The Supreme Court has ruled that if an individual received money in exchange for leaking trade secrets, that payment can be considered criminal proceeds, even if it was received before the leak occurred.
On November 4, legal sources reported that the Supreme Court's third division, led by Justice Lee Suk-yeon, overturned a lower court's decision that did not impose forfeiture on an individual identified as A, who was charged under the Unfair Competition Prevention Act for leaking trade secrets and breach of trust. The case has been sent back to the Seoul High Court.
A, who worked at LG Chem, resigned from the company in January 2024 and was accused of leaking production technology related to polyolefin elastomers (POE) to B, an associate at the Chinese petrochemical company Liaoning Dingzide.
B had signed a technology transfer agreement worth $6 million with Liaoning Dingzide in October 2023, and it was found that A disclosed the trade secrets knowing they would be transferred to the Chinese company.
According to prosecutors, B was introduced to A, who was about to resign, about a month before the contract was signed.
Subsequently, A held meetings with representatives from Liaoning Dingzide at B's request, answering questions and providing materials related to the trade secrets.
A retained the trade secret materials that LG Chem demanded be deleted or returned upon resigning on January 12, 2024, and sent photo files of the trade secret materials to B on January 30 and February 28.
From October 2023 to February 2024, A received approximately 45 million won, including $10,188, in ten payments under the guise of salary.
On November 4, legal sources reported that the Supreme Court's third division, led by Justice Lee Suk-yeon, overturned a lower court's decision that did not impose forfeiture on an individual identified as A, who was charged under the Unfair Competition Prevention Act for leaking trade secrets and breach of trust. The case has been sent back to the Seoul High Court.
A, who worked at LG Chem, resigned from the company in January 2024 and was accused of leaking production technology related to polyolefin elastomers (POE) to B, an associate at the Chinese petrochemical company Liaoning Dingzide.
B had signed a technology transfer agreement worth $6 million with Liaoning Dingzide in October 2023, and it was found that A disclosed the trade secrets knowing they would be transferred to the Chinese company.
According to prosecutors, B was introduced to A, who was about to resign, about a month before the contract was signed.
Subsequently, A held meetings with representatives from Liaoning Dingzide at B's request, answering questions and providing materials related to the trade secrets.
A retained the trade secret materials that LG Chem demanded be deleted or returned upon resigning on January 12, 2024, and sent photo files of the trade secret materials to B on January 30 and February 28.
From October 2023 to February 2024, A received approximately 45 million won, including $10,188, in ten payments under the guise of salary.
The key issue in this case was whether this money constituted criminal proceeds, defined as property obtained as a reward for criminal activity.
The first trial found that the money was indeed criminal proceeds and sentenced A to three years in prison along with a forfeiture of 45 million won. However, the second trial upheld the prison sentence but did not impose forfeiture.
The second trial court reasoned that A received the payments before leaking the trade secrets. Additionally, since A participated in meetings with the Chinese company and answered questions, it was difficult to classify the payments as criminal proceeds.
The second trial court stated, "Even if some of the money A received included compensation for the crime, there is no data to determine the proportion of that amount."
However, the Supreme Court disagreed, asserting that the money A received should be classified as criminal proceeds.
The Supreme Court stated, "Even if the compensation for criminal acts includes some non-criminal actions, if those actions are merely ancillary or supportive to the criminal act, all money or goods received should be subject to forfeiture as property obtained from criminal acts."
It emphasized that A's attendance at meetings and answering questions were merely ancillary actions to the leak of trade secrets.
Regarding the timing of the payments, the Supreme Court ruled, "Whether the money or goods received are classified as property obtained from criminal acts depends on whether they were paid as compensation for the crime, and the mere fact that the payment occurred before or after the crime does not easily negate their nature as compensation for criminal acts."
The court further stressed the need to strictly punish trade secret leaks and confiscate criminal proceeds to eliminate the economic incentives for such criminal behavior, stating, "To maintain the international competitiveness of domestic industries, it is essential to impose strict penalties for trade secret leaks and to confiscate criminal proceeds to fundamentally deprive the economic benefits that incentivize criminal acts."
* This article has been translated by AI.
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