffered, leaving many such small-medium enterprises out of business.

Therefore, this proposal seeks to enhance the protection of the rights of small-medium enterprises against technology theft by providing mandatory confidentiality agreements when technological data is being transferred, and by establishing a legal basis for correction order against technology usurpation conduct, for punitive damages, and for estimation of damages, etc.

Details

A. Define any conduct that uses or makes public any technological data that has not been publicly known and is being protected as confidential through reasonable means as technology usurpation (Newly insert Article 2, subparagraph 12)

B. Require the parties to conclude a confidentiality agreement in cases where the commissioned enterprise transfers technological data to the commissioning enterprise; and allow the Minister of SMEs and Startups to draft/recommend a standard confidentiality agreement format (Newly insert Article 21-2)

C. Newly insert a provision prohibiting the request of technological data on the part of the commissioning enterprise; and prohibit the commissioning enterprise from technology usurpation conduct (Article 25, paragraph 1, subparagraph 12; Article 25, paragraph 2; Article 25-2)

D. Allow the Minister of SMEs and Startups to issue a corrective order against a commissioning enterprise in violation of the prohibition on technological data transfer request, etc.; and impose a statutory fine not exceeding one hundred and fifty million Korean won if any entity does not comply with the corrective order (Newly insert Article 28-3, Article 41, paragraph 4)

E. Implement a punitive damages scheme under which the liability for damages will be determined within tenfold of the amount of loss suffered from technology usurpation; and newly insert a provision to estimate the amount of loss suffered (Newly insert Article 40-2, paragraph 3 and paragraph 4; Newly insert Article 40-3)

F. Construe the commissioning enterprise’s technology usurpation conduct in such cases where it was shown that a commissioned enterprise transferred technological data to a commissioning enterprise and the commissioning enterprise produced products similar to the commissioned transaction following the transaction, and so on (Newly insert Article 40-4)

G. Implement a data submission order scheme under which the court may order the parties to submit data to lessen the burden of proof on the victimized enterprise (Newly insert Article 40-6)

H. Implement a confidentiality order scheme in damage claims cases; and establish penal provisions against any person in violation of confidentiality orders (Newly insert Article 40-7, Article 40-8, Article 40-9, Article 41-2)

I. Impose a statutory fine in the amount not exceeding ten million Korean won against any person who did not issue a written agreement when commissioning the manufacture of a product, etc.; who did not conclude a confidentiality agreement in regard to technological data; who did not provide a written statement when requesting technological data (Newly insert Article 43, paragraph 2, subparagraphs 1/2/3)

The Minister of SMEs and Startups may, against commissioning enterprises in violation of Article 25-2, order the suspension of violating conduct, the prevention of future violation, and other measures necessary for correction (Article 28-3, paragraph 1).
The Minister of SMEs and Startups may, in cases where a commissioning enterprise does not comply with correction order as referred to under paragraph 1, publicly notify the recipient and content of the correction order (Article 28-3, paragraph 2).
Any entity that fails to comply with a correction order issued under paragraph 1 of this Article within one month since the public notification of such order under Article 28-3, paragraph 2, will be subject to a statutory fine not exceeding one hundred and fifty million Korean won (Article 41, paragraph 4).
Any domestic or international entity that violates a confidentiality order pursuant to Article 40-7, paragraph 1 of this Act without extenuating circumstances shall be subject to five years in prison or statutory fine of up to fifty thousand Korean won (Article 41-2, paragraph 2).