SOUTH KOREA Law and Practice Contributed by: Hwansung Park, Eunwoo (Vera) Lee, Hankil D. Kang and Jung Heo, Lee & Ko
tion, and although they may raise questions similar to employee-invented works or works made for hire, there is little case law on whether information acquired by an employee during employment belongs to the employer. That said, the Supreme Court has held that where a trade secret also qualifies as an employee invention, disclosure by the employee to a third party before the rights have been assigned to the employer does not constitute unauthorised disclosure of the employer’s trade secret, because the employer is not yet the holder of the secret. The Court nevertheless found a possible breach of trust and recognised an obligation to transfer the secret to the employer. For non-invention cases, the prevailing academic view is that rights generally vest in the employer. 6.4 Protection Through Contract and Confidentiality The contractual mechanisms used to protect know- how are largely the same as those used to protect trade secrets, because secrecy is the key require- ment for both. Accordingly, it is common to include confidentiality clauses or NDAs that clearly define the scope of disclosure and the counterparty’s confiden- tiality obligations, and to specify the know-how cov- ered in an annex or schedule as precisely as possible, since identifying know-how can be difficult. Because reverse engineering is not prohibited in Korea, licence agreements should expressly pro- hibit it. In transfer agreements, the transferor’s non- use obligation is essential to protect the transferee’s know-how. In both cases, provisions on improved or modified technology should also be included. 6.5 Licensing and Assignment Know-how may be transferred or licensed separately from trade secrets or patents, provided it can be suf- ficiently identified, but in practice it is usually covered together with other technical information in the same agreement. In that case, it is important to define the relevant know-how precisely. Unlike patents, no spe- cial formalities are generally required for transferring or licensing know-how, and it may be delivered in writing or electronically, or through technical assistance by engineers. That said, because know-how protection typically requires confidentiality, non-use, and anti- reverse engineering provisions, a written agreement
is strongly recommended. Notarisation may be used to confirm authenticity or date, but it is not a condition
for valid transfer or licensing. 6.6 Reverse Engineering
In Korea, there is no separate body of law on know- how and reverse engineering, so the relevant trade secret principles are usually applied by analogy. As a general rule, reverse engineering is lawful, and a person who acquires information through lawful reverse engineering may also be treated as a trade secret holder if the information itself satisfies the trade secret requirements. For lawful reverse engineering, the product must generally be available on the market, and the mere fact that reverse engineering is possible does not automatically destroy non-publicity unless it is easy to do so. Contractually, reverse engineering may be restricted, and in software agreements such clauses are common. If such a clause exists, reverse engineering by the counterparty can be treated as a contractual breach and restricted accordingly. 7. Data, AI and Emerging IP Issues 7.1 Data Rights and Database Protection Database Right Under the Copyright Act, a person who has made a substantial investment of human, financial, or mate- rial resources in the creation of a database, or in the updating, verification, or supplementation of its con- tents, is granted the right to reproduce, distribute, broadcast, or transmit the database in whole or in substantial part. This right arises upon completion of the database and lasts for five years from the begin- ning of the following year and, if a substantial subse- quent investment is made to update or supplement the database, the five-year protection period restarts for that specific updated portion. Infringement is pun- ishable by up to three years’ imprisonment or a fine of up to KRW30 million, or both. Other Protections Information contained in a dataset may also be pro- tected, where the relevant requirements are met, as a trade secret, a copyright work, or by contract. In addi- tion, UCPA prohibits the unauthorised use of certain data as an unfair competition act.
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