Korean Patent Law’s Trade Secret Protection: Amendment to Trade Secret Law in Korea

Protection of IP in Korea: Trade Secrets

The amended Patent Act of Korea (“Korean Patent Act”) and the amended Unfair Competition Prevention and Trade Secret Protection Act (“Korean Trade Secret Protection Act”) of Korea shall enter into force on July 9, 2019. The most important key developments are great criminal penalties for trade secret misappropriations; damage awards up to three times of the actual damage regarding infringements of patent rights or trade secret rights; eased litigation requirements for the claimants; and revised basis for calculating royalty damages. These amendments are expected to lead to a heightened protection for intellectual property rights in Korea.

The 2019 Major Key Changes in the Korean Patent Act and the Korean Trade Secret Protection Act:

Increased Criminal Penalties under the Korean Trade Secret Protection Act

Under the current regulations, a criminal penalty for a trade secret misappropriation is narrowly defined and considered by many legal practitioners and academics as not protective enough of the rights of IP holders.

The amendment to the Trade Secret Protection Act provides expands scope of punishable acts and increases penalties for trade secret infringement. The Korean Trade Secret Act was amended to include as punishable actions:
(a) removing a trade secret from an authorized to an unauthorized location for the purpose of obtaining an unjust benefit or harming the owner;
(b) acquiring a trade secret by theft, deceit, threat or other illegal means;
(c) misappropriation of a trade secret involving use of the trade secret overseas or knowledge that such overseas use will occur generally may be punished with imprisonment of up to 15 years or a fine of up to KRW 1.5 billion;
(d) all other trade secret misappropriation generally may be punished with imprisonment of up to 10 years or a fine of up to KRW 500 million;

Increased Scope of “Secret” under the Trade Secret Protection Act

The current Trade Secret Protection Act defines as “secret” technical or managerial information, which is useful for business activities and has been preserved as secret by “reasonable efforts.” It was considered by many as imposing a too restrictive definition of trade secret that is not inline with the international norms.

Current definition of “trade secret” in Art. 2, 2.: means information, including a production method, sale method, useful technical or business information for business activities, that is not known publicly, is the subject of reasonable efforts to maintain its secrecy, and has independent economic value;

The amendment deletes the phrase containing “reasonable efforts” from the definition (as stricken above), thus, not requiring the trade secret holder to establish that it has made a “reasonable effort” to

Treble Damage Awards under Certain Circumstances

Under the current legal regime, which stipulates that the trade secret or patent owner may only claim “actual” damages, the damage awards for trade secret misappropriation and patent infringement is often less than the actual caused damage.

With the amendment, courts can now impose punitive damages up to three times of the amount of the actual damages, if the court comes to the conclusion that the higher damage award is under consideration of the following aspects justified:
(a) whether an infringer is in a dominant position;
(b) the degree to which an infringer recognized the willfulness of his misconduct or potential damages that a Plaintiff may sustain;
(c) the scope of damages suffered by holder or owner of the trade secrets;
(d) economic benefits that an infringer obtained as a result of the infringing act;
(e) the period and frequency of the infringing act;
(f) penalties arising from the infringing act;
(g) the scope of infringer’s assets; and
(h) the degree of remedial efforts by an infringer;

We shall have additional posts on other changes in Korean Patent and Trade Secret law over the next couple of weeks. Check back to the The Korean Law Blog and our IPG’s law firm website for updates or for a consultation with a lawyer.

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