Hello. This is Attorney Shin Joon-sun of Cheongchul Law Firm.

Regarding the first instance ruling rendered by the Seoul Central District Court in February 2025, which denied copyright infringement but recognized trade secret infringement and imposed KRW 8.5 billion in damages in the dispute between Nexon and Ironmace over the game "Dark and Darker," we have already covered the underlying reasoning in two prior posts on this blog.

Subsequently, both parties filed appeals and petitions for review. In December 2025, the Seoul High Court issued a ruling (2025Na206557) that recognized the P3 program, source code, and build files as trade secrets, even though they had not been recognized as such in the first instance, thereby expanding the scope of protection while reducing damages to approximately KRW 5,764,644,688 (about KRW 5.76 billion). On April 30, 2026, the Supreme Court dismissed both appeals and confirmed the appellate judgment as it stood (2026Da200492).

In this column, following the two earlier posts on the first instance ruling, we summarize only the core issues that were decided differently at the appellate and Supreme Court levels and review their significance and practical implications.

[Question] Key Issues in the Appellate and Supreme Court Confirmed Rulings of the "Dark and Darker" Case: Where the First Instance Was Reversed

[Answer]

1. Expansion of Trade Secret Scope — 'P3 Files' Themselves Recognized as Trade Secrets

The first instance recognized only some elements of the P3 game ('P3 Information') as trade secrets, while denying trade secret status to the 'P3 Files' such as development production programs, data sources, source code, and build files, on grounds that ① file names and classifications alone lacked sufficient specificity, ② there was no objective evidence that the defendants possessed them, and ③ proof of trade secret status was inadequate.

However, the appellate court reversed this finding, holding that the P3 materials could be lawfully specified as trade secrets 'as an organic whole united under the single purpose of developing the P3 game,' and recognized the entire body of P3 materials as trade secrets. In particular, the court inferred actual possession and use of the materials by considering: ① the fact that the defendant team lead transmitted approximately 2,747 build files to his personal server between April 6 and June 18, 2021, immediately before his resignation; ② the fact that he downloaded source code and other materials approximately 20 times during the same period; and ③ the fact that the defendants effectively skipped the usual game planning and concept review stages and proceeded directly to server system construction immediately after resignation.

The Supreme Court likewise held that "the lower court did not err in misapplying legal principles regarding trade secret specification, trade secret status, or infringement determination, nor in violating evidentiary rules, when it found that the P3 materials constituted trade secrets as a whole and recognized trade secret infringement," thereby confirming the appellate court's conclusion. This clarifies that development outputs such as source code and build files are themselves protected as trade secrets when viewed as a whole.

2. Extension of the Trade Secret Protection Period — From 2 Years to 2 Years and 6 Months

While the first instance set the protection period at approximately 2 years from the resignation date (around July~August 2021), i.e., until the early access release of Dark and Darker around August 2023, the appellate court extended it by an additional 6 months to approximately 2 years and 6 months, until around January 31, 2024. This was based on consideration of: ① the fact that the specific content and combination of the P3 materials and information constituted independent results not found in prior games, and ② the fact that the defendants substantially shortened their game development period through use of the P3 materials.

However, the appellate court also held that the protection period had already lapsed at the time of closing arguments and dismissed the claims for service prohibition and disposal of Dark and Darker. The Supreme Court likewise reaffirmed the established principle that "the scope of the trade secret protection period falls within the exclusive discretion of the trial court, unless it is found to be markedly unreasonable in light of equitable principles" (Supreme Court Decision 2017Da34981 dated September 10, 2019), and upheld the appellate court's judgment.

3. Shift in the Method of Calculating Damages — From KRW 8.5 Billion to KRW 5,764,644,688

The reduction of damages from KRW 8.5 billion to KRW 5,764,644,688 (approximately KRW 5.76 billion) at the appellate level was not because the trade secret infringement portion was reduced, but rather because the method of calculating damages was changed.

The first instance applied not only Article 14-2(2) of the Unfair Competition Prevention Act (the provision presuming damages based on the infringer's profit) but also paragraph (5) of the same article (which allows the court to recognize a reasonable amount of damages in light of the entire purport of pleadings), and accepted the plaintiff's full claim of KRW 8.5 billion. By contrast, the appellate court applied paragraph (2) of the same article but shifted to a method of directly calculating the infringer's profit based on objective evidence.

A. Revenue × Marginal Profit Margin × Contribution Rate

The total revenue from the release date of Dark and Darker (August 8, 2023) to the end of the trade secret protection period (January 31, 2024) was KRW 45,626,219,386 (KRW 37,635,186,613 from August 8 to December 31, 2023 + KRW 7,991,032,773 for January 31, 2024). The marginal profit of KRW 38,430,964,588 was calculated by multiplying this by the marginal profit margin of 84.23% for the software development and supply industry per the Bank of Korea's "2023 Corporate Management Analysis Report." The final damages amount of KRW 5,764,644,688 was then derived by applying a 15% contribution rate for the P3 materials and information.

B. Key Grounds for the 15% Contribution Rate

The plaintiff argued for a contribution rate of 75% or more, while the defendants argued for less than 3%. The appellate court determined the rate at 15% by considering: ① the fact that individual components included in the P3 trade secret information were already disclosed in prior games, allowing other companies to develop them independently; ② the fact that of the approximately 2,200 total components of the P3 game, only about 80 components could correspond to Dark and Darker, representing a quantitative proportion of merely 3.6%; and ③ the fact that post-release service maintenance, content updates, and promotional activities of Dark and Darker could not be said to have benefited from the P3 materials. The Supreme Court accepted this determination as is.

4. Both Copyright Infringement and Unfair Competition (Misappropriation of Achievements) Denied

The denial of copyright infringement was maintained identically across all three instances. P3 remained within the battle royale genre, while Dark and Darker was developed as an extraction shooter genre centered on escape. This genre difference resulted in decisive differences in game progression, terrain placement, and level design, leading to denial of substantial similarity. The Supreme Court likewise confirmed that "the lower court did not err in misapplying legal principles regarding the creative individuality and substantial similarity of game works or infringement of derivative work creation rights."

The Supreme Court also accepted the appellate court's holding that "the entire body of results related to P3 game development, including the P3 game and planning materials," does not constitute 'achievements, etc.' under Article 2(1)(pa) of the Unfair Competition Prevention Act. This means that while the P3 materials are protected as 'trade secrets,' they are not subject to separate protection under the general provision of subparagraph (pa) as 'achievements, etc.,' confirming that the two areas of protection do not automatically overlap.

5. Conclusion and Practical Implications

A. Importance of Trade Secret Specification and Evidence of Material Removal

While the first instance found that file names and classifications alone lacked sufficient specificity, the appellate court and Supreme Court found that the materials could be specified by grouping them as 'an organic whole united under the single purpose of P3 game development.' Furthermore, the appellate court inferred actual possession and use by considering mass downloads immediately before resignation, full-scale development immediately after resignation, and the omission of usual planning stages. Rights holders should establish strategies for specifying the subject of infringement and should comprehensively secure and manage digital forensics, personnel records, and development history at the time of key personnel departures.

B. Importance of the Damages Calculation Method

While the presumption provision in Article 14-2(2) of the Unfair Competition Prevention Act is clearly a tool favorable to rights holders, courts may shift, as in the appellate court's recalculation, to a method of directly calculating revenue, marginal profit margin, and contribution rate based on objective evidence. In such cases, the marginal profit margin and contribution rate become critical variables. Rights holders must prepare to calculate and prove the relevant baseline figures (the infringer's revenue and operating profit, industry-specific marginal profit margins, and the contribution rate of the infringing portion).

C. Reaffirmation of Copyright Protection Scope

Abstract elements such as genre, worldview, and systems are classified as ideas under copyright law and are not subject to protection. For substantial similarity to be recognized, the combination of specific expressions must be substantially similar. As in this case, where genre differences are clearly recognizable, copyright alone makes it difficult to protect rights against subsequent similar games by competitors. Ultimately, the effectiveness of trade secret management systems determines the success or failure of rights protection. Game developers and other IT companies need to introduce realistic protection strategies, such as periodically reviewing and updating identification of core assets, access controls, and resignation procedures.

6. Conclusion

This case will remain a meaningful precedent that has presented determinations on the causal relationship between the movement of key personnel and corporate IP and trade secret protection, not only in the game industry but also throughout the IT and content industries.

If you require legal advice on trade secret disputes, post-employment restrictions, non-compete obligations, trade secret infringement cases involving the departure of key personnel, or damages calculation, please feel free to contact us at any time.