Ministry of SMEs imposes a 5 million KRW fine on Daewoong Pharmaceutical for "refusing administrative investigation on technology infringement"

[Asia Economy Reporter Kim Daeseop] On the 25th, the Ministry of SMEs and Startups announced that it has given prior notice of imposing a fine of 5 million KRW on Daewoong Pharmaceutical for refusing an administrative investigation into technology infringement.

This action marks the first case of a fine imposed since the introduction of administrative investigations into technology infringement under the Act on the Protection and Support of Small and Medium Enterprise Technology (SME Technology Protection Act) in December 2018.

The case involves Medytox, a biopharmaceutical manufacturer, reporting in March last year that Daewoong Pharmaceutical illegally acquired and is using the raw materials (botulinum strains) and manufacturing technology data of Botox products that a former employee had taken out.

According to the Ministry of SMEs and Startups, the Botox dispute between Medytox and Daewoong Pharmaceutical has been ongoing through criminal and civil procedures since 2017. In October last year, the U.S. International Trade Commission (ITC) tribunal conducted expert analysis to determine whether the entire nucleotide sequences of the strains from both companies were identical, drawing significant attention.

The Ministry recognized that the critical nucleotide sequences of the strains from both companies were identical and that Daewoong Pharmaceutical’s Botox product development period was remarkably short. To verify whether Daewoong Pharmaceutical developed the Botox product independently, the Ministry requested an on-site investigation at Daewoong Pharmaceutical’s research institute located in Yongin, Gyeonggi Province. However, Daewoong Pharmaceutical refused this request, according to the Ministry.

After review by external experts (Technology Infringement Advisory Group) and legal examination, the Ministry regarded Daewoong Pharmaceutical’s refusal of the on-site investigation as a first refusal and decided to impose a fine of 5 million KRW. The fines for refusal of on-site investigations increase as follows: 5 million KRW for the first refusal, 7 million KRW for the second, and 10 million KRW for the third.

The Ministry plans to establish follow-up measures for administrative investigations into technology infringement and strengthen litigation support for victim companies. If the administrative investigation confirms that a company is a victim of technology infringement, intellectual property litigation experts appointed to the Legal Support Group will be available to represent the victim company in civil and criminal lawsuits, with necessary costs supported.

Lee Dongwon, Director of the Technology Protection Division at the Ministry of SMEs and Startups, stated, "The purpose of administrative investigations into technology infringement by SMEs is to resolve the unreasonable reality where the perpetrator holds most of the evidence, yet the victim SME must prove the facts." He added, "The Ministry will continue to develop the system so that administrative investigations into technology infringement can assist SMEs facing difficulties in proving infringement despite being victims."

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