Ministry of SMEs and Startups Announces 'Measures to Strengthen Protection and Relief for Innovative Technologies'
Promoting Introduction of Punitive Sanctions and Financial Penalties
Penalties and monetary sanctions will be introduced for the misappropriation of startup innovative technologies, strengthening the level of punishment compared to the existing measures.
The Ministry of SMEs and Startups announced the "Measures to Strengthen the Protection and Remedy of Startup Innovative Technologies" at the Economic Ministers' Meeting on the 16th.
First, regarding violations of technology misappropriation laws, administrative measures that had previously been limited to corrective recommendations will be changed to corrective orders, and if these orders are not complied with, penalties can be imposed through legal amendments. The penalties are expected to be imprisonment for up to one year or fines of up to 50 million KRW. Additionally, the introduction of monetary sanctions such as fines will be considered for serious legal violations, including large corporations misappropriating startup technologies.
The issue of undercompensation will also be addressed. Previously, only damages actually incurred from the transfer or sale of technology were recognized as compensation, but going forward, even if the product does not reach the market, the costs invested in technology development will be recognized as damages by improving the criteria for calculating damages.
Furthermore, to eliminate blind spots in technology protection, the innovative technologies of startups will be broadly protected. Until now, startups needed separate confidentiality management efforts to protect their internal core technologies. However, considering startups' financial constraints, institutional measures are being reviewed to provide support even if confidentiality management requirements are not met.
Legal obligations regarding technology requests and provision during negotiation and bargaining processes will be strengthened. Non-disclosure agreements (NDAs), which were mandatory only in supplier-subcontractor relationships, will be expanded to all bilateral relationships such as negotiations and bargaining. To prevent unfair verbal technology requests and to use them as favorable evidence in case of disputes, technology must be requested in writing only, and legal obligations will be strengthened to require the return or destruction of technology once negotiations are concluded.
In addition, a "Core Technology Imitation Early Warning Service" will be introduced to analyze startups' core technologies and regularly monitor the filing of similar patents. To enhance the effectiveness of dispute mediation systems, private experts such as lawyers will be involved in the dispute mediation process to conduct fact-finding investigations.
Moreover, the "SME Technology Protection Voucher" support will be increased so that startups can autonomously select and continuously use integrated technology protection programs that were previously supported individually and sporadically. Also, a dedicated legal advisory service for startups will be added to prevent contracts from being nullified due to unfavorable clauses being deleted or toxic clauses being added during the NDA drafting process with large corporations and others.
Oh Young-joo, Minister of SMEs and Startups, stated, "Through these measures, innovative technologies of startups that were not protected under existing laws will be protected without blind spots, and damages will be realized at least four times higher by including technology development costs, so the importance and value of intangible assets such as technology can be properly recognized. We will swiftly proceed with necessary actions such as legal amendments to ensure these measures work effectively in the field."
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