[After Technology Theft from SMEs]②Pushing for Fines Up to 5 Billion Won: "Economic Sanctions Must Be Intensified"

<2> Government Steps Up to Eradicate Technology Theft

Average Damages Awarded: 140 Million Won
Only 17.5% of Claimed Amount Recognized

Tandem Wins Partial Victory in Second Trial Against Jinhaksa
Court Orders 20 Million Won in Comp

Editor's NoteTechnology theft targeting small and medium-sized enterprises (SMEs) is a destructive act that can collapse years or even decades of hard work overnight. The government is accelerating efforts to revise relevant systems, but voices from the field remain desperate and strained. Many victims choose to remain silent due to the immense financial burden of endless legal battles, while others barely win lawsuits yet ultimately go out of business. This article examines why such injustices persist and what challenges must be addressed to resolve them.

Enormous litigation costs, severed business relationships, and the stigma of being labeled a "problematic company"—these are just some of the significant disadvantages SMEs face when engaging in legal disputes after having their technology stolen. Yet, few companies actually win these lawsuits; even when they do, they are typically awarded compensation amounts that fall far short of their actual losses.

Recognition Rate for Damages at 17%... "Even When You Win, Nothing Is Left"

Tandem, a university review platform operator, is also facing such difficulties. In 2018, Tandem signed a memorandum of understanding (MOU) for university review services with a major admissions information company, Company A, and provided review data and application programming interfaces (APIs). However, the following year, Company A launched a similar service to the Tandem platform, leading both parties into legal conflict.

The Korean Intellectual Property Office recommended monetary compensation by Company A at the first trial, but Company A instead filed a lawsuit seeking confirmation of non-existence of debt. Later, the appellate court ordered Company A to pay 20 million won in damages, but Tandem claims this amount is significantly insufficient compared to the actual scale of the damages. The case is currently pending before the Supreme Court due to Company A's appeal.

According to a survey by the Ministry of SMEs and Startups on June 11, the average amount of damages recognized by courts in technology infringement lawsuits was 140 million won, only 17.5% of the average amount claimed by plaintiffs (800 million won).

The primary reason for this low recognition rate is the extreme difficulty victims face in proving tangible and intangible damages caused by technology theft. A representative example is the case involving CDS Global, who claims that in 2009, Company B, a bamboo salt manufacturer, stole their proprietary bamboo salt melting furnace technology, which had been managed as a trade secret.

Patent attorney Chanmi Park explained, "Considering that the bamboo salt melting furnace, which costs about 200 million won each, has a maximum lifespan of three years, the economic benefit that could have been obtained if the technology had been properly traded is estimated at about 2 billion won. Factoring in additional lost contracts and missed opportunities for business expansion, the actual loss is even greater, but it is realistically very difficult for the victim company to prove this directly."

Realistic Compensation and Stronger Economic Sanctions... "A Shift in Social Perception Is Needed"

The government has been revising relevant laws and systems since last year to ease the burden of proof on victimized companies. In January, the Ministry of SMEs and Startups pushed to amend the Act on the Promotion of Win-Win Cooperation between Large Enterprises and SMEs (the Win-Win Cooperation Act) and introduced the "Korean-style Discovery System" (K-Discovery). The core aspect of this system is that court-appointed experts can visit the offices and factories of the infringing company to collect evidence related to technology theft on behalf of the victim, and that courts may accept this evidence.

There are also plans to allow research and development (R&D) costs invested in technology development by the victimized company to be reflected in the calculation of damages. The government intends to estimate development costs using data from national R&D projects with similar technologies and use this as the basis for calculating damages. Additionally, the government is considering expanding the Central Technology Assessment Center of the Korea Technology Finance Corporation into a "SME Technology Damage Assessment Center" to establish a more professional and objective system for assessing damages.

(From left) Lawyer Hyun Kyung Lee of Gyeongcheong Foundation, Assemblyman Jae Bong Song of the Democratic Party of Korea, CEO Young Soo Cho of CGI, CEO Jae Yong Shim of NC Power, CEO Sung Taek Kwon of The Order, Chan Mi Kim of CDS Global, Chairman Tae Kwan Jang of Gyeongcheong Foundation, and lawyer Hee Kyung Park of Gyeongcheong Foundation are taking a commemorative photo at the press conference to eradicate technology theft held at the Korea Federation of SMEs in Yeongdeungpo-gu, Seoul. Gyeongcheong Foundation

The Ministry of SMEs and Startups is also working to strengthen the current "recommendation" level of administrative investigations to "orders for corrective action" and, in serious cases, to impose fines of up to 5 billion won. Other measures under consideration include imposing penalty points on companies that commit technology theft to restrict their participation in government bids or requiring employee education. Experts point out that these efforts should serve as a starting point to further intensify economic sanctions against companies that steal technology.

Attorney Yongchan Lee of Insight Law Firm emphasized, "The reason technology theft is repeated is that the economic gains from infringement are perceived to outweigh the risks of punishment. It is important to send a societal message through high fines that 'stealing technology will result in even greater costs.' In terms of realistic compensation, it is worth considering including even the future profits that the technology could generate in the calculation of damages, using technology valuation models from institutions such as the Korea Technology Finance Corporation."

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