The latest amendment to the Unfair Competition Prevention and Trade Secret Protection Act (UCPA) took effect on 18 July 2018 and introduced a new provision prohibiting unfair competition in connection with 'idea theft' – the unfair use of the ideas of another that were acquired as part of a business negotiation or transaction. The purpose of the amendment is to provide additional protection for creative business ideas that may not be as easy to protect as typical intellectual property such as patents, copyright or trademarks.
The amendment contemplates situations where a smaller business or individual with a new business idea enters into negotiations with a larger business to commercialise the idea, and where they may be required to disclose the idea to the larger business, thus risking losing control of the idea. The potential unfair uses covered by this provision include the uses of the ideas of another for one's own business or for a third party's business, as well as providing such information to a third party for their use. However, there is no violation if the person who is accused of obtaining the idea had previous knowledge of the idea from another source, or if the idea was already widely known in the relevant business field.
Violation of this new provision can result in civil or administrative liability, but not in criminal liability or penalties for now. Under this amendment, the Korean Intellectual Property Office (KIPO) may issue violators with a corrective recommendation to cease the violation (ie, idea theft) within a specified period not exceeding 30 days. Pursuant to this amendment, the enforcement decree to the UCPA was also amended effective 18 September 2018 and now stipulates the details of the KIPO's investigation powers and processes, including with regard to document/material production, interrogation, site visits and the handling of produced materials. The KIPO has already expanded its scope of IP enforcement activities to include investigations into idea theft.
The new provision is primarily designed to help smaller companies who are often required to disclose their business ideas when negotiating with other (often larger) companies for purposes of negotiating some form of business collaboration, and who may find it difficult to adequately protect such ideas under existing intellectual property, trade secrets or contract law. The government clearly hopes that these additional avenues for enforcement by the KIPO will improve protection for the creative ideas of smaller Korean companies and thereby spur greater innovation in the Korean economy. On the other hand, larger corporations are well advised to use caution when receiving business ideas or proposals from smaller businesses during the course of negotiations or business discussions, to avoid unnecessary challenges from smaller businesses in reliance upon the new amendment.
For further information on this topic please contact Duck Soon Chang, Mikyung Choe or Injae Lee at Kim & Chang by telephone (+82 2 3703 1114) or email (email@example.com, firstname.lastname@example.org or email@example.com). The Kim & Chang website can be accessed at www.kimchang.com.
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