169 Cases of SME Technology Protection per Large Corporation... Tripled in 3 Years

[Asia Economy Reporter Kim Hyewon] Amid recent legislative discussions on technology theft, the number of cases supporting the protection of small and medium-sized enterprises' (SMEs) technology per domestic large corporation has tripled to 169 cases in three years.

This is based on the results of a survey conducted by the Federation of Korean Industries on February 14, investigating cases of win-win growth in the technology sector using sustainability management reports from large corporations. The protection of SME technology by large corporations has diversified in terms of technical support methods such as patent development and joint technology development, as well as an increase in technology protection measures like technology data escrow. The technology data escrow system is a mechanism where large corporations and SMEs in a transactional relationship agree under certain conditions to deposit core technology data with a third-party institution, thereby proving the development and ensuring continuous use of the supplied technology. LG Electronics actively utilizes the technology data escrow system introduced in 2008. Last year alone, it supported 212 escrow cases, the highest record among domestic large corporations.

Some companies have established and operate technology data cooperation systems to prevent the misuse of technology data in advance and protect partner companies' technology. Samsung Electronics requires the use of CPCex (Development Collaboration Support System) whenever requesting and receiving technology data from partners, mandates prior submission of technology data provision requests, prohibits use beyond the intended purpose, and requires disposal once the purpose is achieved. SK, on the other hand, only allows technology data requests for legitimate reasons, complies with the obligation to provide data in writing, and has built a system to manage the entire process of returning and disposing of received data. Samsung C&T has also strengthened its internal control system by preparing and distributing technology protection guidelines for partner companies.

The number of companies jointly filing patents for technologies developed with partners or supporting partners' patent applications through costs or training is also increasing. Hyundai Motor Company pursued 717 joint patent applications last year, while Hyundai Mobis promoted 41 joint patent applications and supported registration costs for partner companies' patent applications.

To strengthen awareness of technology protection, companies also enhance education. They educate employees on the matters to be observed regarding technology data and visit individual partners to conduct training, striving to prevent technology data leaks. Samsung Electronics visited 62 partner companies and provided training to 514 partner employees last year. SK also had approximately 3,000 employees complete online training this year.

Support for partner companies' technology typically takes the form of free patent rights provision or joint research and development promotion. Hyundai Mobis opened its latest patents and transferred patents needed by partners free of charge, completing 160 patent openings and 27 patent transfers last year. Emphasizing reducing dependence on overseas parts and domestic research and development, it spent 19.25 billion KRW on 122 cases of technology development support, also focusing on R&D expenditure support.

Large corporations such as Samsung Electronics, Hyundai Motor Company, POSCO, and Lotte Chemical are diversifying their methods of supporting partner companies' technology. Recently, through smart factory support, they transfer innovation know-how across production to both partner and non-partner companies, while expanding activities that pass on field know-how by operating technology support organizations.

According to the Fair Trade Commission's evaluation trends on the implementation of fair trade agreements, recent win-win growth in the technology sector has more than doubled in both performance (cost) and number of cases. The number of technology protection cases per company increased 2.9 times from 58.3 cases in 2016 to 169.2 cases last year. During the same period, the technology support cost per major company rose 2.3 times from 6.25 billion KRW to 14.3 billion KRW. While the number of companies reporting technology protection performance increased by 12.7% from 55 to 62, the number of technology protection cases surged 227.2% from 3,206 to 10,489. As the number of technology-supported companies grew 12.5% from 96 to 108, the total technology support amount increased 157.2% from 600.3 billion KRW to 1.5441 trillion KRW.

Sustainability management reports also confirm major companies' participation in technology protection and support. Analyzing 23 out of the top 30 companies by sales that published sustainability management reports, 19 companies (82.6%) emphasized technology protection activities for partners. Even more, 21 companies (91.3%) engaged in technology support in collaboration with partners.

Yoo Hwan-ik, head of the Corporate Policy Office at the Federation of Korean Industries, said, "Win-win growth with partners is expanding not only in technology development support but also in activities protecting partners' technology," adding, "Support measures should precede regulatory expansion to enable companies' autonomous mutual growth activities to spread to secondary and tertiary partners."

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