The world’s second-largest LED manufacturer, Seoul Semiconductor Co. Ltd (Seoul Semi), announced that the Suwon District Court in South Korea has ruled against Everlight Electronics Co., Ltd. (Everlight), a leading Taiwanese LED manufacturing company, finding that Everlight had misappropriated Seoul Semi’s trade secrets and handing down the maximum fine allowed under Korean law. This case was brought by prosecutors under South Korea’s Industrial Technology Protection Act and the Trade Secret Protection Act. This conviction is noteworthy in that it is reportedly the first time that the maximum criminal fine has been assessed against a foreign company.

The district court’s decision comes two years after the alleged solicitation and hiring of three Seoul Semi employees by Everlight in September of 2018, including one managing director and two subordinates. At least one conspirator reportedly used a fake name while subsequently working at Everlight. The three individuals were co-defendants in the case indicted for the same violations of the Acts. They were found guilty and each received 1-year prison sentences (temporarily suspended).

According to the prosecutors, the three conspirators possessed intimate knowledge of Seoul Semi’s WICOP technology for automotive LED lighting. WICOP was introduced in 2012 by Seoul Semi as the world’s first package-less LED—enabling LED chips to be directly attached to printed circuit boards without other conventional packaging materials, lead frames, or bonding wires—in whose research and development Seoul Semi has reportedly invested over 560 billion Korean won (US$ 472 million).

TIP: Companies should take special care when recruiting from major competitors and be wary of further heightened risk when the candidates have had exposure to potentially sensitive or cutting edge information. For cross-border hiring, companies should also be mindful of the laws and criminal statutes in the former employer’s locale and their potential extraterritorial reach.