How to Clear Charges of Trade Secret Infringement Under the Unfair Competition Prevention Act

This is LAWFIRM LEAP, where three attorneys with backgrounds at major law firms and the police work together as a team on each case.

Some of you reading this may be facing prosecution under the Unfair Competition Prevention Act after being accused of trade secret infringement.

A typical example of a violation of this law is leaking a company's internal confidential materials.

Cases are common where someone who worked in an industry handling highly sensitive information moves to a company in the same industry, or is recruited by one, and is then accused of leaking information beneficial to a competitor, resulting in a trade secret infringement lawsuit.

And in such cases, if the charge is established, you may face criminal punishment as well as civil liability for damages, so you need to obtain a legal assessment of your actual conduct before deciding how to respond.

With that in mind, today we would like to explain how to minimize legal liability if you are facing this type of lawsuit, in order to both defend against sentencing and avoid financial loss.

This account comes directly from professionals with extensive experience handling various intellectual property matters, so it should be of real help in resolving your case.

01If You Have Been Sued for a Violation of the Unfair Competition Prevention Act

The Unfair Competition Prevention and Trade Secret Protection Act provides that, where corporate confidential information is disclosed or disseminated, a person who intentionally engages in conduct that infringes upon another's business interests and causes damage is liable to compensate for such damage.

Unfair Competition Prevention and Trade Secret Protection Act, Article 5 (Liability for Damages for Unfair Competition Acts, etc.) A person who, by an act of unfair competition committed intentionally or negligently (in the case of a violation of Article 3-2, Paragraph 1 or 2, this refers only to an act of unfair competition committed intentionally), infringes upon another's business interests and causes damage shall be liable to compensate for such damage.

And in this type of case, criminal liability may be imposed in addition to liability for damages.

You may face imprisonment of up to 10 years or a fine of up to KRW 500 million, and in cases where a fine is imposed, if 10 times the amount obtained exceeds KRW 500 million, a fine of between 2 and 10 times the amount of the pecuniary gain may be imposed.

Therefore, you must first legally determine whether the elements of the offense under the Unfair Competition Prevention Act are met, decide on your position, and then respond to the complaint.

For the offense of trade secret infringement, factors to consider include whether there was intent or negligence, whether the confidential information was obtained through threats or deception, and whether the person leaked the information and gained financial benefit from it.

And if these key issues are found to apply, the charge cannot be avoided, so reaching a settlement with the other party through an experienced attorney before criminal punishment is imposed can be an advantageous way to resolve the case.

In addition, depending on the circumstances, you should review what charges apply and what resolution the other party is seeking, and take appropriate legal action accordingly. We recommend proceeding with an intellectual property specialist experienced in handling this type of case.

02How to Defend Against a Lawsuit and Reduce Damages in Unfair Competition Prevention Act Cases

In many of these cases, in fact, the other party is often less interested in obtaining a criminal conviction than in filing a civil claim for damages in order to secure financial compensation.

Therefore, if the charge truly cannot be avoided, it is advisable to pay damages and reach a settlement before criminal proceedings begin, in order to obtain leniency.

At this stage, the settlement amount may be set based on the amount of civil damages, but the amount can be reduced by proving factors such as: the trade secret did not have significant economic value; the company failed to manage it with proper security; no benefit was gained from the disclosure of the confidential information; and the disclosure was not made with the intent to hand it over to another company.

Reaching a settlement in advance, before civil litigation proceeds, can be advantageous in terms of both time and cost.

However, even if there are advantageous factors, they must ultimately be reflected in a legally binding settlement agreement through negotiation, so you should seek the assistance of legal counsel experienced in handling numerous Unfair Competition Prevention Act cases.

In particular, since the other party in this type of case is typically a corporation, unlike ordinary cases, settlement negotiations can be complex, and given the large amounts involved, it is advantageous to receive help from a professional experienced in company-to-company settlements rather than individual settlements.

Therefore, before the investigation stage begins, you should accurately understand the situation and discuss the matter with a professional who understands the investigative process well enough to respond with consistent, favorable statements and evidence.

The attorneys of LAWFIRM LEAP have handled a wide range of legal disputes while working at Kim & Chang and Bae, Kim & Lee, Korea's largest law firms.

As former police officers with extensive experience in the investigative process, with substantial know-how in initial police response, our attorneys are well equipped to develop strategy at the investigation stage and handle the trial process without error in this type of case.

With LEAP's legal representatives, who combine experience at major law firms with police backgrounds, you will be able to quickly find ways to defend against sentencing and minimize financial loss in disputes with companies or in matters such as trade secret infringement.

If you are looking for professionals who can comprehensively handle both criminal and civil matters while presenting your position clearly, please consider working with us at LEAP.

We at LEAP understand better than anyone the situation you are in and how urgent it feels, and we will mobilize all our knowledge and experience to help achieve the best possible outcome.

Thank you for reading this long article.