Technology Disputes in Small and Medium Enterprises, Now Prepared with 'Insurance'

Ministry of SMEs and Startups to Introduce 'Small and Medium Business Technology Protection Policy Insurance' Starting Next Year

[Asia Economy Reporter Kim Jonghwa] Company A, a developer of ATM motors for banks, recognized that it had infringed on the technology of a large corporation, Company B, by disclosing Company B's trade secret materials to a third party, but gave up on litigation due to a lack of funds for legal costs. As a result, Company A faced a management crisis.

Many small and medium-sized enterprises (SMEs) like Company A often give up on lawsuits altogether due to the heavy burden of litigation costs when they have to legally dispute technology-related issues. Going forward, such cases can be resolved through insurance.

The Ministry of SMEs and Startups announced on the 29th that it will introduce the "SME Technology Protection Policy Insurance" to alleviate the financial burden arising from technology disputes for SMEs and is recruiting participating insurance companies to operate this program.

According to the "2020 SME Technology Protection Survey Results" by the Ministry, 42.9% of SMEs responded that they took "no action" after experiencing technology leakage or theft. The main reason was the "burden of legal costs" (38.9%), indicating that the financial burden from technology disputes significantly affects SMEs.

In particular, SMEs with poor financial conditions often give up on legal responses despite facing disputes due to concerns about prolonged disputes and legal cost burdens.

The Ministry plans to introduce the "SME Technology Protection Policy Insurance" from next year, which compensates legal costs up to a maximum of 100 million KRW when legal disputes arise related to technologies owned by SMEs. To promote early settlement and activation of the policy insurance, it will support part of the insurance premiums paid by SMEs at the time of subscription (up to 70%).

SMEs subscribing to the policy insurance can receive compensation for costs related to ▲ legal disputes filed by third parties (defense against lawsuits) and ▲ legal actions against those infringing on the insured SME's technology (filing lawsuits). The insurance period can be selected from 1 year up to a maximum of 3 years.

The Ministry is recruiting insurance companies to operate the SME Technology Protection Policy Insurance through the Korea Foundation for Advanced Studies in Cooperation between Large, Medium, and Small Enterprises and Agriculture, Forestry, and Fisheries. Selected insurance companies, after undergoing prescribed procedures, will participate in full-scale business operations from next year through business agreements with the operating institution.

Won Youngjun, Director of Technology Innovation Policy at the Ministry, said, "It is very meaningful that the financial and management burdens arising from SME technology disputes can be alleviated through policy insurance," adding, "We will continue to expand various protection networks to effectively protect SME technologies."

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