Developing Products with Skills Gained During Employment Is Not Breach of Trust Unless Materials Are Key Business Assets

Supreme Court Overturns Conviction and Orders Retrial

The Supreme Court has overturned a conviction and remanded the case of a former executive who took technical materials obtained during employment without authorization and used them to develop similar products after leaving the company, ruling that "the materials in question cannot be considered key business assets of the company." On May 19, the Supreme Court's Criminal Division 1 (Presiding Justice Shin Sookhee) announced that it had overturned the lower court's guilty verdict against Mr. A, who was indicted for occupational breach of trust after leaving a filler raw materials manufacturer and using related business materials to start a similar business. The case has been sent back to the Gwangju District Court (2024Do19305).

Supreme Court. Yonhap News

[Facts]

From 2014, Mr. A was responsible for managing related materials such as test reports, results of animal transplantation experiments, and order forms. When he resigned in January 2019, he did not return or destroy these materials as required by the company. Instead, he copied them onto his personal computer, established a competing company, developed similar products, and even filed patents.

[Key Issue]

The main issue was whether the materials Mr. A took without authorization constituted "key business assets."

[Lower Court Rulings]

The first trial and the appellate court ruled that the defendant had violated his "occupational duties" and that the materials in question were key business assets of Company A, finding Mr. A guilty.

[Supreme Court Ruling]

The Supreme Court reached a different conclusion. The court stated, "Each material could be obtained through ordinary channels without going through the victim company, and it is difficult to see that these materials could provide a competitive advantage." The court further explained, "Since the materials themselves do not constitute key business assets, the requirements for establishing the crime of occupational breach of trust are not met." The Supreme Court clarified, "For materials to be considered 'key business assets,' they do not necessarily have to be trade secrets, but they must not be unilaterally disclosed to the public, must have been created by the company with considerable time and expense, and must be capable of providing a competitive advantage."

Reporter: Ahn Jaemyung, The Law Times

※This article is based on content supplied by Law Times.