[Interview] Kim Dongseop, YK Attorney: "SME Technology Is the Nation's Future Growth Engine... Neglecting Theft Will Collapse the Ecosystem"

Sign Non-Disclosure Agreements and Keep Detailed Records of Information Sharing

Realistic Standards Needed for Damage Assessment and Stronger Authority for Document Submission

Expand Investigative Manpower, Including Specialized Intellectual

For small and medium-sized enterprises (SMEs) that must collaborate with large corporations to survive, it is difficult to refuse requests from major companies for technical documents. As a result, cases in which technical data provided to large corporations under the pretext of "business cooperation" or "investment review" lead to technology misappropriation continue to occur.

We spoke with Dongseop Kim, Attorney at Law at YK Law Firm, who has directly represented numerous cases involving technology leaks by large corporations and technology misappropriation against SMEs, to ask about strategies SMEs can use to guard against technology theft by large corporations and directions for improving related systems.

Dongseop Kim, Attorney at Law at YK Law Firm.

Attorney Kim, who majored in physics at Yonsei University, became a patent attorney in 2008. After working at a patent law office, he passed the 6th bar exam in 2017 and has been active as a lawyer specializing in IT and intellectual property. He represented the filing of domestic and overseas patents for Samsung Electronics smartphones and carried out prior art research and development (R&D) projects for the Korean Intellectual Property Office. In addition, he has served as a reviewer for the Korea Creative Content Agency (KOCCA), a Blockchain Forum member for the Korea Internet & Security Agency (KISA), and an adjunct professor at Sogang University Law School.

The following is a Q&A with Attorney Kim.

-From the perspective of SMEs that must work with large corporations, it is a reality that it is difficult to refuse when large corporations request internal technical documents or demand detailed explanations. What measures can SMEs take to prevent technology misappropriation by large corporations?

▲ Prevention is much more important than post-incident response. To prepare for potential disputes, SMEs should proactively utilize the "technology escrow" system or "original proof of trade secrets" services, and secure rights by filing patents for core technologies before engaging with large corporations whenever possible. During formal collaboration discussions, it is essential to sign a non-disclosure agreement (NDA) specifying concrete purposes and return conditions. SMEs should minimize the amount of material provided to large corporations, clearly mark confidential documents, and thoroughly document the transfer history. In addition, SMEs should maintain a clear record of their independent technology development history using electronic lab notebooks or similar tools. They should also take advantage of government-supported customized technology protection consulting and security infrastructure programs to strengthen their own capabilities to prevent technology leaks.

-If there are signs of intellectual property rights infringement by a large corporation or if an SME has already been victimized by technology misappropriation, what actions can the affected SME take?

▲ In the early stages, when there are indications of possible infringement, the first step is to quickly secure all relevant evidence—such as internal system access logs, emails, and messenger records—without any damage or tampering. Next, SMEs should send an official warning letter or content-certified mail to the large corporation to demand cessation of rights infringement, thereby leaving objective evidence of the other party’s malicious intent for any future legal disputes.

As an administrative remedy, SMEs can actively use the "SME Technology Misappropriation Whistleblower Center," a joint government reporting channel. By filing a report, they can receive ongoing consultations from two experts, and depending on the nature of the case, the matter will be assigned to the appropriate ministry—such as the Ministry of SMEs and Startups, the Fair Trade Commission, the Korean Intellectual Property Office, or the National Police Agency—for investigation and support, including linking to victim relief programs, all in a one-stop process.

If actual damage from technology misappropriation has already occurred and is spreading, SMEs must not rely solely on administrative measures but should quickly file a criminal complaint with law enforcement to hold those responsible criminally accountable for illegal acts. At the same time, they should file civil lawsuits, such as for damages, to ensure robust judicial responses and effectively recover losses.

-For SMEs that must continue collaborating with large corporations, reporting to the intellectual property office or filing a lawsuit can be burdensome. What alternatives are available?

▲ If maintaining the relationship with the large corporation is necessary, a strategic and indirect approach is preferable to an all-out confrontation. There are three main alternatives.

First, use an external legal representative as a buffer. By communicating refined legal demands through a representative, direct conflict can be avoided and internal correction or settlement by the large corporation can be encouraged.

Second, take advantage of anonymous reporting and the government’s ex officio investigation systems. Anonymous reporting channels or ex officio investigations by the Ministry of SMEs and Startups or the Fair Trade Commission can facilitate indirect resolution without the risk of retaliation.

Third, use the "SME Technology Dispute Mediation" system, which is conducted privately instead of through litigation. This is often the most realistic exit, allowing both parties to quickly find an acceptable compromise without triggering reputational risks for the large corporation.

Dongseop Kim, Attorney at Law at YK Law Firm.

-Why is it difficult for actual investigations or trials to recognize technology misappropriation by large corporations?

▲ The biggest reason is the overwhelming information asymmetry and disparity in financial resources between large corporations and SMEs. Specifically, there are three major barriers.

First, the limitation in securing evidence. All key evidence needed to prove technology leaks is tightly held inside the large corporation, making it structurally very difficult for SMEs without authority to find and present it.

Second, the strict requirements set by the court for recognizing trade secrets. SMEs, lacking sufficient capital and manpower, often cannot maintain the rigorous security management systems demanded by the courts, so their rights are frequently not recognized in litigation.

Third, prolonged litigation and minimal damages awarded. Large corporations use their financial power to drag out trials for years, wearing down SMEs. Even when SMEs win, the damages awarded by the courts are often too low for meaningful relief.

-What has been the most challenging aspect of representing technology misappropriation cases in practice? What institutional improvements do you think are needed?

▲ The most painful aspect in practice is that the burden of finding clear evidence falls on the SME victim. When a large corporation refuses to submit documents, there are few realistic means to compel them, leading to a sense of powerlessness. To level this playing field, three institutional reforms are urgently needed.

First, the establishment of a Korean-style discovery system. Fact-finding investigations by experts into suspected infringing companies and strong court powers to order document submission must be promptly introduced in the field.

Second, making the criteria for calculating damages more realistic. Given the difficulty SMEs face in proving lost operating profit, the entire cost invested in technology development should be recognized as the basic amount of damages.

Third, the active application of punitive damages. With the statutory limit for compensation raised up to five times actual damages, frontline courts should actively award the highest possible damages to send a strong deterrent message against technology misappropriation.

-Recently, the "Pan-Government Task Force to Eradicate SME Technology Misappropriation" was formed, and the "SME Technology Misappropriation Whistleblower Center" was launched. To what extent do you think these government responses will help eradicate technology misappropriation against SMEs? Are there any systems or measures that should be introduced to prevent such misappropriation?

▲ The unification of previously fragmented consultation and reporting channels into the Whistleblower Center, improving accessibility for SMEs and resolving confusion in the initial response, is a very positive change. However, beyond unifying intake channels, it is essential to establish a deeper system that enables genuine investigative cooperation and information sharing among ministries.

Going forward, it is essential to expand the functions of the "SME Technology Damage Assessment Center," which helps objectively calculate damages that are difficult for SMEs to prove. In addition, the "Technology Protection Fence"—a data integration platform that provides case law and technology transaction information—needs to be further enhanced.

To prevent technology misappropriation, the government should actively promote the introduction of automated systems for classifying trade secrets and detecting abnormal leaks using artificial intelligence (AI), particularly for SMEs lacking capital and manpower, as part of government support programs.

Dongseop Kim, Attorney at YK Law Firm.

-What related laws are in place to regulate technology misappropriation by large corporations? Which aspects of current law should be supplemented through legal amendments?

▲ There are a number of laws regulating technology misappropriation by large corporations, including the Fair Transactions in Subcontracting Act, the Act on the Protection of Technical Know-how of Small and Medium Enterprises, the Act on the Protection of Industrial Technology, the Unfair Competition Prevention Act, and the Patent Act. However, improvements are still needed to increase the effectiveness of administrative investigations and actual enforcement. Measures that are currently only recommendations should be upgraded to binding corrective orders, and penalties should be strengthened so that substantial fines can be imposed for serious violations. The maximum administrative fine for refusal or obstruction of an investigation should also be raised to 50 million won to ensure the authority of investigations.

Above all, for these laws to function effectively in practice, it is imperative to significantly increase the number of specialized investigators, such as the special judicial police for intellectual property at the Korean Intellectual Property Office, so that increasingly sophisticated technology leak crimes can be thoroughly investigated.

-Any final comments?

▲ Preventing technology leaks is not merely a dispute between companies, but a matter that directly affects the innovation capacity and future growth engine of the national economy. As the government strengthens investigative cooperation through fast-track systems and the expansion of technology police, I hope that an economic environment based on fairness and trust—where free riding and technology misappropriation are no longer tolerated—will be realized.

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