Korea’s government, National Assembly and courts are pushing to raise the level of punishments for technology leakage as key personnel of companies involved in Korea’s national high-tech strategic industries are frequently leaking out along with their technology. National high-tech strategic industries include semiconductors, displays, secondary batteries, and biotechnology.
The Korean Ministry of Trade, Industry and Energy will implement measures to strengthen specialized human resources such as strategic technology holders to prevent technology leaks, according to industry sources on March 25. This is a follow-up to the High-Tech Strategic Industries Act, which designates key experts in the national high-tech strategic industries as specialized personnel set by law to systematically manage them.
Specialized personnel will be subject to the rule of signing contracts to prevent leakage of secrets and restrict their moves to other companies in the same industry in overseas countries with Korean companies. To prevent technology leakage, Korean companies will be allowed to receive immigration information on their technological experts and engineers.
Overseas leakage of Korea’s key national technologies has been on the uptick year by year. From 14 cases in 2019, the number of detected cases increased to 17 in 2020, 22 in 2021, 20 in 2022, and 23 in 2023. Of the 23 cases of technology leakage detected in 2023, more than half (15) came from the semiconductor sector. The display and automotive sectors had three cases each, and the biotech and electrical and electronics sectors one case each.
Technology theft methods are also becoming more sophisticated and cleverer. In addition to stealing specialized workers, foreign companies are also hiring technical personnel to acquire technology or taking over Korean companies and then leaking their technology abroad. While industries are increasing compensations to retain key personnel, such as raising salaries and incentives, it is necessary to toughen penalties for technology leaks, many experts point out.
Korea’s National Assembly is pushing for an amendment to the Industrial Technology Protection Act to raise the upper limit of fines for overseas leakage crimes from the current 1.5 billion won to 6.5 billion won. The highest fine of 6.5 billion won is comparable to US$5 million. The U.S. criminalizes technology thefts as de facto espionage. Under the Economic Espionage Act (EEA) and the Defend Trade Secrets Act (DTSA), economic espionage is punishable by up to 15 years in prison and a fine of up to US$5 million.
The bill also includes harsher penalties for technology leak brokers. The cap on punitive damages for technology theft will be increased from three to five times, and elements for penalties will be expanded from purposeful technology leaks to willful ones. Currently, even if a person intentionally passes it overseas, he or she must prove that it was intended for use in a foreign country, but the amendment will include willfulness.
Courts will also increase sentencing guidelines for thefts of national critical technology. Currently, the statutory penalty for leaking key national technology is at least three years in prison and up to 15 years for leaking such technology abroad. However, the sentencing guidelines range from one to three and a half years, which is lower than the statutory penalty, and have been criticized as a slap on the wrist. The Supreme Court’s Sentencing Commission is expected to finalize the sentencing guidelines in March to increase the maximum sentence to 18 years in prison for the crimes of leaking critical national technology.