Strategies for Responding to Intellectual Property Trade Secret Infringement Disputes <Public>

Among those reading this article, some of you may be facing a police investigation after being reported for trade secret infringement of intellectual property.

'Trade secret infringement' is defined as an unlawful act under the Unfair Competition Prevention Act, and if you are found to have leaked or disseminated confidential information that could determine a company's survival, you may face both criminal punishment and liability for damages.

The amount of damages liability can also be extremely high depending on the case.

Therefore, if you have received a criminal complaint regarding this matter, you must promptly review the applicable legal principles and establish a response strategy.

Since you must review whether an actual legal violation occurred and prepare an initial position for the police investigation based on this review in order to obtain a favorable outcome, it is advantageous to receive assistance from legal counsel specializing in intellectual property.

In that regard, today we will explain the potential penalties for involvement in this matter and how to minimize your legal liability.

Attorneys at LAWFIRM LEAP, who have extensive experience at major law firms, as former police officers, and in handling intellectual property cases, will share practical know-how that can help at the investigation stage, so please take about 3 minutes to focus on reading this article.

01What Constitutes Intellectual Property Trade Secret Infringement?

Under the Unfair Competition Prevention Act, 'trade secret infringement' refers to acquiring confidential information from another person through wrongful means such as threats, deception, or theft, or using or disclosing information acquired in such a manner.

In addition, this matter also applies where a person, despite having a contractual duty to keep confidential information secret, discloses such information to obtain wrongful profit or to cause harm to the other party.

Act on Prevention of Unfair Competition and Protection of Trade Secrets, Article 11 (Liability for Damages from Trade Secret Infringement) A person who, intentionally or negligently, infringes upon the business interests of a holder of a 'trade secret' through 'trade secret infringement' and thereby causes damage shall be liable to compensate for such damage.

If such infringement is legally established, the offender may face imprisonment of up to 10 years or a fine of up to KRW 500 million.

If a fine is imposed, and 10 times the amount wrongfully obtained exceeds KRW 500 million, a fine of between 2 and 10 times the amount of the property gain may be imposed instead, so the financial loss can also be substantial.

Therefore, if you have been reported in connection with this matter, you must promptly seek a response strategy to reduce both the applicable sentencing standards and the substantial financial liability.

You should demonstrate that the trade secret infringement was not intentional or negligent and appeal for leniency, and if the legal requirements are actually not met, you should also seek ways to prove that you are cleared of suspicion.

Therefore, you should receive assistance from an expert who can analyze the contents of the complaint according to your specific case and find an appropriate response strategy.

Please keep in mind that in matters involving the Unfair Competition Prevention Act and 'trade secret infringement,' it is advantageous to have an intellectual property attorney prepare a response based on specialized knowledge and litigation experience.

02What Is Required to Establish Legal Liability for Intellectual Property Trade Secret Infringement?

You must properly analyze whether the requirements for the offense are met in this matter and decide whether to admit to the allegations or argue that you are cleared of suspicion.

A trade secret must possess both economic value and be subject to confidentiality management, and it must be information that is not publicly known and can be proven to have been consistently managed as confidential within the company.

The problem is that, unlike other areas of intellectual property, there is no patent or separate registration system for trade secrets, so if you have been reported for this matter, you must argue and prove that the company had no defined scope of rights or that the information does not constitute a trade secret.

Also, even if you are suspected of having removed materials, if the information in question does not constitute a trade secret, you will not be punished for this offense and can argue that you are cleared of suspicion.

Conversely, if the company has presented evidence that the information was maintained and managed as confidential and that you knew this yet disclosed it, this meets the criteria for punishment, so admitting to the allegations and appealing for leniency may be the strategic approach.

Therefore, we urge you to work with an expert attorney who can review this matter and reach an accurate legal determination to find a resolution.

03How to Minimize Damages Liability for Trade Secret Infringement

If the allegations are found to be true in this matter, you must not only defend against sentencing but also find ways to reduce your liability for damages.

By promptly acknowledging the offense and showing remorse during the police or prosecution investigation, you should quickly submit sentencing materials to defend against a harsh sentence and reduce the amount of damages.

In many trade secret infringement cases, the goal is often to obtain damages rather than criminal punishment, so if you defend against sentencing as much as possible and reduce your legal liability, your liability for damages will also decrease, allowing you to limit financial loss.

To do this, you should gather evidence showing that the economic value of the trade secret was low, that the loss suffered by the other party from the disclosure was not significant, and that you gained little to no benefit from the act.

It is also important to use these facts to minimize legal liability, defend against a fine, and calculate and pay an appropriate settlement amount to reach an agreement.

However, negotiating a settlement in this type of case is not as easy as it may seem, and to obtain a statement from the victim expressing no desire for punishment—which is favorable at trial—you should work with legal counsel who has extensive experience handling similar cases.

We recommend that you receive legal assistance capable of comprehensively responding to both criminal punishment and civil damages litigation, and approach the matter strategically from the initial response stage.

Our attorneys at LAWFIRM LEAP have handled a wide range of legal disputes while working at Kim & Chang and Bae, Kim & Lee, two of Korea's largest law firms, and, as former police officers, have handled numerous critical initial response processes in various matters, giving them deep, practical expertise.

Therefore, if you work with LAWFIRM LEAP, an attorney with experience at a major law firm and in the police force will personally support you from the beginning to the end of the case, actively substantiating the client's position and strategically handling evidence, whether favorable or unfavorable, to secure a favorable outcome.

At LEAP, we understand better than anyone the situation you are in and the urgency you feel. We promise to mobilize all of our knowledge and expertise to help achieve the best possible outcome. If you have not found a solution based on the information provided today, please be sure to contact LEAP before undergoing the police investigation.

We will thoroughly prepare a strategy tailored to your situation, starting with the investigative agency's initial response. Thank you for reading this lengthy article.