Will SMEs Finally Get Justice for Technology Theft? Introduction of Korean-Style Discovery System and Realistic Damages

Ministry of SMEs and Startups Announces Measures to Eradicate Technology Theft from SMEs
Supporting Evidence Collection through Expert Fact-Finding System
Including Technology Development Costs in Damages Calculation

To minimize the damage suffered by small and medium enterprises (SMEs) that have had their technology unfairly stolen, the “Korean-style Discovery System” (evidence disclosure system) will be introduced. This system is a localized adaptation of the U.S. discovery system, which requires parties in a lawsuit to submit documents and evidence requested by the opposing party.

Additionally, the system will be revised to allow the costs incurred by victimized companies in developing the infringed technology to be recognized when calculating damages. This measure aims to address the difficulties SMEs face in proving evidence, which often puts them at a disadvantage in lawsuits, and to remedy the issue where, even if they win, the awarded damages are unreasonably low and thus ineffective.

Yongsoon Park, Director of Technology Innovation Policy at the Ministry of SMEs and Startups, is announcing measures to eradicate technology theft from small and medium enterprises to establish a fair market order at the Government Seoul Office Annex in Jongno-gu, Seoul on the 9th. Photo by Yonhap News Agency

On September 10, the Ministry of SMEs and Startups, together with the Fair Trade Commission, the Korean Intellectual Property Office, and other relevant ministries, announced the “Measures to Eradicate Technology Theft from SMEs and Establish a Fair Market Order” at the Industrial Competitiveness Enhancement Ministers’ Meeting. These measures were developed based on discussions among ministries following President Lee Jaemyung’s mention of technology theft eradication at the Cabinet meeting on August 12, as well as feedback from joint public-private consultations and field opinions.

The Ministry of SMEs and Startups focused on addressing the “information imbalance,” which victimized companies commonly cited as a major challenge. Accordingly, the ministry has established an expert fact-finding system, allowing court-appointed experts to investigate sites in lawsuits related to the infringement of technical data, patents, or trade secrets, with the results admissible as evidence. Additionally, a data preservation order system will be introduced to prevent the destruction of materials outside of court.

Furthermore, a new authority will be established to allow courts to compel administrative agencies such as the Ministry of SMEs and Startups and the Fair Trade Commission to submit administrative investigation materials in damages lawsuits. If these agencies refuse, obstruct, or avoid submission, a fine of up to 50 million won may be imposed.

Administrative investigations will also be strengthened at each stage of a case. At the reporting stage, anyone-not just the victimized company-will be able to anonymously report incidents. During the investigation stage, the Ministry of SMEs and Startups will be able to initiate investigations ex officio without a separate complaint. Simultaneously, the Fair Trade Commission will intensify its existing ex officio investigations, focusing on industries where technology theft is frequent, to detect and sanction violations. At the action stage, the current administrative investigation by the Ministry of SMEs and Startups, which only recommends corrective action, will be upgraded to allow for corrective orders, and in cases of serious violations, fines may also be imposed.

To address the issue of damages being too low compared to the scale of harm, the criteria for calculating damages will be made more realistic. According to an analysis by the Ministry of SMEs and Startups of court rulings related to technology theft, the average amount awarded in damages lawsuits was 140 million won, only 17.5% of the average amount claimed by victimized companies (800 million won).

The key point is that, to more broadly assess the scale of damage, costs incurred in developing the infringed technology will be recognized as damages in lawsuits. If it is difficult to calculate these costs, information on R&D expenses from similar government research and development projects may be used. To this end, a legal basis will be established to allow courts, rather than relying solely on judicial discretion, to commission qualified experts or professional institutions to assess damages.

At the same time, efforts will be made to raise public awareness of technology theft to prevent future harm. The number of joint technology protection briefings by ministries such as the Ministry of SMEs and Startups and the Fair Trade Commission will be increased to five per year, and a new “on-site technology protection education” program will be introduced to strengthen policy outreach. In addition, the number of technology escrow cases, currently at around 17,000, will be increased to 30,000 by 2030 so that SMEs can use them as evidence in disputes.

The government will also streamline the currently fragmented response system for technology theft across multiple ministries. A new “Pan-Governmental Response Team for Eradicating Technology Theft” will be established, bringing together relevant ministries to discuss policy directions for SME technology protection. A “SME Technology Dispute Help Desk” will also be set up to connect SMEs, who may not know which ministry to contact in the event of damage, with the appropriate department.

At the same time, the government will expand the technology police organizations and personnel at the Korean Intellectual Property Office and the National Police Agency. In cases where additional illegal acts are suspected during administrative investigations of technology theft, the case will be immediately transferred to investigative agencies, thereby enhancing the investigative system.

Minister Hansung Sook of the Ministry of SMEs and Startups stated, “The ultimate goal of these measures to eradicate technology theft from SMEs is to realize a fair and trustworthy economic environment based on fairness and trust. We will meticulously manage these policies through inter-ministerial cooperation to ensure they are effectively implemented in the field.”