Concerns Persist Over Technology Protection Despite Passage of K-Discovery Law

As South Korea prepares to implement its K-Discovery system, there is a growing call for additional safeguards to protect core technologies and trade secrets of domestic companies. Key measures being discussed include the establishment of practical guidelines for attorney-client privilege (ACP), transparency regarding stakeholders behind lawsuits, and strict limitations on the use of investigation data for purposes other than intended.

According to industry sources, the Cooperation Law Amendment, which passed the National Assembly in January, is set to take effect in February 2028. While the law aims to support companies victimized by technology theft in securing evidence, there are significant concerns that information obtained during investigations could be leaked to foreign competitors, making it difficult to recover damages through post-factum sanctions.

The critical issue is whether the law can ensure its effectiveness while preventing the exposure of corporate secrets. In industries like semiconductors and telecommunications, where global competition is fierce, the potential damage from information leaks could be extensive. Therefore, experts stress the need for a well-structured protection system before the law is enacted.

A business representative stated, "If the discovery system is introduced in patent litigation, core technologies and trade secrets could be revealed to opposing parties, raising concerns that foreign competitors or non-practicing entities (NPEs) might exploit this information for technology theft or litigation pressure. In the context of intense global technological competition, it is essential to engage in thorough discussions to ensure that our companies' technological protection and innovation activities are not stifled."

One proposed solution is to delay the implementation of the discovery process until the ACP system is firmly established at the practical level. The ACP is designed to protect confidential communications and litigation preparation materials between attorneys and clients. Concerns have been raised that if evidence collection procedures are implemented without sufficient judicial precedents regarding the scope of protection and application criteria in South Korea, it could lead to confusion surrounding companies' rights to defend themselves.

There are also discussions about revealing the actual stakeholders behind lawsuits. This is in response to fears that foreign NPEs or litigation finance entities could misuse the discovery process to access critical technology information from domestic companies. Advocates argue for the need to disclose funders and actual rights holders to ensure transparency regarding the interests behind lawsuits.

Additionally, mechanisms to restrict the overseas transfer and misuse of investigation data are deemed necessary. This would involve controlling the provision and reuse of technical information obtained in domestic litigation to prevent it from being utilized in lawsuits in third countries or for subsequent product development, along with establishing effective sanctions for violations.

The Cooperation Law includes provisions for confidentiality obligations and penalties for violations. However, once core technologies are leaked, it may be challenging for companies to recover damages solely through compensation or criminal penalties. Therefore, there is a growing consensus on the need to specify preventive measures such as managing access records and ensuring the return or destruction of sensitive materials.

Kwack Jae-woo, an attorney at the law firm Kim & Chang, emphasized, "From the perspective of trade secret protection, it is crucial to implement procedural safeguards and manage the operation of the system to prevent the leakage or misuse of core information. Companies should also strengthen practical protective measures by establishing and refining document management systems that can utilize the ACP to prevent the leakage and misuse of core technology information."