Hello, I am Law Firm Cheongchul Attorney Eom Sang-yun.

The Act on Prevention of Unfair Competition and Protection of Trade Secrets ("Unfair Competition Prevention Act") defines trade secrets as information that is not publicly known and has independent economic value, which includes production methods, sales methods, and other useful technical or managerial information that has been kept secret.

Today, we will look into the requirements for trade secrets, particularly the requirement of secrecy management.

[Question]

I understand that the requirement for 'secrecy management' to be recognized as a trade secret has been relaxed.

Then, can a trade secret be established even without managing secret information?

[Answer]

The former Unfair Competition Prevention Act stated that trade secrets must be 'maintained as a secret through considerable effort,' but after the amendment on January 28, 2015, it was revised to 'maintained as a secret through reasonable efforts,' thus relaxing the requirement. Subsequently, on January 8, 2019, the law was amended again to strengthen the protection of trade secrets, stipulating that they must be 'managed as a secret' in accordance with the current law, further relaxing the requirements.

Therefore, under the current Unfair Competition Prevention Act, even if one has not made 'considerable effort' or 'reasonable effort', a trade secret can still be recognized.

However, case law holds the position that even though the requirement for secrecy management has been relaxed due to the amendment, a company must make some form of management effort for the trade secret to be recognized. In other words, the court stated that even if the phrase 'by reasonable efforts' is deleted from the current law, the information must still be 'managed as a secret,' so the secret holder's management activities are still necessary, and such management efforts are required in any form. The requirement for the information to be recognized as secret includes marking it in a way that can be perceived as confidential and restricting access to it, similar to how it has been interpreted since the enforcement of the current Unfair Competition Prevention Act.”, concluding that if no specific management actions for secrecy have been taken, it cannot be recognized as a trade secret (Daejeon High Court 2021Na16384, etc.).

Furthermore, 'managed as a secret' means that the information must be in a state where it can be recognized objectively as being maintained as a secret, such as by marking it so that it is perceived as confidential, informing relevant parties, limiting access to that information, or imposing confidentiality obligations on those who access it. Therefore, at least minimal actions are necessary to be recognized as a trade secret.

For example, in the case mentioned above, the plaintiff company kept and managed trade-related information, such as customer contact information, transaction prices, and operating profits, in a representative email account while leaving it easily accessible to employees, and did not mark it in a way that could be perceived as confidential, nor did they collect non-disclosure agreements from employees or establish secrecy management regulations, which led the court to determine that the information in question did not qualify as trade secrets.

Trade secrets are the first gateway established by the Unfair Competition Prevention Act to protect a company's assets; thus, interpreting the establishment requirements too narrowly would be unfair. However, since the statutory language clearly states that it must be 'managed as a secret,' it is difficult to protect trade secrets in cases where there are no management actions. Additionally, considering the company's scale, there are often instances where trade secrecy is recognized even when the management is deemed insufficient, so rather than neglecting management due to practical difficulties, it is advisable to separate confidential materials from general materials and take simple actions, such as marking files as 'confidential.'   

Law Firm Cheongchul is a specialized law firm established by lawyers from the four major law firms, providing comprehensive solutions regarding trade secrets, intellectual property rights, and more. If you have any further inquiries, please feel free to contact us via email or phone.