As South Korea prepares to implement its K-Discovery system, designed to assist patent infringement victims in gathering evidence, concerns are mounting over its potential misuse by foreign companies targeting domestic firms. Local companies, already beleaguered by indiscriminate patent lawsuits abroad, may risk exposing critical trade secrets while attempting to prove their innocence.
According to a report from the office of Rep. Choi Soo-jin of the People Power Party, South Korean tech giants like Samsung Electronics and SK Hynix have faced a total of 558 patent lawsuits from overseas in the past five years. Of these, 453 cases, or 81.2%, were directed at large corporations. Notably, in 2024, 80.4% of the 97 lawsuits filed against South Korean companies in the U.S. were initiated by non-practicing entities (NPEs), often referred to as patent trolls.
As domestic firms find themselves increasingly targeted by foreign NPEs in the global market, the introduction of the K-Discovery system could further constrict their operational space. This is because companies will be required to submit sensitive internal documents, including proprietary process technologies, cost structures, and customer information, to defend against infringement claims.
In jurisdictions like the U.S., where discovery procedures are already well-established, negative consequences have emerged. Recent patent lawsuits against Samsung revealed that the Chinese company Purple Vine IP funded these legal actions. A U.S. court acknowledged that despite a confidentiality order, the opposing party improperly obtained and misused confidential information, leading to the dismissal of the plaintiff's claims.
There are also concerns that the costs associated with patent litigation in South Korea could skyrocket. The discovery process may involve collecting millions of documents, conducting digital forensics, and engaging specialized legal teams, potentially increasing litigation expenses by several times or even tens of times compared to current levels.
This situation deepens the anxiety of domestic small and medium-sized enterprises (SMEs) in the materials, parts, and equipment sector, which typically have limited financial resources and patent portfolios. A representative from a domestic semiconductor equipment company expressed, "If advanced companies from Japan or the U.S. leverage this system to file lawsuits, our relatively weaker patent portfolios will leave us defenseless and likely to lose."
There is also a risk that SMEs could be exploited by foreign NPEs, which might fund lawsuits targeting large corporations using the SMEs' patents or names. If foreign NPEs initiate discovery requests through domestic SMEs, it could lead to the exposure of critical technologies and supply chain information, jeopardizing the entire domestic industrial ecosystem.
A survey by the Korea Intellectual Property Association (KINPA) revealed that 68% of responding companies opposed the introduction of K-Discovery. Among large corporations, 71% expressed opposition, while 63% of SMEs and mid-sized companies did the same. Notably, in the electronics and information communication sectors, where the risk of technology leakage is high, 92% of respondents were against the system.
Concerns about fairness have also been raised. Foreign companies or NPEs often have key documents located overseas, making it difficult for domestic firms to secure evidence even if they file counterclaims. In contrast, advanced technology companies like Samsung Electronics and SK Hynix, which have their headquarters and R&D infrastructure in South Korea, face the risk of exposing core technology and trade secrets through domestic court discovery procedures.
A KINPA official stated, "Unlike major countries like the U.S., South Korea lacks adequate legal protections for attorney-client privilege (ACP). If discovery is implemented, there is a significant risk that companies' core trade secrets will be exposed. If foreign NPEs use key materials obtained through domestic discovery in overseas lawsuits, it could lead to severe repercussions for the entire domestic technology sector."
* This article has been translated by AI.
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