1.

Background

On August 14, 2025, the Korean Supreme Court upheld a guilty verdict against a Taiwanese corporation indicted on charges of trade secret and industrial technology misappropriation committed by its employees (Supreme Court Decision 2022Do8664). In Korea, the vicarious liability provisions in the Unfair Competition Prevention and Trade Secret Protection Act (the “Trade Secret Protection Act”) and the Industrial Technology Act provide that if a corporation's employee commits a criminal act in the course of his or her work – including, without limitation, misappropriation of a third party’s trade secrets or industrial technology – the corporation itself will also be subject to criminal liability unless the corporation can prove that it did not neglect its duty of due care and supervision over its employees to prevent such a criminal act. The specific issue examined in this Supreme Court case was whether a foreign company is subject to the jurisdiction of Korean courts based on crimes committed in Korea by its Korean employees in connection with their work for the company.

The defendant Taiwanese corporation in this case (“TaiwaneseCo”) manufactures and sells LEDs in Taiwan. TaiwaneseCo hired Employee A from a competing Korean corporation (“KoreanCo”) in July 2016. In August 2016, Employee A conspired with Employees B and C, who were still employed by KoreanCo at that time, to leak KoreanCo’s trade secrets to TaiwaneseCo. Employees B and C extracted confidential information from KoreanCo in Korea and delivered it to Employee A, who then shared the data with officers and employees of TaiwaneseCo to develop their own products. Employees B and C subsequently joined TaiwaneseCo and further misappropriated KoreanCo's confidential information.

Employees A, B, and C were found guilty of illegally leaking, disclosing, and using KoreanCo’s trade secrets and industrial technology. TaiwaneseCo was indicted in a Korean court under the vicarious liability provisions described above in connection with the crimes committed by Employees A, B, and C, on the basis that TaiwaneseCo had failed to exercise its duty of due care and supervision over its employees. TaiwaneseCo argued that, since it is not a Korean corporation and that any negligence in exercising its duty of due care and supervision over its employees was committed outside of Korea, it should not be subject to Korean court’s jurisdiction.

The Supreme Court rejected TaiwaneseCo’s argument and held that TaiwaneseCo was indeed subject to the Korean court’s jurisdiction because at least a material part of the employees’ illegal acts was committed in Korea. In addition, the Supreme Court ruled that, because the collusion and misappropriation occurred in Korea, the crime was deemed to have been committed in Korea even if the trade secrets were subsequently disclosed and used outside the country. Further, given that the criminal acts committed by Employees A, B, and C constituted a material element of the crime attributed to the employer under the vicarious liability provisions, the Supreme Court held that the employer also committed the crime within the territory of the Republic of Korea and accordingly recognized the Korean court’s jurisdiction over TaiwaneseCo.
 

2.

Significance of Judgment

This Supreme Court decision is the first case in which the Supreme Court has established its rationale for determining whether Korean court’s jurisdiction applies to a foreign corporation under the vicarious liability provisions. The ruling indicates that foreign corporations recruiting skilled employees from Korean companies may be subject to criminal prosecution in Korea based on the acts of those employees in Korea, even if the foreign corporation itself took no action in Korea. Foreign corporations are well-advised to implement sufficient measures to ensure that Korean employees hired in Korea do not bring or use their former employer’s confidential information in the course of their work for the foreign corporation.
 

3.

Next Step

As this decision sets a clear court precedent for criminally charging foreign corporations based on vicarious liability under Korean law, it is likely that Korean investigative agencies will become more active in investigating foreign corporations for criminal activity committed by their employees or agents, and in enforcing vicarious liability. To minimize the risk of criminal liability in Korea for trade secret misappropriation, both Korean and foreign companies should implement effective management and supervisory procedures when recruiting experienced employees from Korean competitors, thereby fulfilling their duty of due care and supervision over the activities of such employees.

It should be noted that many other Korean statutes contain vicarious criminal liability provisions similar to those under the Trade Secret Protection Act and Industrial Technology Act, and this decision is likely to influence the interpretation of other statutes with such provisions. Therefore, foreign corporations are advised to review all applicable vicarious criminal liability statutes under Korean law, including those related to trade secrets and industrial technology, as well as their systems and procedures to ensure compliance with the conditions for avoiding vicarious liability across all areas.