Both Technology "Exports" and "Leakage" Now Go Through Law Firms

Published 15 Oct.2025 15:30(KST)

More Companies Seeking Legal Advice Amid Stricter Export Regulations
Technology Leakage Cases on the Rise, Making Proactive Response Essential

Due to the recent strengthening of the Industrial Technology Protection Act, more companies facing legal risks or uncertainties are proactively seeking assessments to determine whether their technologies are subject to regulation. Suppliers of technology-related materials, components, and equipment are also consulting law firms to find out if their technologies fall under national core technologies or national advanced strategic technologies.

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Domestic manufacturing company A sought to establish an overseas plant. During this process, a foreign financial institution requested the company’s technology intellectual property (IP) as collateral. Although providing technology as collateral does not immediately result in its transfer, there were concerns about potential technology leakage during the enforcement of rights in the event of default. In order to minimize business delays while reducing legal risks, company A consulted a major law firm to determine at what point it should obtain export approval for its technology.

Company B, a supplier of technology-related components, was contacted by the government while pursuing a merger and acquisition (M&A) with a foreign company. The government stated that it needed to determine whether the technology owned by company B constituted a “national core technology.” Due to the uncertainty of potential regulation, company B ultimately abandoned the M&A deal.

27 Technology Leakage Cases Referred to Police in 2024

The background to these corporate actions lies in the recently strengthened regulations and harsher penalties. Amid global competition for technological supremacy, incidents of technology leakage have been on the rise. In 2024, the police referred a total of 27 overseas technology leakage cases, with China accounting for 20 cases-the highest number-and the United States for 3 cases. Since the launch of the National Investigation Headquarters, the number of overseas technology leakage cases has steadily increased from 9 in 2021 to 12 in 2022, 22 in 2023, and 27 in 2024.

Stronger Laws and Penalties

As of July 22, 2024, the amended Industrial Technology Protection Act allows the Minister of Trade, Industry and Energy to suspend or even order the restoration of an M&A if an institution holding national core technology proceeds with an overseas M&A without reporting it. Even unintentional acts of leakage can now be punished, and the maximum fine has been raised to 6.5 billion won-nearly five times higher than before.

Shield or Deal Breaker

These stricter regulations have become a “double-edged sword” for technology companies. Lim Bokyung, an attorney at SEJONG Law Firm (Judicial Research and Training Institute, 30th class), stated, “Designation as a national core technology serves as a strong shield for companies at risk of technology leakage, but for those seeking M&A or investment, it can act as a ‘deal breaker’ that derails transactions.” She added, “As a result, there is growing demand among companies for preliminary assessments to clearly determine whether their technologies are subject to regulation.”

Importance of Proactive Response

With systematic review systems being established for exports and overseas M&As with high potential for technology leakage, on-site inspections and security capability evaluations for technology-holding companies are expected to be strengthened. From the corporate perspective, the unpredictability of approval timing or outcome could prevent them from providing promised technologies overseas in a timely manner. Experts therefore advise that proactive and active responses are essential.

Lim Sungtaek, managing partner at Jipyong Law Firm (27th class), predicted, “For technologies related to national security, the screening of foreign investments is likely to be further strengthened in the future.”

Kim Hongseon, an attorney at Kwangjang Law Firm (37th class), also advised, “Companies should seek expert assistance and actively communicate and respond by providing detailed explanations and submitting additional materials to relevant authorities throughout the approval process.”