[Patent Talk] The Unfair Competition Prevention Act and Patent Protection

This column by patent attorney Taeyoung Lee of our firm was published in Etoday on April 27, 2021. It discusses the amendment to the Unfair Competition Prevention Act concerning technology misappropriation.

[Patent Talk] The Unfair Competition Prevention Act and Patent Protection

Up to treble damages for idea misappropriation... Amended Act effective on the 21st

The amended Unfair Competition Prevention and Trade Secret Protection Act (the Unfair Competition Prevention Act), which provides for damages of up to three times the actual loss where ideas submitted to contests or the like are used without authorization, became effective on the 21st. Specifically, a new item (cha) was added to the definitions in Article 2(1) of the Act to make clear that misappropriating technical or business ideas of economic value in the course of business negotiations or transactions constitutes an act of unfair competition, and Article 14-2(6) was amended to allow damages of up to three times the loss.

This amendment aims to prevent technology misappropriation, such as the misappropriation of ideas submitted to corporate idea contests and of technical materials provided as a condition of supply to a company. Until now, corrective recommendations against unfair competition were of limited effect because there were no particular sanctions, such as administrative fines, for failure to comply. The amended Act strengthens the effectiveness of corrective recommendations against technology misappropriation and is expected to greatly enhance its deterrent effect.

Such technology misappropriation typically harms individuals and SMEs. Technical details are included in technology briefings for business proposals or in proposals for supply contracts, but individuals and SMEs, being in the weaker position, often find it difficult to conclude non-disclosure agreements (NDAs). The amended Act is therefore a welcome provision for weaker parties who find it hard to obtain NDAs.

It should be noted, however, that the amended Act merely clarifies that technology misappropriation constitutes unfair competition and allows damages of up to three times the loss, thus providing for punitive liability; it does not create a new legal liability that did not exist before. Also, the amended Act does not ease the burden of proof or ...

(Please click the link below to read the full column.)

LNB IP Law Firm