SMEs' 'Technology Misappropriation' Penalty Increased from 1 Billion to 2 Billion Won

[Asia Economy Reporter Eunju Lee] From now on, the penalty for technology misappropriation under the Subcontracting Act will be increased from 1 billion KRW to 2 billion KRW. The fixed penalty is the standard amount applied when it is difficult to calculate the violation amount.

On the 11th, the Fair Trade Commission announced that it will implement the 'Enforcement Decree of the Act on the Fairness of Subcontract Transactions' and detailed standards for operating the subcontract payment condition disclosure system starting from the 12th. This revision was made to stipulate the legal delegation under the 'Act on the Fairness of Subcontract Transactions (Subcontracting Act)' promulgated on the 11th and to promote national policy tasks such as raising the fixed penalty limit.

According to the enforcement decree, the fixed penalty limit for technology misappropriation and other cases where it is difficult to calculate the violation amount will be raised from 1 billion KRW to 2 billion KRW. This measure reflects criticism that the penalty was low despite the considerable benefits that could be gained depending on the infringed technology and the degree of commercialization of its content. Along with this, the Fair Trade Commission decided to reduce penalty points by up to 2.5 points by evaluating the conclusion of subcontract payment linkage contracts and the actual increase in subcontract payments. The Fair Trade Commission imposes penalty points on companies that violate the Subcontracting Act; if the points exceed 5, a request to restrict participation in public bidding is made, and if they exceed 10, a request for business suspension under the Framework Act on the Construction Industry is made.

In addition, the original contractors belonging to the disclosed business groups must disclose information on subcontract payment methods, payment amounts, payment periods, and the subcontract payment dispute resolution organization established within their company on a semiannual basis. Violations of this will result in a fine of 50 million KRW. The Fair Trade Commission stated, “With the enforcement of the revised Subcontracting Act enforcement decree, deterrence against legal violations will be strengthened, and through incentives such as penalty point reductions, the use of standard linkage contracts and adjustment of subcontract payments are expected to become more active.”