"Punitive Damages Limit Raised from 3x to 5x... Amendment to Bu-gyeong Act Passed by National Assembly"

Amendment to the Pukyung Act Passed in the National Assembly Plenary Session on the 25th
Strengthening Punitive Damages Limit to '5 Times' and More
High-Intensity Measures to Prevent Technology and Idea Theft Established
Includes Enhanced Administrative Relief Support for Victims

The amendment to the Unfair Competition Prevention Act, which includes high-intensity measures to prevent technology leakage such as increasing the cap on punitive damages from three to five times, has passed the plenary session of the National Assembly.

On the 26th, the Korean Intellectual Property Office (KIPO) announced that the amendment to the "Unfair Competition Prevention and Trade Secret Protection Act" (hereinafter referred to as the Unfair Competition Prevention Act) has passed the plenary session of the National Assembly, gaining momentum to promote strong measures to prevent technology theft.

The passed Unfair Competition Prevention Act is legislation promoted through cooperation between the government and ruling and opposition parties, focusing on eliminating threats to domestic industrial competitiveness and forming a sound technological innovation ecosystem.

The main contents include strengthening deterrence and punishment for criminal acts, enhancing administrative remedies for illegal acts, and resolving legal gaps in protection.

According to the amendment, punitive damages will be strengthened to five times. This is a measure to raise awareness of technology leakage and secure the effectiveness of victim compensation.

In addition, to suppress trade secret infringement acts systematically carried out by corporations, KIPO emphasizes that corporate fines will be increased up to three times the current regulation.

Provided by the Korean Intellectual Property Office

The proportion of corporate involvement in total trade secret infringement crimes was 1.5% in 2017, 1.6% in 2018, 1.8% in 2019, 1.6% in 2020, and 1.6% in 2021.

In particular, the proportion of corporate involvement in crimes violating the Unfair Competition Prevention Act was 33.9% in 2017, 30.2% in 2018, 41.9% in 2019, 36.3% in 2020, and 29.2% in 2021, showing that corporate involvement is more frequent in unfair competition crimes than in trade secret infringement crimes. Strengthening corporate fines for trade secret infringement acts and others is a measure taken considering this situation.

A notable point in the amendment is the newly introduced provision allowing the confiscation of not only goods infringing trade secrets but also manufacturing facilities. The confiscation of manufacturing facilities, etc., is intended to prevent secondary damage caused by the distribution of infringing goods in advance.

Administrative remedies for damages caused by unfair competition acts will also be strengthened. When unfair competition acts such as idea theft occur (are recognized), KIPO will be able to conduct an administrative investigation first and then impose corrective orders along with fines based on the newly established legal grounds.

So far, even when KIPO detected unfair competition acts through administrative investigations, it only issued corrective recommendations and public announcements, making it difficult to effectively suppress unfair competition acts. For example, as of December 2023, among 15 cases where KIPO issued corrective recommendations, 5 cases (33%) did not comply with the recommendations. This clearly shows that corrective recommendations alone are insufficient to suppress unfair competition acts in the field.

The amendment also newly establishes a legal basis allowing KIPO to provide the entire investigation records to the court upon request when the victim of unfair competition acts uses KIPO’s administrative investigation data as evidence in civil litigation such as claims for damages. This is to provide convenience to victims who have difficulty securing evidence in civil lawsuits.

The amendment includes provisions to punish cases where trade secrets are damaged or deleted by hacking, beyond the traditional areas of trade secret infringement such as unfair acquisition, use, or disclosure. This is a measure to strengthen protection of trade secrets considering the recent increase in hacking incidents. From now on, those who damage or delete trade secrets for unfair purposes may face imprisonment of up to 10 years or fines of up to 500 million KRW.

Jung In-sik, Director of the Industrial Property Protection Cooperation Bureau at KIPO, said, “The amendment will serve as a foundation for KIPO to respond more proactively to frequent overseas leakage of trade secrets and unfair competition acts such as idea theft.” He added, “Based on the amendment, KIPO plans to prevent technology theft and trade secret infringement in the industrial field in advance and strengthen technology protection capabilities.”

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