OLED 'Technology Leak', LG-Samsung 7-Year Battle... Supreme Court Rules "Not a Trade Secret"

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[Asia Economy Reporter Heo Kyung-jun] The Supreme Court has ruled that the technology leaked by the subcontractor CEO who jointly developed LG Display’s (LGD) organic light-emitting diode (OLED) technology to Samsung Mobile Display (SMD) does not constitute a ‘trade secret’ and therefore cannot be punished.

The Supreme Court’s First Division (Presiding Justice Park Jung-hwa) on the 16th upheld the lower court’s ruling that acquitted LGD partner company president A and others, who were charged with violating the Act on the Prevention of Unfair Competition and Trade Secret Protection.

A, who runs an LGD subcontractor, was prosecuted on charges of presenting and emailing ‘FS Key Technical Data’ containing trade secrets related to OLED Face Seal technology, acquired during the joint development process with LGD, to Samsung Display employees in May-June 2010. Four SMD employees were also indicted for acquiring trade secrets with the intent to cause damage to LGD.

The trial focused on whether the FS Key Technical Data handed over by A to SMD employees constituted LGD’s trade secrets. Under the Unfair Competition Prevention Act, trade secrets refer to production methods, sales methods, or other technical or business information useful for business activities that are not publicly known, have independent economic value, and are managed as secrets. To be recognized as trade secrets, the requirements of non-disclosure, economic usefulness, and secret management must be met.

The first trial court found that some of the materials A provided to SMD employees qualified as trade secrets, sentencing A to five months in prison with a one-year probation, and giving suspended prison sentences to the SMD employees as well.

The first trial court stated, "Considering that the FS Key Technical Data had a ‘Confidential’ label at the bottom and that A expressed ‘sensitive parts have been deleted’ when sending the materials by email, it can be seen that there was awareness of LGD’s trade secrets included in the FS Key Technical Data."

It also ruled, "Some of the leaked materials have economic value and were managed as confidential, thus constituting trade secrets," and "The defendants’ intent to exchange such trade secret materials is also recognized."

Regarding the SMD employees, the court noted, "They knew that the technology was acquired during the joint development process with LGD, and during the FS Key Technical Data presentation, it was clear that the technology belonged to LGD, not the company operated by A, so they were aware that it was LGD’s trade secret."

On the other hand, the second trial court ruled that none of the parts recognized as trade secrets by the first trial were trade secrets, acquitting both A and the SMD employees. The second trial court judged, "Most of the technical data content was already known through academic papers or included significantly in materials distributed by Japanese film manufacturers to the industry."

Regarding the SMD employees, it also pointed out, "It is likely they were engaged in routine equipment purchasing activities, and it is difficult to prove that there was intent or conspiracy to acquire trade secrets or that there was an intent to cause damage to LG Display."

The Supreme Court also agreed with the second trial court’s judgment. The court stated, "The ‘FS Key Technical Data’ is a company promotional material, and compared to the materials LGD claims as original trade secrets, it only contains omissions of specific details. It has the peculiarity that technology information independently developed by A and some jointly developed with LGD are mixed, making clear distinction difficult," adding, "It is difficult to recognize non-disclosure and economic usefulness because the materials include generally known FS technology and FS technology independently developed by the subcontractor unrelated to LGD."

Earlier, in July 2012, prosecutors indicted 11 LG employees without detention on charges of leaking Samsung’s OLED core technology. In September of the same year, Samsung and LG filed lawsuits against each other over OLED technology, and in December, over LCD technology. However, all lawsuits were settled after government mediation in 2013.

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