Korea’s New “K-Discovery” System Facilitating Evidence-Gathering in Disputes to Take Effect in Some Litigation Contexts in February 2028

Korea has introduced its first comprehensive system for evidence discovery in certain litigation contexts (the “K-Discovery” system) through promulgation of a landmark amendment to the Act on the Promotion of Mutually Beneficial Cooperation Between Large Enterprises and Small-Medium Enterprises (the “Act”) on February 19, 2026. This evidentiary framework is modeled on Germany’s expert fact-finding inspection and the US discovery system, and will take effect beginning on February 20, 2028. Key features of the K-Discovery system, including the incorporation of attorney-client privilege, and practical implications of the changes for businesses operating in Korea, are summarized as follows.

Scope of Application

At present, the amended Act only governs the prohibition of misappropriation and unauthorized use of small and medium-sized subcontractors’ technology by larger principal contractors, as well as related damages actions, and therefore does not apply to patent infringement or trade secret litigation. However, the scope of application is expected to greatly expand as proposed amendments regarding the Patent Act, the Unfair Competition Prevention Act, and the Utility Model Act—all key components of the government’s broader K-Discovery initiative—are pending at the National Assembly and all are widely expected to be enacted in due course.

Key Features of K-Discovery System

The K-Discovery system aims to resolve the perceived “uneven playing field” between large companies and small and medium-sized enterprises (“SMEs”) in technology misappropriation disputes, where critical evidence tends to be disproportionately held by the principal contractor. The amended Act introduces three core mechanisms:

Expert Fact-Finding Investigation System (Article 40-6 et seq.)

Under current law, courts have been able to issue document production orders to the parties, but due to the limited means of compulsion available, these have often been insufficient to secure evidence concealed within the principal contractor’s internal records where the principal contractor asserts that the materials contain trade secrets. The amended Act now allows the court, upon a party’s motion, to appoint experts to conduct fact-finding investigations in technology misappropriation damages actions. Some key aspects of these new procedures include:

On-site access: Court-appointed experts may enter the opposing party’s offices or factories to ask questions, inspect and copy documents and operate equipment for examination.
Adverse inference: If the opposing party refuses to cooperate without justifiable cause, the court may deem the applicant’s allegations to be true.

Document Preservation Order System (Articles 40-11 and 41 (4))

The amended Act introduces a new document preservation order system, under which a court may order a party to preserve materials identified by the court in reasonable anticipation of litigation being filed. The key distinguishing feature compared to existing evidence preservation procedures under the Civil Procedure Act is the ability to require preservation even before the filing of litigation. In addition, the system provides for:

Adverse inference: Non-compliance may result in the court deeming the applicant’s claims to be true.
Criminal penalties: Willful destruction of materials in violation of a preservation order is subject to imprisonment of up to seven years or a fine of up to KRW 100 million.

Party-Initiated Witness Examinations (Articles 40-12 and 41 (6))

Korea’s litigation system has traditionally limited examinations of witnesses to court proceedings overseen by judges. The amended Act introduces a new procedure analogous to US depositions, in which attorneys may take the lead in conducting examinations of relevant individuals, even prior to oral court hearings. Audio and video recordings of statements made by parties or witnesses outside the courtroom may be submitted as evidence, enabling testimony to be secured from the early stages of a dispute. Key features of the new procedure include:

Oath requirement: A party-deponent must be informed of sanctions for false statements, and a third-party deponent must be warned of perjury penalties, after which each must take an oath.
Adverse inference: If a party fails to appear at an examination without justifiable cause, or refuses to take an oath or make a statement, the court has discretion to deem the opposing party’s claims to be true.
Criminal penalties: A non-party deponent who makes a false statement may face imprisonment of up to three years, or a fine of up to KRW 10 million.

Attorney-Client Privilege

A particularly noteworthy change under the amended Act is the express incorporation of protection of attorney-client privilege, which aligns with the newly enacted Article 26-2 of the Attorney-at-Law Act—a companion amendment that was passed by the National Assembly and promulgated on the same date. Article 26-2 of the amended Attorney-at-Law Act formally establishes statutory protection for confidential communications between legal counsel and their clients for the purpose of providing or receiving legal assistance on legal matters, as well as documents or materials prepared by an attorney in connection with a retained matter for the purposes of litigation, investigation or inquiry.

Under the amended Act, when the court orders an expert fact-finding investigation, any communications, documents and materials protected under Article 26-2 of the Attorney-at-Law Act must, upon a party’s motion, be excluded from the scope and subject matter of the investigation. This also applies to witness examinations conducted by attorneys outside the court, where matters subject to attorney-client privilege are excluded from the scope of examination.

If statements subject to attorney-client privilege are included in the course of an examination, a party may argue for the deletion of such content from any audio recordings, video recordings or transcripts of the examination. The court will delete the relevant content if it finds the claim to be justified.

Implications and Practical Considerations

The amended Act will take effect on February 20, 2028, to allow time for court systems to implement the changes, and for harmonization with other statutes. In particular, the amendment is expected to serve as a catalyst for the enactment of similar pending bills to amend the Patent Act and the Unfair Competition Prevention Act.

Impact on Dispute Practice in Korea

As the first comprehensive discovery system for litigation to be introduced in Korea, the amended Act is expected to have far-reaching implications, such as:

Increased litigation by SMEs: With the availability of direct access to and compelled production of corporate internal materials, SMEs are expected to actively utilize these new evidentiary tools in litigation against large enterprises, likely leading to increased recourse to litigation as a dispute resolution mechanism.
Broader grants of enhanced damages: Increased production of internal corporate materials is likely to yield increased evidence supporting a finding of willfulness, leading to greater issuance by courts of enhanced damages for intentional intellectual property infringement.
Faster litigation proceedings: Expert-led evidence investigation procedures are expected to facilitate early evidence gathering and identification of issues, which may lead to expedited litigation timelines.

Recommended Actions for Companies

In light of the amended Act, companies—particularly those engaged in subcontracting transactions involving technology—should consider taking the following steps:

Strengthen document management systems: Companies should implement comprehensive document retention and management protocols across the entire technology development lifecycle, with a view to potential discovery obligations.
Leverage attorney-client privilege to protect litigation strategy: Companies should establish internal protocols that effectively utilize attorney-client privilege protections, including careful consideration of the appropriate scope and timing of attorney involvement in the preparation and review of technology-related materials.
Prepare for new preservation obligations: Companies should develop litigation hold procedures and internal guidelines for responding to document preservation orders, given the significant penalties for non-compliance.

Closing Remarks

The introduction of the K-Discovery system marks a paradigm shift in Korea’s approach to evidence-gathering in technology misappropriation disputes. While the amended Act currently applies to principal contractor-subcontractor relationships, the anticipated passage of parallel amendments to the Patent Act, the Unfair Competition Prevention Act, and other statutes signals a broader transformation of Korea’s litigation landscape. Companies are advised to begin preparing well in advance of the February 2028 effective date to ensure compliance and to position themselves strategically in this evolving legal environment.

[Korean Version]

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