Hyundai Elec and Hanwha Aero Demand Only Supplier Technology Without Providing Rights Accrual Documents... Fair Trade Commission Sanctions

Hyundai Elec receives corrective order and 20 million won fine... Hanwha Aero receives corrective order

[Asia Economy Reporter Moon Chaeseok] The Fair Trade Commission announced on the 3rd that it has identified Hyundai Electric & Energy Systems (Hyundai Electric) and Hanwha Aerospace for requesting technical data from subcontractors without providing written documents detailing rights ownership and other conditions. Hyundai was fined 20 million KRW and given a corrective order, while Hanwha received a corrective order.

From April 2017 to January 2018, Hyundai commissioned the production of high-voltage switchgear-related products and received deliveries, during which it requested 20 drawings from seven subcontractors. However, it did not provide written documents specifying confidentiality methods, rights ownership, compensation, and payment methods.

When Hyundai signed contracts with subcontractors for the delivery of high-voltage switchgear, it required the submission of approval drawings for the delivered products. While receiving these approval drawings from the subcontractors, Hyundai did not issue written documents related to the request for technical data.

Hyundai claimed, "During the review process, the contract specified the submission of approval drawings, and since the cost of preparing the approval drawings was paid, the ownership of the approval drawings belongs to Hyundai."

In response, the Fair Trade Commission judged, "The obligation to submit drawings and the obligation to transfer ownership of drawings are different, and the costs paid by Hyundai were merely labor costs (drawing costs), so ownership cannot be considered transferred."

The Fair Trade Commission explained, "Hyundai violated procedural regulations under the Subcontracting Act by failing to provide the written documents required when a principal requests technical data from subcontractors."

Hanwha, from January 2015 to June 2016, commissioned and received deliveries of processing for aircraft engine parts, requesting eight 'work and inspection manuals' related to processing from four subcontractors. Similarly, it did not provide written documents specifying rights ownership and other conditions.

Hanwha argued, "Since the subcontractors created the materials based on Hanwha's technical guidance during the review process, the materials belong to Hanwha."

The Fair Trade Commission decided, "If subcontractors prepare technical data containing their own unique technical information, it should be regarded as the subcontractors' technical data." The commission judged that Hanwha also violated the Subcontracting Act regulations, similar to Hyundai.

Moon Jongsuk, head of the Fair Trade Commission's Technology Misappropriation Monitoring Team, stated, "The significance lies in clarifying that when a principal requires approval drawings in the contract, they must issue the written documents required under the Subcontracting Act when requesting technical data." He added, "This will prevent principals from arbitrarily interpreting rights ownership and compensation related to technical data and further help prevent technology misappropriation."

Moon also said, "The Fair Trade Commission plans to strengthen monitoring not only of technology misappropriation but also of procedural violations occurring during the principal's technical data request process and will impose industry sanctions when violations are detected."

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