Re-promotion of the Win-Win Cooperation Act Amendment... Large Corporations' Backlash

Ruling Party and Government Impose Burden of Proof on Large Corporations for Technology Misappropriation
Industry Calls It "Excessive Shifting of Responsibility"

[Asia Economy Reporters Daeseop Kim and Dongwoo Lee] The government and the ruling party are facing conflicts between large corporations and small and medium-sized enterprises (SMEs) as they re-push amendments to the "Act on Promotion of Mutual Cooperation between Large Enterprises and SMEs (Mutual Cooperation Act)" to prevent damages to SMEs caused by technology theft by large corporations. While SMEs argue that institutional improvements are urgent as damages from technology theft continue unabated, large corporations are opposing the move, claiming it is an excessive transfer of responsibility.

According to the government and the National Assembly on the 13th, the Ministry of SMEs and Startups recently announced a legislative notice for partial amendments to the Mutual Cooperation Act to strengthen the rights relief for SMEs against technology theft. The core point is that if a large corporation produces goods similar to those of an SME it had been trading with or outsources manufacturing to another SME, it will be regarded as an act of technology misappropriation by the large corporation, and the burden of proof will be imposed on the large corporation.

The SME sector emphasized the need to push forward the amendment to the Mutual Cooperation Act as damages from technology theft continue despite various government measures. They explained that the majority of SMEs are unable to take special measures after technology leakage damages occur due to lack of capacity to prove and fears of trade disruption.

In fact, according to the "Survey on the Level of Technology Protection for SMEs (2018)" by the Korea Federation of SMEs, 246 SMEs suffered technology leakage damages over the past five years (2014?2018), with the damage amounting to 540 billion KRW. Considering SMEs that remained silent out of fear of retaliation from large corporations and those not included in the survey, the SME sector claims that the actual extent of technology theft damages is impossible to estimate.

On the other hand, the business community argues that it is excessive to place the entire burden of proving technology misappropriation on large corporations. They cited that the obligation to prove lies with the administrative authorities and that a similar system is already being implemented by the Fair Trade Commission. They also pointed out as a side effect the difficulty in switching suppliers when improved products come out compared to existing traded products. The reason is that companies holding the original product technology may find it burdensome to switch to better suppliers due to concerns about unfairness.

This raises concerns that the risk-free overseas companies may replace domestic suppliers, causing damages to return to SMEs. Kwon Hyuk-min, head of the Industrial Strategy Team at the Federation of Korean Industries, pointed out, "If the amendment passes, the incentive for large corporations to bear risks and trade with domestic SMEs may decrease, leading to a shift of supply lines overseas. Ultimately, the damage could affect all domestic companies, including large corporations and SMEs."

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