Hello, this is Attorney Baek Gi-hyung from Cheongchul Law Firm.

In an era where corporate competitiveness is becoming increasingly important, trade secrets are considered one of the key assets. Perhaps for this reason, the legal mechanisms to protect trade secrets are becoming increasingly sophisticated. But if several companies develop a specific technology or know-how together and result in 'joint ownership', do we have to obtain permission from the other party every time we use it?

Recently, an interesting ruling from the Supreme Court has gained attention regarding this issue. The key point was whether the unilateral use of a jointly owned trade secret by one party could be considered an 'infringement'. Through this case, the scope of use of jointly owned trade secrets and the extent of their legal recognition has become clearer.

[Question] If one party uses a jointly owned trade secret without the other party's consent, would it constitute a trade secret infringement?

[Answer]

It is not necessarily recognized as an infringement.
According to the Supreme Court's precedent, if the parties jointly own a trade secret, they may not be legally liable for using it without the other party's consent, barring special circumstances. However, if there is evidence of 'intending to gain unfair profit or to harm other holders,' it may be considered an infringement, hence the existence of that 'intent' becomes crucial in actual disputes.

The facts of this case are as follows.

• Plaintiff (Company A): Developer of key components for high-speed trains (IGBT stack assembly)

• Defendant (Company B): Jointly owns the same technology information in cooperation with Company A

• Issue Emerges: The defendant ignored the non-disclosure agreement signed with the plaintiff and independently delivered products utilizing the technology to a third party (Korea Railroad Corporation)

• Plaintiff's Claim: Filed a lawsuit, claiming it constitutes 'trade secret infringement under the Unfair Competition Prevention Act'

The Supreme Court ruling of November 20, 2024 (2021Da278931) ultimately concluded that the defendant's (Company B) actions did not intend to gain unfair profit or cause damage to the plaintiff, and therefore did not constitute trade secret infringement. The main grounds specified in the judgment are as follows.

1. Joint Development and Ownership Relationship
   "Since the technology information was developed together by both the plaintiff and defendant, it constitutes a jointly owned trade secret unless there is a separate agreement."

2. Difficulties in Recognizing Exclusive Usage Rights
   "It cannot be established that the 'trade secrets of the plaintiff' as defined in the non-disclosure agreement include information developed jointly."

3. Limitations on Usage Intent

"Since there was no separate agreement regarding the method of use, usage locations, or restrictions on usage, it cannot be deemed that consent must be obtained." Furthermore, even if the defendant produced and delivered products using this technology, it is difficult to conclude that the plaintiff's competitiveness has been significantly undermined or that the secrecy of trade secrets has disappeared."

4. Absence of Intent to Cause Unfair Profit or Damage
   "It is difficult to view the defendant's supply activities as directly causing damage to the plaintiff or obtaining unfair profit."

According to the conclusion of the Supreme Court's ruling mentioned above, in the case of jointly owned trade secrets, it is likely that one party using the trade secrets without the other party's consent generally does not constitute trade secret infringement. Given that joint technology development frequently occurs during business operations, it is recommended to keep the following points in mind.

Ultimately, even if there are jointly owned trade secrets, using them at will without the consent of the other party is not always legal. However, the court does not immediately rule it as infringement. The key is the existence of 'unfair intent,' so if you are planning cooperation between companies, it is wise to prepare detailed contractual terms in advance. This will help avoid unexpected disputes during the process of utilizing the technology and allow everyone to cooperate with peace of mind.

Cheongchul Law Firm is composed solely of attorneys from large law firms in Korea such as Kim & Chang, Bae, Kim & Lee, Lee & Ko, and Yulchon, as well as former members of major corporate legal teams. Rather than a single attorney handling a case, a team of specialized attorneys in the relevant field responds to cases. Cheongchul provides comprehensive solutions for overall business, focusing not just on resolving specific issues, but helping clients achieve their ultimate goals. If you need assistance in achieving your goals, please feel free to contact Cheongchul.