Up to 5 Times Compensation for Stealing Technology from Subcontractors

Amendment to the Subcontracting Act Passed in the National Assembly Plenary Session

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If a prime contractor misappropriates the technical data of a subcontractor, they will be liable for damages up to five times the amount.

The Fair Trade Commission announced that the amendment to the "Act on the Fairness of Subcontract Transactions," which strengthens punitive damages liability for acts of technology misappropriation and introduces standards for calculating damages caused by technology misappropriation, passed the National Assembly plenary session on the 1st.

This amendment strengthens punitive damages liability considering the reality that it is difficult to receive adequate compensation even if intangible or tangible technology and know-how are taken away under the current law.

When a prime contractor misappropriates the technology of a small or medium-sized subcontractor causing damage to the subcontractor, the compensation liability limit has been raised from up to three times to up to five times the damage amount incurred by the subcontractor.

Additionally, standards for calculating damages caused by technology theft have been established. Specifically, the damage amount to the victim company caused by technology misappropriation will include amounts exceeding the victim company's production scale.

Moreover, not only the profits directly obtained by the business that stole the technology but also the profits gained by providing the technology to a third party will be presumed as damages. The damage calculation standards apply not only to goods consignment under the Subcontracting Act but also to technology misappropriation acts in service consignment.

The Fair Trade Commission expects that "with the legal amendment, the compensation amount to victim companies by technology-misappropriating firms will increase, thereby deterring technology theft, and the introduction of damage calculation standards for technology misappropriation will alleviate the burden of proving damages for small and medium-sized victim companies."

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