Kyungdong Navien has been caught by fair trade authorities for providing a competitor with technical drawings based on temperature sensor designs from a small subcontractor.
The Fair Trade Commission announced on August 30 that it has issued a corrective order and imposed a fine of 500 million won (approximately $450,000) on Kyungdong Navien for violating subcontracting laws by misusing technical data.
According to the commission, Kyungdong Navien sought to reduce manufacturing costs for heating equipment by diversifying its temperature sensor suppliers. The temperature sensor measures the internal temperature of boilers.
In March 2024, Kyungdong Navien created its own drawings based on three temperature sensor designs submitted by an existing supplier in 2017. The commission's investigation revealed that the two sets of drawings were not only visually similar but also had identical or very similar dimensions and specifications.
Kyungdong Navien did not consult or obtain consent from the existing supplier during the process of creating its own drawings. Subsequently, in April 2024, the company provided these drawings to a competitor of the supplier.
The commission determined that Kyungdong Navien's actions of unlawfully using the supplier's technical data and providing it to a competitor violated the prohibition against the misuse of technical data under subcontracting laws.
Additionally, violations of the technical data request procedures and document retention obligations were also uncovered. From March 2018 to August 2019, Kyungdong Navien requested and received 12 management plans from four suppliers without providing written requests that specified the purpose, rights, and compensation related to the technical data. Furthermore, between February 2018 and August 2019, the company requested 10 management plans from five suppliers but failed to retain the written requests provided.
This incident was uncovered during a proactive investigation by the Fair Trade Commission into the home appliance sector. A commission official stated, "We will continue to monitor the improper use of small businesses' technical data for the purpose of reducing purchase prices or changing suppliers, and we will closely examine any acts of technology theft targeting small enterprises to ensure their technical data is not unfairly exploited for cost reduction or supplier changes."
* This article has been translated by AI.
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