Unfair Competition Prevention and Trade Secret Protection Act | Judgment on the Intent and Purpose of a Violation of the Unfair Competition Prevention and Trade Secret Protection Act

Parties Involved

Defendant 1 (hereinafter A) : an employee of the victim company, an adhesive manufacturer

Defendant 2 (hereinafter B) : the head of a technology research institute in the ink resin manufacturing business

Defendant 3 (hereinafter C) : the head of a technology research institute in the NC binder and adhesives manufacturing and sales business

Defendant 4 (hereinafter D) : an NC binder and adhesives manufacturing and sales company

Case Progress

1) While A was working at the victim company, A used a mobile phone camera to photograph the raw-material measurement and manufacturing instruction sheets, among other documents, that contained the product's manufacturing method, which the victim company managed as a trade secret.

2) A subsequently took a job at the company where B worked, and B, upon learning that A had photographed the trade secret, directed A to use the photographed manufacturing instruction sheets to produce a prototype.

3) A then took a job at company D.

4) C, who was working at company D, learned that A had photographed the trade secret, and, intending to use it to make a prototype, directed A to manufacture the product.

The Supreme Court, however, found it difficult to accept the lower judgment, and reversed and remanded the case to the Daejeon District Court.

◈ The victim company had recorded the names of the individual raw materials needed to manufacture the product, the quantities and ratios of the raw materials used, the manufacturing process instructions, and the precautions, and it had never disclosed these to an unspecified number of people.

In addition, the victim company had posted a prohibition on copying or photographing high-grade technical materials, and A had also submitted a confidentiality agreement; nevertheless, A photographed and kept the manufacturing method on a total of eight occasions.

→ A would have been aware, at least in the form of conditional intent (dolus eventualis), that using or disclosing the manufacturing method was not permitted even after leaving the company.

◈ B and C directed that the manufacturing method be used to make products.

→ B received a copy of the manufacturing method from A, and B and C each used the manufacturing method in the case, so they appear to have acquired the trade secret.

◈ C provided the product to another company, stating that ‘D also possesses goods with performance equivalent to the victim company's product.’

→ There is a strong basis to find that D, a company in the same market that could be a competitor of the victim company, was aware, at least in the form of conditional intent (dolus eventualis), that it was not permitted to use or acquire the trade secret without permission.

Accordingly, the Supreme Court found that the acquittal as to A's ‘violation of the former Unfair Competition Prevention and Trade Secret Protection Act through the use and disclosure of the trade secret’ and as to B, C, and D involved a misapprehension of the legal principles and a failure to conduct the necessary examination, which affected the judgment, and it remanded the case to the lower court for renewed determination.

This case is governed by the former 「Unfair Competition Prevention and Trade Secret Protection Act」 (as in force before its amendment by Act No. 16204 of January 8, 2019). That Act punishes ‘a person who acquires, uses, or discloses to a third party a trade secret for the purpose of obtaining an unlawful benefit or causing harm to the holder of the trade secret’.

Here, the acquisition of a trade secret may occur by recognizing and memorizing the trade secret itself, or by hiring a person who knows the trade secret. However, an employee of the trade secret holder is regarded as having already acquired the trade secret, so such conduct may constitute occupational breach of trust (a Korean criminal property offense whose closest common-law analog is criminal breach of fiduciary duty) but does not constitute acquisition of the trade secret.(See Supreme Court, Decision of October 15, 2009, 2008 Do 9433, among others)

In addition, the conditional intent (dolus eventualis) that is treated as important in the offense of violating trade secret provisions requires, unlike gross negligence, an awareness of the possibility that the criminal facts will occur, and, further, an internal intent to accept the risk that the criminal facts will occur. In such a case, ‘intent’ must be inferred by assessing specific circumstances such as the form of the conduct and the situation, rather than the actor's statement.(See Supreme Court, Decision of January 12, 2017, 2016 Do 15470, among others)