Two and Half Years in Prison for Technology Theft
A former employee of a Korean technology firm has been found guilty of stealing silver nanowire manufacturing technology and transferring it to a foreign company.
The Suwon District Appellate Court on Sept. 5 found a man surnamed Choi and two co-workers guilty of violating the Act on Prevention of Divulgence and Protection of Industrial Technology (“Protection of Industrial Technology Act”) and the Criminal Act, reversing a lower court’s acquittal judgement.
Choi was sentenced to a prison term of two years and six months, with a stay of execution for three years, and two-hundred hours of community service by the appellate court. Two of his co-workers were sentenced to a prison term of one year in jail, with a stay of execution for two years, and 80 hours of community service work. The company for whom they worked, a Korean subsidiary of a U.S. company, C3nano, was also found guilty and sentenced to pay a fine of 30 million won (about US$25,100).
Choi was found to have stolen state of the art manufacturing technology while working at Nanopyxis, a Korean silver nanowire producer. Later he founded his own firm which used the stolen technology and then transferred the stolen technology to C3nano, a U.S. firm which had acquired full ownership of his company. Choi was arrested and indicted in 2017 with several others on charges of leaking industrial technology. The Seongnam District Court found them guilty of causing damage to Nanopyxis but handed down “not guilty” verdicts on charges of violating the Protection of Industrial Technology Act and Unfair Competition Prevention Act. The appeals court overturned the lower court’s non-guilty verdict on the Protection of Industrial Technology Act, and also held that Choi was guilty of Occupational Breach of Trust under the Criminal Act. The court specifically found that the technology that was stolen is “state-of-the-art technology.”
Nanopyxis, the victim in this case, is a technology startup which owns world-leading silver nanowire technology. Silver nanowire is a next-generation conductive material with precision down to the nanometer level. Given that it is a next-generation material used in display panels, it is considered important as a replacement for conventional indium tin oxide (ITO) film. Since China produces over 80 percent of indium, a key raw material for ITO, while the original ITO technology is highly reliant on Japanese companies, technology-driven companies such as Nanopyxis have made efforts to develop alternative products to replace ITO. Particularly, Nanopyxis’s silver nanowire-based solutions allow electronic signals to pass even when the panel is bent or folded, making it highly suitable for next-generation displays such as foldable smartphones and rollable TVs.
"Our silver nanowire manufacturing technology is the result of investing more than 10 billion won in R&D over five years. It is very fortunate that the court ruling reconfirmed that our intellectual property is a national cutting-edge industrial technology that should be protected,” remarked Lee Yong-sang, CEO of Nanopyxis. “We are dedicated to further developing our production technology, thus elevating our nation’s competitiveness in the area of display material technologies and in producing related parts domestically.”
Regarding the appellate court decision, an intellectual property law expert commented, “The tech leakage from Nanopyxis is a case where high-tech technology that can replace foreign-made products was leaked out of the country, causing not only damage to a single corporation, but also massive national losses. The court’s ruling of this case as a violation of the Protection of Industrial Technology Act indicates that the protection of technologies developed and owned by domestic small and medium-sized firms is becoming stronger.”
Recently, the government has promulgated policies to tighten regulations to curb the infringement of industrial technologies. The related law has been amended to add punitive damage measures so that anyone who leaks the nation’s key technologies can be fined up to three times the actual damages caused.
The damage to Nanopyxis from this technology leak has been estimated to be about 10 billion won. Concurrent civil proceedings are underway.
Established in 2010 in Jeonju, North Jeolla Province, Nanopyxis manufactures silver nanowires and silver nanowire ink products, which are considered a promising replacement for indium tin oxide (ITO), which has limited reserves. These products can be used in a variety of applications such as foldable displays, flexible solar panels and batteries.