The 『Defense Industry Technology Protection Act』 (the “Act”) was promulgated on December 29, 2015 and is set to go into effect on June 30, 2016.
Although there have been a number of Korean statutes prior to the promulgation of the Act that sought to safeguard defense industry technologies, including the 『Act on Prevention of Divulgence and Protection of Industrial Technology』, the 『Foreign Trade Act』, the 『Defense Acquisition Program Act』, the 『Military Secret Protection Act』 and the 『Unfair Competition Prevention and Trade Secret Protection Act』, the Act was enacted to address the widespread concern that the existing statutes mentioned above only provide a limited protection for defense industry technologies.
In accordance with the Act, the Defense Industry Technology Protection Committee (the “Committee”) will be newly established under the Minister of National Defense (Article 6 of the Act) and the Commissioner of the Defense Acquisition Program Administration (DAPA) will designate and notify a defense industry technology after deliberation with the Committee (Articles 2 and 7 of the Act). Moreover, an institution which possesses a technology that has been designated and notified as one of the defense industry technologies or carries out research and development projects relating to such technology (the National Defense and Science Institute, DAPA, each branch of the military, the Defense Agency for Technology and Quality, defense contractors and professional research organizations, other companies, research institutions, specialized agencies, colleges and universities, etc.) is now required to establish and operate a protection system for the defense industry technologies, and the Commissioner of DAPA may issue either a recommendation for improvement or an corrective order with respect to such protection system (Article 13 of the Act). The Act also imposes a strong punishment (with the maximum punishment of imprisonment of not more than 15 years or fines less than KRW 150 million) for any illegal leakage or divulgence of a defense industry technology (Articles 21 through 23 of the Act).
The protection of defense industry technologies carries important significance as a prerequisite for ensuring the national security and making contributions as a responsible member of the international community to maintain world peace. On the other hand, considering that the defense industry has established itself as one of the most important industries in Korea as evidenced by the amount of defense-related exports totaling around KRW 3.5 trillion in 2013, the promotion of defense-related exports must also be taken into account when discussing the benefit of the law regarding the protection of defense industry technologies. With this in mind, there remain some questions to be answered concerning the implementation of the Act, including the following: (i) how the Act would systematically organize and define the scope of a defense industry technology and operate as a means to regulate and control in practice; (ii) whether the Act can work as a potential obstacle that discourages defense-related exports by overly emphasizing on the protection of the defense industry technologies; (iii) whether there is any risk of putting excess pressure on companies during factfinding surveys under the Act; (iv) to what extent and how much the government would provide assistance to those institutions that lack the capability and capacity to establish and operate the protection system for the defense industry technologies under the Act; and ultimately, (v) how the tension and conflicting interests between the promotion of the defense-related exports and the protection of the defense industry technologies would be reasonably reconciled.
With the new enactment of the legislation for the protection of the defense industry technologies, it would be necessary for relevant companies and organizations to monitor its compliance with the Act by internally examining and identifying any areas of improvements and supplementations. Furthermore, they also need to prepare for the enforcement of the Act by paying close attention to subsequent enactment of any enforcement decree, enforcement regulations and other notifications relating to the Act.