Large Corporations' 'Idea Theft' from Small Businesses to Be Eradicated by Law

Passage of Unfair Competition Prevention Act Amendment Last Month... Compensation Up to Three Times the Recognized Damage Amount
Industry Insider Points Out "Need for Stronger Sanctions Beyond Correction Recommendations"

Amid a surge in large corporations stealing technology from small and medium-sized enterprises (SMEs), an amendment to the Unfair Competition Prevention Act, which allows compensation of up to three times the damages if a large corporation plagiarizes an idea proposed by an SME, passed the National Assembly plenary session on September 24. Photo by the Korean Intellectual Property Office

[Asia Economy Reporter Kim Heeyoon] #. Kim Seongchan (alias), CEO of SME A, which develops smartphone security solutions, is currently engaged in a lawsuit with Bank B. After filing a patent application for the developed technology, SME A held a meeting with Bank B while conducting business with large banks. After proposing the business and delivering various technical materials requested by Bank B, SME A failed to secure a contract, and Bank B developed its own solution and launched a smart banking program. The CEO of SME A closed the company several years ago and is now focused on the lawsuit.

As cases of large corporations stealing technology from SMEs surge, large corporations will now be required to compensate up to three times the amount of damages if they appropriate ideas proposed by SMEs.

According to the "Unfair Competition Prevention and Trade Secret Protection Act" (hereinafter referred to as the Unfair Competition Prevention Act), which passed the National Assembly plenary session on the 24th of last month, a punitive damages system will be introduced that requires compensation up to three times the recognized damages if intentional idea theft causes damage to SMEs. Additionally, large corporations must directly announce any corrective recommendations regarding unfair competition acts.

Damage caused by large corporations stealing technology from SMEs has been increasing annually, with reports rising each year. There have also been criticisms that legal protections are insufficient.

An SME CEO lamented, "The profit gained from stealing technology proposed by SMEs is often greater than paying the rightful price, and even if it goes to trial, the profit gained during the time taken is often more than the compensation amount, so the damage keeps recurring."

This amendment applies punitive damages, previously applied to trade secret infringement, to idea theft acts as well, in response to the severe damage caused to SMEs by idea theft.

Furthermore, if corrective recommendations regarding unfair competition acts are not followed, the violation must be publicly announced, thereby increasing the responsibility of large corporations for illegal acts.

An industry insider stated, "This amendment is meaningful in that it increases responsibility through public announcement of illegal acts, but many SMEs that had their ideas stolen may have already closed down," adding, "Stronger additional sanctions beyond corrective recommendations must be supplemented legally to protect the intellectual property of SMEs."