Hello. This is Shin Jun-sun, a lawyer at the Law Firm Cheongchul.

In the previous blog, we examined the specific reasons behind the court's judgment that Dark and Darker did not infringe copyright. In this session, we will look into the reasons why the court recognized that the development company Iron Mace should pay 8.5 billion won in damages, specifically focusing on the recognition of trade secret infringement. (Although there are multiple defendants, I will refer to them collectively as 'the defendant' for convenience).

[Question] Court, does it recognize the trade secret infringement of the game "Dark and Darker"?

[Answer]

1. Issues related to the Unfair Competition Prevention and Trade Secret Protection Act

The issue of trade secret infringement in this case concerns whether the defendant unlawfully used development materials and planning documents related to Nexon’s game "P3", as well as internal data (hereinafter referred to as *"E File" or **"E Information").

* E File (development production program (editor), data source, program source code, build file, etc.)

** E Information (genre, dungeon structure, monsters, lobby menu UI, out-of-game elements, etc.)

A. Whether E Information constitutes a trade secret (partially recognized)

The court proposed three criteria for evaluating whether a secret qualifies as a trade secret: i) non-disclosure (not publicly known), ii) economic value (potential to create competitive advantages from the information, significant costs or efforts required to obtain the information), iii) confidentiality management (having indications or notices to be recognized as secret and restricting access to it). The court also stipulated that it must first examine whether the target information is designated as a trade secret.

(1)   Whether 'E File' constitutes a trade secret of the plaintiff (denied)

The court concluded that there are several issues preventing E File (development production program (editor), data source, program source code, build file, etc.) from being recognized as a trade secret.

①    Lack of specificity: Only the file names and categories were presented, making it impossible to confirm the specific content of individual files.

②    Lack of evidence of possession: There is no objective data to prove that the defendant possesses the relevant files.

③    Insufficient proof of trade secret status: The mere fact that the files were created during the progress of the game project does not mean that it meets all criteria of non-disclosure, confidentiality management, and economic utility.

(2)   Does 'E Information' constitute a trade secret? (Judged based on implementation)

The defendant argued that E Information (genre, dungeon structure, monsters, lobby menu UI, out-of-game elements, etc.) is merely information arbitrarily combined by the plaintiff after the fact, and that this information was not actually implemented in the game. The court analyzed the potential for each component of E Information to be considered a trade secret based on the premise that they were either implemented or intended to be implemented in the game, and reviewed below the implementation or intended implementation of each component.

①    Extraction shooter genre (recognized as a trade secret)

The court determined based on the following evidence that E game was developed not in the 'battle royale' genre but rather as an 'extraction shooter' genre (where escaping is the ultimate goal).

• During the director group meeting (2020.9.28), the team leader stated, "Players must decide whether to exit through the escape routes placed on each floor," clearly indicating that escaping is the ultimate objective.

• In the beta map version milestone review (2021.4.29), it was stated, "The battle royale rules applied in the beta map are temporary," indicating that the future direction of development is extraction shooter.

• An escape portal was already implemented in the game's primitive version, and escape portals and escape ropes were also implemented in the gamma map version.

• E team developers testified that they never decided to exclude the 'escape' elements.

②    The structure of the dungeon (recognized as a trade secret due to the 'multi-layer inverted pyramid structure')

• The team leader explained in the director group meeting, "The underground tomb has a structure that narrows downwards in the shape of an inverted pyramid."

• During the beta map version milestone review, he clarified, "As you descend to the 5th underground floor, the map narrows in the shape of an inverted pyramid," detailing the characteristics of each floor, as well as the specific plans for PvP, monsters, and items.

• The E game planning document explicitly states, "The dungeon becomes more dangerous and narrow as it goes deeper."

③    Monsters (race, cave troll) (not recognized as a trade secret)

• Although mentioned in the game planning document (Monster Asset List), only basic information about the race is provided.

• The cave troll is mentioned only by name as one of 'Orc, Goblins & Trolls'.

• There is insufficient evidence that these monsters were placed or intended to be placed as boss-level characters.

④    Lobby menu UI (not recognized as a trade secret)

• Although there is planning material, there is insufficient evidence that it was intended for actual implementation.

⑤    Out-of-game elements (NPC shops, user trading, ranking boards, etc. recognized as a trade secret)

• The team leader explained the introduction of the "Rank Point" and "Veteran Adventure Point" systems during the beta map version milestone review.

• Specific explanations about the out-of-game system, such as, "Catch an NPC... bring items out to sell outside," were given.

• It was mentioned that "user-to-user trading is also actively occurring, along with the introduction of an enhancement system typical of RPGs."

• Official planning documents and drafts were actually created.

⑥    Altar of resurrection (recognized as a trade secret)

• The team leader explained during the beta map version milestone review, "The atmosphere of the resurrection altar is the place where party members can be brought back to life," in specific terms.

• The resurrection altar art was already implemented in the beta map version of E game.

(3)   The entity to which E trade secrets belong (recognized to belong to the plaintiff)

The court stated, "Not all business-related knowledge acquired by an employee while working for a company is recognized as the company's trade secrets. General knowledge, skills, and experiences gained by the employee during their employment, in light of their education and career, belong to them as personal matters." However, it also indicated that, for the following reasons, it judges that the E trade secret information belongs to the plaintiff.

①    The ideas memo from the defendant's development team leader is merely a collection of components listed sporadically, with no specific content or methods of combination revealed.

②    The E trade secret information is a cumulative and developed result through the research, implementation, evaluation, and updating processes of the plaintiff's employees.

(4)   Recognition of the confidentiality management of E trade secrets

The court believed that the plaintiff made considerable efforts to maintain the confidentiality of the E trade secret information, based on the following reasons.

①    The specificity of the game industry: The game industry faces intense competition, with the lifecycle of new games being short, thus if competitors release similar games first, the marketability of subsequent games declines significantly; hence, maintaining security over development information is common practice in the industry.

②    Operation of internal security regulations: In the 'Living Security Guidelines', it reduces access to confidential information to the minimum number of individuals and states the obligation to prevent disclosure in the service directive.

③    Acquisition of information protection agreements: The defendant's team leader signed an information protection agreement in 2018, agreeing to prohibitions on unauthorized access to information, returning or destroying company confidential materials upon resignation, and prohibiting leaking company secrets after resignation.

④    Confidentiality obligations in the salary contract: The 2021 salary contract includes obligations for trade secret compliance and clauses prohibiting engagement in competing business activities for one year after resignation.

⑤    Technical protective measures: The plaintiff implemented various security regulations to protect information assets, restrict access rights for information assets, assign protection responsibility, separate the network into service net/development net/business net allowing access only to authorized individuals, requiring encrypted communication in remote access cases, and restricting non-company PCs for work purposes.

(5)   Recognition of non-disclosure and economic utility

The court recognized the non-disclosure and economic utility of E trade secret information for the following reasons.

①    Differences from industry practices: Game companies generally do not disclose information on the direction and differentiated components of upcoming games. The specific content and combinations of E trade secrets are unique and not found in prior games.

②    Value of unique combinations: Although individual components may be borrowed from existing games, no game has previously implemented all these characteristics together, thus it has economic value in its unique combination.

③    Investment and competitive advantage: The plaintiff invested considerable financial resources and manpower into the E project, and if competitors utilize this information, they could gain temporal and cost advantages.

④    Limitations of publicly available materials: The defendants claimed the game was already released, but the court noted that the disclosed gameplay video was only about 8 seconds long, and the statement was merely, "Adventure through a medieval fantasy dungeon from a first-person perspective with colleagues." The press release and articles contained only brief explanations accompanied by a single photo. Media day was a closed event for certain media outlets, and video distribution was prohibited. The additional video provided to the media was only 39 seconds long, making it difficult to ascertain the detailed contents of E trade secret information. Thus, the court rejected the defendants' claims.

B. Whether there was a trade secret infringement

The court recognized the trade secret infringement of the development team leader and department leader based on Article 2(3)(1) of the Unfair Competition Prevention Act as follows .

(1)   There is a contractual confidentiality obligation: Information protection agreements, salary contracts containing obligations to comply with trade secrets following retirement.

(2)   Purpose of obtaining unlawful benefits recognized:

①  In June 2021, through individual meetings with E-team members, the proposal for changing jobs was made, resulting in 10 individuals transferring to the defendant's company.

②  Dark and Darker includes elements and combinations that are essentially identical or similar to the E trade secret information.

③  After leaving the plaintiff company, prior to establishing the defendant's company in September 2021, they began developing the D game, skipping the essential planning stages in typical game development and immediately starting on server system construction.

④  The modified assets (color temperature, saturation, brightness of the torch, and scaling of door width to 1.22 times and height to 1.08 times) were directly applied to Dark and Darker.

⑤  The development details submitted by the defendant do not reveal the planning processes in the early development stages such as genre or class selection.

Subsequently, the court recognized the defendant company’s trade secret infringement based on Article 2(3)(2) of the Unfair Competition Prevention Act as follows.

(1)   Obtained through unfair means: The defendant company hired 8 former E team members who had possession of E trade secret information, granting shares to some among them (V 6.5%, AH 4.5%, AJ 6.5%, AI 4.5%).

(2)   Incentives to leak trade secrets: The defendant company hired and incentivized them to use the E trade secret information.

Accordingly, the court judged that the actions of the defendants in developing and releasing Dark and Darker constituted trade secret infringement under Article 2(3)(1) (defendant company) and (2) (team leader and department head of defendant’s development team) of the Unfair Competition Prevention Act.

C. Judgment concerning prohibition and disposal requests (exceeding the protection period of the trade secret)

However, the ban on trade secret infringement should be limited to a temporal range necessary for protecting fair competition and personal trust relationships. The court found it reasonable to view the protection period of E trade secret information as around 2 years; thus the requests for prohibition and disposal after 2 years have been rejected.

The establishment of such a protection period considered that the individual components of the E trade secret exist in prior games, and long-term protection would lead to an undue state of idea monopolization, the plaintiff's E information development period lasted only about 1 year (from August 2020 to July 2021), with an additional 4 months required until its release, and that the D game development period for the defendants lasted around 2 years (from September 2021 to August 2023). Additionally, the salary contract between the defendant and the plaintiff contained a clause prohibiting competition for one year after resignation. It also considered that setting the trade secret maintenance period excessively long could infringe upon the freedom of occupational choice and the freedom of commercial activity of employees, leading to an undue state of competition.

2. Conclusion and practical implications

From this ruling, the practical implications that can be drawn concerning trade secret protection in the gaming industry can be summarized as follows:

A.    The importance of specifying trade secrets

To assert trade secret infringement, specific information must be identifiable. Merely presenting file names or categories is insufficient for specifying a trade secret; its content must be verified concretely and distinguishable from other information.

B.    Ideas are not protected; they must be implemented or planned for implementation

Not every idea discussed in the game development process is protected, but only concrete elements that were actually implemented or planned to be implemented can be protected as trade secrets. Legal protection is granted not to simple ideas or concepts but to their specific implementation methods and unique combinations.

C.    The importance of internal management of trade secrets

A systematic secret management system—such as information protection agreements, employment contracts with confidentiality clauses, internal security regulations, and technical protective measures—plays a decisive role in the recognition of trade secrets. In particular, in the IT industry, technical protective measures like network separation, access rights restrictions, and encryption act as crucial evidence.

D.    Setting a reasonable protection period

The protection period for trade secrets is not indefinite but limited to a reasonable duration considering development periods, non-competition agreements, and industry characteristics (in this case, 2 years). This reflects a judgment that emphasizes the balance between trade secret protection, fair competition, and employees' freedom of occupational choice. Therefore, even if the fact of trade secret infringement is recognized, it is necessary to examine the extent of the protection period that could be acknowledged for litigation advantages or disadvantages.

E.    The importance of managing employees after resignation

When key developers collectively transition to a competitor, the risk of trade secret infringement increases. Systematic personnel management is necessary, including non-compete agreements, trade secret training, and document recovery during resignation procedures.

F.    Insights regarding litigation strategies

Since requests for prohibition are time-limited, quick legal responses upon discovery of trade secret infringement are crucial. However, even after the expiration of the trade secret protection period, liability for damages that have already occurred may still be recognized.

This ruling is significant in that it presents a balance in trade secret protection, reflecting the characteristics of the gaming industry, and emphasizes the need for gaming companies to assess and improve their trade secret management systems.

Shin Jun-sun has extensive experience in advising and resolving copyright disputes. Please feel free to contact him if you require legal consultation regarding related matters.