Revised Sentencing Guidelines Strengthen Penalties for Trade Secret Misappropriation and Industrial Technology Infringement Crimes

On March 25, 2024, the Sentencing Commission of the Supreme Court (the “Sentencing Commission”) approved revised sentencing guidelines for intellectual property and technology infringement offenses. The revised guidelines add “Infringement of Industrial Technology” as a new category of intellectual property crime, amend the title of the sentencing guidelines to “Sentencing Guidelines for Intellectual Property and Technology Infringement Crimes” (hereinafter, the “Sentencing Guidelines”), increase prison terms, and strengthen suspended sentences standards for trade secret misappropriation and technology infringement crimes. The Sentencing Guidelines will apply to cases prosecuted on or after July 1, 2024.

Increase in Recommended Sentencing Range for Trade Secret Misappropriation Crimes

The amendments to the Act on Prevention of Unfair Competition and Protection of Trade Secrets (the “Unfair Competition Act”), which increased criminal penalties for trade secret misappropriation, were promulgated on February 20, 2024, and are expected to take effect on August 21, 2024. In response to the amendments, the Sentencing Commission has revised its guidelines to increase the sentencing range for trade secret misappropriation crimes. The announced revisions to the Sentencing Guidelines are expected to have a significant impact on the actual level of punishment for trade secret misappropriation crimes.

Category		Mitigated Sentence Range	Standard Sentence Range	Aggravated Sentence Range
Misappropriation Within Korea	Previous	Up to 10 months	8 months to 2 years	1 to 4 years
Misappropriation Within Korea	Revised	6 months to 1 year 6 months	10 months to 3 years	2 to 5 years
Misappropriation Outside Korea	Previous	10 months to 1 year 6 months	1 year to 3 years 6 months	2 to 6 years
Misappropriation Outside Korea	Revised	10 months to 3 years	1 year 6 months to 5 years	3 to 8 years

Strengthened Sentencing Range for Infringement of Industrial Technology and National Core Technology

Unlike the previous guidelines which did not provide separate sentencing standards for the infringement of “industrial technology” or “national core technology,” the new Sentencing Guidelines establish strengthened sentence recommendations for violations of the Act on Prevention and Protection of Leakage of Industrial Technology, the Defense Industrial Technology Protection Act, and the Act on Special Measures to Strengthen and Protect Competitiveness of National High-Tech Strategic Industries. For example, the Sentencing Guidelines recommend a maximum prison term of up to 18 years^[1] for overseas infringement of national core technology. As for overseas infringements of industrial technology, for which the previous sentencing guidelines for trade secret misappropriation acts were applied to provide a recommended prison term of up to nine years, the Sentencing Guidelines recommend a prison term of up to 15 years.^[2] It is worth noting that the recommended sentences are significantly higher than past cases of actual sentences imposed or the statutory sentences for similar categories of offenses. The strengthened sentences reflect a policy of increased punishment for overseas infringement that jeopardizes the viability of domestic companies and harms national economic security.

Category	Mitigated Sentence Range	Standard Sentence Range	Aggravated Sentence Range
Misappropriation of Trade Secrets in the Course of Employment	Up to 8 months	6 months to 1 year 6 months	1 year to 3 years 6 months
Infringement Within Korea	8 months to 2 years	1 to 4 years	2 years 6 months to 6 years
Overseas Infringement of Industrial Technology	1 year to 3 years 6 months	2 to 6 years	4 to 10 years
Overseas Infringement of National Core Technology	2 to 5 years	3 to 7 years	5 to 12 years

Strengthened Standards for Suspension of Sentence

The new Sentencing Guidelines eliminate the lack of a criminal conviction as a major mitigating factor in determining whether to grant a suspended sentence for trade secret misappropriation or technology infringement crimes. In addition, the infringement of “industrial technology” (as opposed to general technology infringement) is now prescribed as a major aggravating factor. The strengthened standards are expected to have a strong deterrent effect, as the new standards significantly increase the likelihood that even first-time offenders will be subject to prison terms. However, for crimes committed with gross negligence, the Sentencing Guidelines allow prison terms to be reduced or suspended in consideration of difficulty in recognizing infringement of intellectual property crimes.

Upon taking effect, the Sentencing Guidelines are expected to significantly increase criminal sentences for trade secret misappropriation and industrial technology infringement offenses. The Sentencing Commission’s revisions are expected to sound an alarm on technology infringement crimes and have a positive impact on protecting the substantive rights of rights holders. While the Sentencing Guidelines are expected to deter infringement more effectively, it is also expected that companies and individuals suspected of being violators will face a far greater risk of criminal sanctions.

Further, in light of the Korean Government’s recent establishment of the Technology Leakage Task Force to swiftly and proactively respond to the illicit overseas outflow of technology and human resources, companies are advised to review their internal compliance systems, especially companies that own national core technologies or industrial technologies or conduct businesses involving such technologies.

^[1] At the time of sentencing, the judge has discretion to add or subtract by one half the number of the recommended years at both ends of the sentence range. Thus, given that the recommended sentence range for the overseas infringement of national core technology is 4 to 10 years, in practice, a judge may sentence anywhere between 2.5 to 18 years.
^[2] For the same reason as above, the actual range that a judge may sentence for the overseas infringement of industrial technology is 2 to 15 years.

[Korean Version]

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