"If Caught as an Industrial Spy, 'Up to 5 Times' Punitive Damages... Starting August"

Amendments to Patent Law and BuGyeong Law Passed at Cabinet Meeting
Key Point: Technology Theft Compensation Increased Up to 5 Times
5x Compensation Is the Strongest Domestically and Internationally

Damages for acts of technology theft such as patent infringement, trade secret infringement, and idea theft will be increased up to five times.

On the 13th, the Korean Intellectual Property Office (KIPO) announced that the amendments to the "Patent Act" and the "Unfair Competition Prevention and Trade Secret Protection Act (hereinafter referred to as the UCPA)" containing these provisions have passed the Cabinet meeting and will be enforced from August this year.

The amendments to the Patent Act and the UCPA were made to expand the cap on punitive damages from the existing three times to five times to prevent malicious technology leakage and to secure the effectiveness of victim relief.

The fivefold punitive damages represent the highest level when compared to domestic and international circumstances, with China being the only country currently applying fivefold punitive damages.

For example, Japan does not have a punitive damages system for technology theft at all, and even the United States, which strongly protects technology, limits punitive damages to a maximum of three times for patent infringement and up to two times for trade secret infringement.

Domestically, fivefold punitive damages have been introduced only in certain fields that are socially significant issues, such as the Serious Accidents Punishment Act.

The introduction of fivefold punitive damages for technology theft acts through the amendments to the Patent Act and the UCPA is interpreted as a result of the growing seriousness of technology theft and the formation of social consensus accordingly.

So far, the Patent Act and others have prohibited acts of patent and trade secret infringement and idea theft during technology transactions to protect companies' technological competitiveness, allowing victims to seek relief through civil damage claims if violated.

However, when patent rights, trade secret infringements, or idea theft cases against small and medium-sized enterprises occur, it has been difficult to prove infringement facts, and even if infringement is proven, it has been challenging to calculate damages, resulting in insufficient compensation from infringers.

According to a study conducted by KIPO (Research on SME Litigation Strategies through Analysis of Patent Infringement Precedents), in patent infringement damage claims lawsuits from 2016 to 2020, plaintiffs claimed an average of 628.29 million KRW, but the median amount awarded was only 100 million KRW.

This is a very low level compared to the median damages for patent infringement in the United States, which was 6.57 billion KRW (1997?2016), and even considering the economic scale of both countries (as of 2018), Korea’s amount is only one-seventh of that of the United States, according to KIPO.

For the same reason, in the industrial field, the perception that "copying technology from other companies is more profitable" has become widespread rather than developing technology and holding patents and trade secrets, and many victim companies have given up lawsuits due to low damage awards, continuing a vicious cycle.

The increase in punitive damages through the amendments to the Patent Act and the UCPA is not unrelated to these field conditions.

Jung In-sik, Director of the Industrial Property Protection Cooperation Bureau at KIPO, said, “We expect that the amendments to the Patent Act and the UCPA will reduce technology infringement acts and allow victim companies to receive substantial compensation.” He added, “For the punitive damages system to be operated more effectively, it is necessary to make it easier to collect evidence required for damage calculation. Therefore, as a follow-up measure, we will actively promote institutional improvements such as introducing a Korean-style evidence collection system in patent infringement lawsuits.”

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