Calls mount for law revision to prevent trade secrets theft

2024.02.13 14:13:01 | 2024.02.13 17:30:57

[Image source: Pixabay]이미지 확대

[Image source: Pixabay]

A growing number of companies in South Korea are reporting losses due to the leakage of trade secrets, including design drawings. The current customs retention system, which prevents the import and export of goods that infringe on another company’s rights at the border, is only used for externally disclosed intellectual property rights such as trademarks and patents. There are growing calls for the system to be updated to include goods that violate trade secrets managed internally by companies.

According to sources on Monday, police are currently investigating a former employee of Korean firearms parts manufacturer SNT Motiv Co. on charges of trade secret infringement.

SNT Motiv claims that the former employee secured internal data by sending business emails to personal emails when communicating with clients and caused damage even after leaving the company by opening Company A to export firearms components using SNT Motiv trade secrets, including design drawings.

SNT Motiv sued the former employee in 2023 for leaking trade secrets and breach of trust. The Korea Customs Service is also investigating the fact that some Company A products were exported without approval from the country’s Defense Acquisition Program Administration (DAPA).

The former employee claimed that while “it was a mistake to not have the DAPA permit for some items,” “all items are currently being exported with permits.” As for the alleged leakage of trade secrets, the former employee said, “There were times where company emails were classified as spam by Middle Eastern clients, so I frequently used personal emails for internal reporting or even added my personal emails to my business card as part of my regular business practices.”

SNT Motiv’s lawsuit for damages against the former employee is scheduled for its first hearing at the end of February 2024.

Defense industry insiders raised the issue that Company A products that potentially infringed trade secrets are still being exported during the investigation period. Under the current customs law, the Korea Customs Service can suspend exports of goods that infringe on intellectual property rights such as trademarks and patents via the customs retention system at the request of the affected company, but there is no basis to stop the export of goods that infringe on trade secrets.

Representative Joo Ho-young of the People Power Party proposed a bill in November 2023 to amend the customs law, thus allowing for customs retention of goods that infringe on trade secrets and goods that infringe on nationally designated advanced industrial and defense technologies. The Korea Customs Service is also in favor of amending the current law, but there are concerns that expanding the scope of customs retention could lead to it being abused to suppress competition.

“The scope of trade secrets is broad and the boundaries ambiguous, making it difficult for customs to identify infringement immediately, unlike trademark infringement cases which are relatively easy to identify,” a customs law expert at a major Korean law firm said.

By Hong Hae-jin and Yoon Yeon-hae

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