Suwon Attorney Consultation | Client Sued over Prohibition of Trade Secret Infringement, Plaintiff's Claim Dismissed with Daeryun's Help

The clients who had a consultation with a Suwon attorney recounted the following.

The clients had been working in sales at the plaintiff's company, which processes and distributes various health supplements.

Judging that they no longer saw a future at the plaintiff's company, the clients separately resigned and then started a business in the same industry as freelancers.

However, several months later, the plaintiff filed a lawsuit against the clients claiming damages for prohibition of transfer to a competitor and trade secret infringement.

The claim was that the clients had secretly taken out the plaintiff company's client information, then obtained employment at OO Co., Ltd., which operates in the same line of business, and infringed trade secrets by sending catalogs of OO Co., Ltd.'s products and the like to the plaintiff company's clients.

The clients, appealing their sense of injustice, requested Daeryun's help.

🔗A trade secret refers to technical or managerial information that is not publicly known, holds independent economic value, and has been managed in secrecy, such as a production method, a sales method, or other information useful for business activities.

Under the Unfair Competition Prevention and Trade Secret Protection Act, in order for a trade secret to be established, the following three requirements must be met.

① Non-public nature

A trade secret must not be publicly known. It must be in a state where it has not been published in publicly available materials and the like, and where it cannot be obtained by just anyone without going through the holder.

② Economic usefulness

A trade secret is established where a competitive advantage can be obtained, or where substantial cost or effort is required to acquire or develop the information.

③ Secrecy management

Information that qualifies as a trade secret must be managed as a ‘secret.’ This means restricting those who may access the information or restricting the methods of access.

In the complaint, the plaintiff used the term ‘the client information at issue in this case’ and submitted a document describing a ‘list of clients’ without precisely specifying the concrete items.

However, we argued that, under Article 2 of the Unfair Competition Prevention and Trade Secret Protection Act, a trade secret is technical or managerial information, and that such information must be capable of being clearly specified, yet the plaintiff had submitted no materials or grounds whatsoever in this regard.

We therefore argued that an unreasonable situation arises in which, even if the clients were later to do business with a particular company, they could be mistaken as having committed trade secret infringement merely because that company's information happened to be registered in the plaintiff company's system.

The plaintiff argued that the clients had obtained employment at OO Co., Ltd. despite having entered into an agreement on prohibition of transfer to a competitor, but we argued that the clients had merely entered into a product supply contract with OO Co., Ltd. and had not obtained employment there, so this claim could not be accepted.

As in the case above, the Suwon attorney consultation 🔗unjustly sued for trade secret infringement actively provides assistance for the defense of clients who have been sued.

If you need help, please request a legal consultation from 🔗Daeryun's Suwon Office.