Company Sues Employees Who Took Employment Records...Court Declares "Not a Trade Secret," Hands Down Acquittal

Employees of a manufacturing company were put on trial on charges of taking company materials when they resigned, setting up a competing business in the same field, and selling similar products. However, the court ruled that the materials in question did not constitute trade secrets and handed down an acquittal.

According to the legal community on the 28th, the Jeju District Court in March acquitted three individuals, including Mr. A, who had been indicted on charges of violating the Unfair Competition Prevention and Trade Secret Protection Act (including disclosure of trade secrets) and occupational breach of trust.

Mr. A worked at Company B, a manufacturer, before resigning in 2022 and establishing a company in the same field. Two colleagues who subsequently left Company B joined his company.

Company B claimed that Mr. A and the others had taken computer files related to a product under development around the time of their resignation. It also emphasized that it suffered financial damage because Mr. A's company used these materials to launch and sell a similar product first.

During the trial, Mr. A and the others denied all charges. They said they resigned because they had not been properly paid several months' worth of wages, and that they took the materials to prove their employment. They argued that the files they took upon resignation had no access restrictions or confidentiality markings, so they did not constitute trade secrets, and that the product they launched with their new company differed in composition from Company B's product, so no damage was caused.

The court accepted their claims as true and determined that the materials taken during the resignation process were not trade secrets either. This was because most of the content of the materials was publicly available on the internet, so Mr. A and the others made the product in a way accessible through YouTube. The court also found that the profit they earned from making the product was very small, so the materials taken from Company B could not constitute a major business asset capable of providing a competitive advantage.

Attorney Lee Da-woo of Daeryun LLC, who represented Mr. A and the others, explained, "Under the Unfair Competition Prevention Act, information that anyone can easily obtain or that is generally known cannot be recognized as a trade secret," adding, "We were able to obtain an acquittal by emphasizing that the files in question were nothing more than materials available on the internet, and that the purpose of removing them was to prove the fact of unpaid wages."

Reporter Jeong Cheol-wook

[Read Full Article]
Company Sues Employees Who Took Employment Records...Court Declares "Not a Trade Secret," Hands Down Acquittal (Go to link)