"Calls Grow Louder from Companies to Strengthen Penalties for Trade Secret Leaks"

The voices of companies calling for tougher penalties on trade secret leakage crimes have grown louder.

The Korean Intellectual Property Office (KIPO) announced the results of the "2023 Intellectual Property Protection Status Survey" on the 17th. This survey has been conducted annually since 2021 to serve as basic data for establishing policies related to unfair competition prevention and trade secret protection. The target includes companies nationwide with 10 or more employees. The main survey items cover awareness and status regarding trade secret protection, unfair competition acts, and trademark protection.

According to the survey, one out of two companies holding trade secrets responded that "criminal penalties for trade secret leakage crimes should be strengthened."

In particular, the proportion of companies giving such responses more than doubled from 27.1% in 2022 to 46.4% last year. This is analyzed as an increase in negative perceptions of trade secret leakage crimes felt in the corporate field. Besides strengthening penalties, companies prioritized support for establishing systems that facilitate evidence collection (36.6%) and providing trade secret protection education and counseling (34.5%).

KIPO analyzed that the companies’ demand for tougher penalties on trade secret leakage crimes is rooted in the perception that lenient punishments for technology leakage crimes have allowed technology leakage incidents and accidents to continue unabated.

The main measures companies use to protect trade secrets include ▲periodic signing of trade secret protection agreements by insiders (37.4%) ▲confidentiality agreements with outsiders (7.3%) ▲non-compete agreements and obligations preventing employees from moving to competing companies (5.2%).

The representative unfair competition acts recognized by companies are ▲false indication of origin (92.9%) ▲idea theft (90.4%) ▲product form imitation (84.9%) ▲unauthorized use of others’ achievements (83.9%). To improve unfair competition acts, companies saw the need for ▲strengthening administrative investigation authority (such as corrective order systems) ▲establishing an idea original proof system (25.9%) ▲procedures for utilizing administrative investigation materials in civil lawsuits (14.6%).

The survey also showed a request for strengthened crackdowns on counterfeit goods online, such as through overseas direct purchase, which increased more than tenfold from 2.6% in 2022 to 35.2% last year. This is analyzed as a result of the rapid increase in the distribution of counterfeit goods online, causing enormous economic damage. In fact, the Korea Intellectual Property Research Institute estimated in 2019 that the sales decline, including exports, caused by counterfeit goods that year reached 22 trillion won.

Jung In-sik, Director of the Industrial Property Protection Cooperation Bureau at KIPO, said, “Based on the follow-up tasks derived from the survey, KIPO will continuously establish policy and institutional measures to prevent trade secret leakage crimes.”

Meanwhile, the survey was conducted targeting companies nationwide with 10 or more employees. By survey item, 2,500 companies (30.8%) out of 8,123 companies holding trade secrets, 2,000 companies (17.5%) out of 11,432 companies aware of unfair competition acts, and 3,000 companies (4%) out of 75,000 companies holding trademark rights participated in the survey to voice their opinions.