Prohibition on Technology Theft from SMEs Stalled in the National Assembly

The COVID-19 alert level was raised to the highest 'Severe' stage, and with news that a confirmed COVID-19 patient attended a parliamentary forum, all National Assembly schedules, including the plenary session planned for the 24th, were canceled or postponed. The 'Stop' traffic sign in front of the National Assembly plenary hall on the 24th seems to reflect the situation at the Assembly. Photo by Yoon Dong-joo doso7@

[Asia Economy Reporter Moon Hyewon] "We have been providing various technical materials at the request of the original contractor while doing business with them. But now, the original contractor is producing and supplying products very similar to ours on their own." (Executive of SME A)

The small and venture business sector is urging the National Assembly to pass a bill that strengthens penalties for large corporations' misappropriation of small business technologies and imposes equal burden of proof on both large and small companies. On the 25th, the Korea Federation of SMEs held a press conference at the SME Federation in Yeouido, Seoul, calling for the passage of the "Act on Promotion of Mutual Cooperation between Large and Small Enterprises" (hereinafter referred to as the Mutual Cooperation Act Amendment). In a statement, the Federation said, "Small businesses, which are relatively 'subordinate' in business relationships, can only suffer silently when their technologies are stolen. It is difficult to prove infringement, and the cost burden makes it impossible to even consider litigation," adding, "The small business sector strongly urges the passage of the Mutual Cooperation Act Amendment in the February extraordinary session so that small and venture businesses and startups can focus on technology development and business activities with peace of mind."

The Mutual Cooperation Act Amendment stipulates that if a large corporation manufactures products similar to those produced by a small business it previously traded with or commissions a third party to manufacture such products, it is considered an act of technology misappropriation by the large corporation, and the burden of proof is imposed on the large corporation. Currently, the Ministry of SMEs and Startups can only punish after a dispute mediation request is made by the trading parties, but the amendment strengthens the authority to punish by allowing investigation and punishment even without a mediation request. The amendment is currently pending in the National Assembly's Legislation and Judiciary Committee. There is significant disagreement between ruling and opposition parties within the committee over whether the burden of proof for technology leakage should lie with small or large companies.

Technology theft by large corporations from small businesses is a chronic problem between large and small enterprises. According to the Korea Federation of SMEs, from 2013 to 2017, 246 domestic small businesses suffered technology leakage damages, with the amount of damage reaching 540 billion KRW.

Meanwhile, due to concerns over the spread of the novel coronavirus infection (COVID-19), the schedule for the February extraordinary session of the National Assembly is inevitably delayed. The government questioning session has been postponed, and today's (25th) plenary session was also canceled.

This content was produced with the assistance of AI translation services.