Samsung case puts IP protection at top of South Korea’s priority list

Felix Kim

Technology industry leaders and government officials in South Korea are mobilizing to counter persistent efforts to steal the country’s intellectual property (IP).

Shockwaves rumbled through Seoul in December 2018 when the chief executive of a Samsung supplier and eight of his employees were charged with selling Samsung’s organic light-emitting diode (OLED) technology to Chinese agents for U.S. $13.8 million, Bloomberg reported. Samsung developed OLED technology for use in smartphones with foldable screens. Samsung introduced its first OLED panels in 2014 with the Galaxy Note Edge. Since then, it has introduced another version that has been used in its S and Note series, pictured.

Now, as Samsung prepares to roll out a folding smartphone, Chinese competitors are releasing their own version, which employs strikingly similar OLED technology.

The national discussion on protecting IP has defense implications because South Korea is upgrading its defense technology with innovations that include new unmanned aerial vehicles and artificial intelligence-based weapons systems.

“South Korea is a technology-driven society where both the public and private sectors have aggressively embraced IT,” Kim Seung-joo, a professor at the Graduate School of Information Security at Korea University in Seoul, told FORUM. “But such advancement has coincided with deep-running security problems the country has so far failed to address.”

These risks threaten to increase as the South Korean government pushes ahead with the so-called Fourth Industrial Revolution, Kim emphasized. The same advanced communications networks that deliver breakthrough innovations in the defense sector are leaving it vulnerable to “hacking and theft or leakages” of IP, Kim said.

Recognizing IP theft as a national issue, legislators revised South Korea’s Unfair Competition Prevention and Trade Secret Protection Act (UCPA) in 2018. IP theft involving the unlawful movement of property out of the country now carries a fine of U.S. $1.3 million and 15 years in prison, up from U.S. $86,000 in fines and 10 years in prison. The penalty for domestic cases also increased to U.S. $430,000 in fines and 10 years in prison. That’s up from U.S. $43,000 in fines and five years in prison.

Under the amended UCPA, if someone obtains another party’s “technical or business idea” during negotiations or other communication and then illegally uses it or sells it, “such an act is considered an act of unfair competition,” Min Son, president of Hanol Intellectual Property and Law in Seoul, explained in a 2018 article for Managing Intellectual Property magazine.

Parties who suspect their IP has been stolen now can submit a complaint to a government agency, either the Korean Intellectual Property Office or the Korea Intellectual Property Protection Agency, which will investigate on the injured party’s behalf. Previously, injured parties had to take their cases to court, which was a costly and complicated process.

The threat of IP theft in the country’s defense sector requires more comprehensive measures, Kim said. “The country needs a paradigm shift supported by new laws and budgets,” he said. “The military cannot handle these challenges by just tweaking existing systems and rules. As a member of the presidential committee on designing the Fourth Industrial Revolution, I am involved in making recommendations on government policy regarding security.

“Policymakers should stress importance of cyber security, encouraging the defense companies to be keen on it when they design submarines, warships and other weapons. That’s the starting point of countering IP theft or leakages from the level of national security.”

Felix Kim is a FORUM contributor reporting from Seoul, South Korea.