SOUTH KOREA Law and Practice Contributed by: Dongju Kwon, Changkwon Kim, Sejung Lee and Yoon Sun Kim, Yoon & Yang LLC
Departing employees often execute written confidentiality agreements with respect to trade secrets acquired or used during the employment period, normally together with non-compete agreements prohibiting the employment of the departing employees in the same industry for a certain time period. The non-compete agreement goes beyond merely imposing a confidentiality obligation on an employee, and prohibits the employee from engaging in any competitive acts, such as join - ing the employer’s competitor or establishing and operating a competing company on their own. Therefore, there is a concern that such an agreement could unduly restrain competition by restricting the employee’s freedom of job selec - tion, especially given its direct impact on the employee’s livelihood. Nevertheless, courts do not consider non- compete agreements as categorically invalid. Instead, they have held that a non-compete agreement may be deemed invalid if it exces - sively restricts an employee’s constitutionally guaranteed freedom of occupation or right to work or unduly restrains free competition (see Supreme Court Decision No 2009Da82244). 4. Safeguarding Against Allegations of Trade Secret Misappropriation 4.1 Pre-Existing Skills and Expertise Confidential information created, developed or accumulated in the course of employment under the employer’s supervision may include the employee’s general knowledge, skills and experience that should be treated as belonging to the employee.
In Korea, courts distinguish between an employee’s general knowledge, skills or expe - rience and protectable trade secrets. Utilising the employee’s “general” knowledge, skills or experience gained in their employment with the prior employer is not construed as trade secret misappropriation. However, using the “special” knowledge, skills or experience gained by the employee in their employment with the prior employer, while bearing the confidentiality obli - gation, at the subsequent employer would con - stitute trade secret misappropriation. Further, courts have ruled to the effect that using the information and know-how acquired in the employee’s professional line of work in a simi - lar line of work does not violate the UCPA (see Supreme Court Decision No 2008Ma701). This suggests that the doctrine of inevitable disclo - sure does not appear to be broadly accepted in Korea. 4.2 New Employees When a company hires employees from compet - itors (prior employers), it would be recommend - able for the company to ensure that the employ - ees are aware of the actions that should not be taken (such as copying the prior employer’s files) before being hired, and to request them to pro - vide a written pledge to confirm that they neither possess, nor will disclose, any trade secret infor - mation they learned in their prior employment. Additionally, it would be recommendable for the company to require the new employees to sign a statement that they are not violating the terms of any restrictive covenants signed with their prior employers by taking on the new job. Further, it would be advisable for the company to take physical/technical measures to prevent the inflow of the prior employer’s confidential information within the company, if possible. It
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