Copying a Supplier’s Unpatented Technology in South Korea: Supreme Court Rejects a Fixed 10-Year Limit on Protection Against Misappropriation

In 2010, a French transformer manufacturer signed a contract with a Korean electrical equipment company and custom-built transformers for electric multiple-unit railway cars. It also handed over drawings showing the shape, size, names and assembly of the parts, marked to the effect that they contained confidential information and could not be used without approval. From 2013 to 2023, the Korean company delivered transformers that were near-copies of that design to railway car makers and to the Korea Railroad Corporation.

The French manufacturer sued under the misappropriation clause of the Unfair Competition Prevention Act and, in the alternative, in tort under the Civil Act. The appellate court found misappropriation but held that technology-related results were protected only for 10 years from the first delivery in early 2011, and excluded the last order placed on May 11, 2021. On October 8, 2026, the Supreme Court of Korea set aside that part of the ruling (Supreme Court of Korea, October 8, 2026, 2024Da226825).

Starting from that decision, this article explains how far Korea’s misappropriation clause protects technology, products and services that are not covered by patents or trade secrets. We reviewed the original texts of 14 Supreme Court decisions, 4 lower court decisions and the relevant statutes. It is written for companies that supply parts or equipment, share drawings with customers, or build products using materials received from business partners in South Korea.

If something is not patented, can it be copied freely in South Korea?

No. Even results that are not protected as patents, designs, trademarks, copyrights or trade secrets may be protected under the misappropriation clause of the Unfair Competition Prevention and Trade Secret Protection Act if they are taken and used unfairly.

Article 2(1)(pa) of the current Act defines as unfair competition “any other act of using, for one’s own business and without permission, results achieved by another person through substantial investment or effort, in a manner contrary to fair commercial practices or competitive order, thereby infringing that person’s economic interests” (our translation). It comes last in a list of specific unfair competition acts such as passing off, false indications of origin and copying product configurations.

The Supreme Court of Korea calls this a “supplementary general clause.” In the 2026 decision, it confirmed that the clause protects newly emerging intangible results with economic value and compensates for the fact that legislators cannot list every type of unfair competition, so that courts can address new forms of unfair competition and reflect changing views of trade in a timely way (Supreme Court of Korea, October 8, 2026, 2024Da226825). It said the same in the golf course case (Supreme Court of Korea, March 26, 2020, 2016Da276467). The Court has also held that the protected “results” are not limited by type: they include intangible as well as tangible things, and may include new kinds of outputs that were hard to protect under conventional intellectual property laws (Supreme Court of Korea, May 15, 2025, 2025Da202970).

The same clause appears as item (cha), (ka) or (pa)

The clause was introduced in 2013 and moved twice as new items were inserted before it, so court decisions refer to it by the label in force at the time. The 2026 decision applied item (ka) as it stood before the amendment of December 7, 2021.

What counts as a protected “result,” and what use is “unfair”?

Korean courts ask three questions: whether there is a “result” worth protecting, whether it was produced through “substantial investment or effort” and is not in the public domain, and whether the defendant used it without permission “in a manner contrary to fair commercial practices or competitive order.”

1. Result — courts consider the reputation or economic value of the output, the customer appeal embodied in it, and its weight and competitiveness in the relevant business field (Supreme Court of Korea, October 8, 2026, 2024Da226825).
2. Substantial investment or effort — the investment or effort is assessed case by case against the practices and realities of the industry, and the economic interest infringed must not belong to the public domain that anyone may freely use (Supreme Court of Korea, October 8, 2026, 2024Da226825).
3. Unfair use without permission — courts consider whether the parties compete or are likely to compete soon, what the commercial practices and competitive order of the industry are and whether they are fair, whether the defendant’s product or service can replace the result in the market, how well known the result is, and whether customers could be confused (Supreme Court of Korea, October 8, 2026, 2024Da226825; Supreme Court of Korea, March 26, 2020, 2016Da276467).

The party alleging misappropriation bears the burden of proof. The Supreme Court of Korea held that the burden of proving unfair use without permission lies with the party claiming that the act is unfair competition under item (pa) (Supreme Court of Korea, July 9, 2026, 2023Da290355 (main claim) and 2023Da290362 (counterclaim)).

Cases where protection was granted or denied

Even where materials were received in a business relationship, the outcomes differed. In the lifter drive unit case, the problem was using drawings of a device the plaintiff had developed for a purpose other than the one for which they were provided, and pushing the plaintiff out of the supply chain. In the review service case, the API consisted of ordinary elements and there was no evidence of actual use. In a misappropriation dispute, what matters more than “what was received” is whether it is commonplace in the industry, whether it was used for the purpose for which it was provided, and whether there is evidence of actual use.

What about copying before the clause existed?

A damages claim can be brought as a tort under the Civil Act. The misappropriation clause took effect on January 31, 2014, but the Supreme Court of Korea had treated the same kind of conduct as a tort under Article 750 of the Civil Act before then.

The leading case involved a program that made another company’s advertisements appear on an internet portal’s pages. The Supreme Court held that using, for one’s own business and contrary to commercial ethics or fair competition, results that a competitor built through considerable effort and investment, thereby free-riding on that effort and investment and infringing the competitor’s legally protectable interests, is a tort under the Civil Act. It added that if the unauthorized use continues so that money damages alone cannot provide effective relief, and the victim’s interest protected by an injunction outweighs the resulting burden on the wrongdoer, the victim may also seek an injunction (Supreme Court of Korea, August 25, 2010, 2008Ma1541 (decision)). The 2013 amendment reflected the purpose of that decision in statute (Supreme Court of Korea, March 26, 2020, 2016Da276467).

As a result, one case may rely on different grounds for different periods. In the golf course case, the lower court treated the same conduct as a tort until January 30, 2014 and as a violation of the misappropriation clause from January 31, 2014, and the Supreme Court upheld that approach (Supreme Court of Korea, March 26, 2020, 2016Da276467). In the transformer case, the first transformer, ordered on March 26, 2013, was treated as a civil tort, and the second and third deliveries, ordered in 2017 and 2019, as misappropriation; the fourth delivery will be decided again on remand (Supreme Court of Korea, October 8, 2026, 2024Da226825). The appellate court assessed the damages for the first delivery at KRW 13,230,000 (Daejeon High Court, January 24, 2024, 2022Na13337).

How long does protection against misappropriation last?

The statute sets no period. Patents and product configurations have statutory periods, and for trade secrets Korean courts set an injunction period case by case. Whether misappropriation should also have a period like trade secrets was the issue in this case.

Product configurations: no injunction after 3 years

The product configuration clause excludes copying of a configuration more than 3 years after it took shape, such as by making a prototype. Whether to grant an injunction is judged as of the close of argument at the fact-finding court, so if argument closed more than 3 years after the prototype date, no injunction can be granted. The Supreme Court of Korea set aside a ruling that had granted an injunction without examining this point (Supreme Court of Korea, June 28, 2018, 2018Da215893).

Trade secrets: an injunction lasts as long as needed to remove the head start

Trade secrets have no statutory period, but the Supreme Court of Korea has held that the purpose of an injunction is to prevent the infringer from unfairly profiting from the superior position of a head start or time savings over fair competitors, so an injunction must be limited to the time needed for that purpose (Supreme Court of Korea, February 13, 1998, 97Da24528). Relevant factors include the nature and difficulty of the technical information, the time and cost the owner spent to obtain it, the time other competitors would need to obtain it lawfully through independent development or reverse engineering, and a comparison with patent terms (Supreme Court of Korea, February 13, 1998, 97Da24528).

Once the protection period expires, the right to an injunction lapses. But if the end of the period cannot be determined, for example because others are unlikely to obtain the same technology lawfully, the court may decline to set an injunction period, and this is not a permanent ban: the enjoined party may later argue that the period has expired (Supreme Court of Korea, March 14, 2019, 2018Ma7100 (decision)). Even when an injunction is refused because the period has expired, damages for losses up to that point can still be awarded. In a navigation circuit design case, a ruling that fixed the end of the protection period around March 2012, denied the injunction and awarded damages up to that time was upheld (Supreme Court of Korea, September 10, 2019, 2017Da34981).

Misappropriation: lower courts borrowed periods from other regimes

Because the misappropriation clause has no period, lower courts have refused protection under it once the period of another regime had expired. The Busan High Court held that information whose trade secret protection period had expired could be regarded as having entered the public domain and rejected a misappropriation claim (Busan High Court, October 6, 2021, 2020Na57663), and the Seoul Central District Court held that selling products with the same configuration after the 3-year product configuration period was hard to regard as a use “contrary to fair commercial practices or competitive order” under the misappropriation clause (Seoul Central District Court, August 25, 2022, 2020Gahap518132).

The appellate court in this case took the same direction. Citing Supreme Court decisions on trade secret injunction periods, it reasoned that injunctions against unfair competition should, like trade secret injunctions, be limited to the time needed, and that technology-related results may be regarded as entering the public domain after a certain time, and it set the protection period at 10 years (Daejeon High Court, January 24, 2024, 2022Na13337). The Supreme Court did not accept that conclusion.

What happened in the transformer case?

The case concerned transformers for electric multiple-unit railway cars ordered by the Korea Railroad Corporation. A railway car maker ordered transformers from a Korean electrical company (the defendant), which in turn engaged a transformer manufacturer headquartered in Lyon, France (the plaintiff) to build and supply them (Supreme Court of Korea, October 8, 2026, 2024Da226825; Daejeon District Court, June 9, 2022, 2021Gahap100797).

The plaintiff had given the defendant drawings showing the shape, size, names and assembly of the transformer parts, stating that they contained confidential information and that use without the plaintiff’s approval was prohibited. It sued for an injunction, destruction of the products and KRW 3,016,547,738 in damages (Supreme Court of Korea, October 8, 2026, 2024Da226825). The district court granted an injunction and destruction and awarded KRW 250,000,000 (Daejeon District Court, June 9, 2022, 2021Gahap100797). It found that the defendant appears to have disassembled the sample transformer received from the plaintiff in early 2013 and was thereby able to confirm its components, their connections and its design structure (Daejeon District Court, June 9, 2022, 2021Gahap100797).

The appellate court: misappropriation, but only 10 years of protection

The appellate court found that the transformer was a result of the plaintiff’s substantial investment or effort and that the defendant had made and sold near-copies using the plaintiff’s transformer and drawings without consent. It then set the protection period at 10 years from the plaintiff’s first delivery in early 2011, citing the roughly one year the plaintiff spent designing and building the transformer, the disclosure of the drawings around December 2012 after approval by the Korea Railroad Corporation, the defendant’s acquisition of the technology in a relatively short time around 2013, and the fact that railway transformers, once delivered in volume, see little demand until the next car order (Daejeon High Court, January 24, 2024, 2022Na13337).

It therefore enjoined the manufacture, sale and delivery of products under the October 7, 2019 contract and ordered their destruction, but held that deliveries under the contract of May 11, 2021, made after the protection period had ended, were not unfair competition (Daejeon High Court, January 24, 2024, 2022Na13337). Damages were calculated by applying the standard income rate from the National Tax Service’s expense-rate notice to the defendant’s sales from the first three deliveries (Daejeon High Court, January 24, 2024, 2022Na13337).

Total sales are KRW 135,000,000 for the first delivery, KRW 399,168,000 for the second and KRW 7,698,600,000 for the third; the 9.8% rate is 100% minus the 90.2% simple expense rate for locomotive and railway car parts manufacturing. Of the KRW 806,811,264, KRW 13,230,000 is for the civil tort (first delivery) and KRW 793,581,264 for misappropriation (second and third deliveries) (Daejeon High Court, January 24, 2024, 2022Na13337).

Why did the Supreme Court reject the 10-year limit?

The Supreme Court of Korea held that it was difficult to say that the protection period for the plaintiff’s transformer could be limited uniformly, or that it had already expired at the time of the fourth delivery (Supreme Court of Korea, October 8, 2026, 2024Da226825). It gave six reasons.

1. Custom technology — the plaintiff built the transformer to order based on technology and know-how accumulated over many years, and its capabilities are broadly recognized in industry surveys and research papers.
2. Use outside the contract — the defendant breached the contract, used the transformer’s technical information outside the contract’s purpose, and made near-copies.
3. Competition and lost recovery — both companies make and supply railway transformers and compete; the defendant gained substantially while the plaintiff lost the chance to recover the value of the money and effort it invested.
4. A shortcut — without using the information in that way, the defendant would have found it hard to acquire enough capability for EMU-150 transformers in a short time.
5. No real difference between the third and fourth deliveries — the lower court put the third delivery inside the period and the fourth outside it, but their end dates were only about two months apart, the products were the same, and there was little change in the technology or the defendant’s capabilities in between.
6. Still near-copies after 10 years — the transformers delivered under the fourth order through August 31, 2023 were still near-copies of the transformer first supplied in early 2011, and there was no evidence that it belonged to the public domain, so the transformer was likely still a competitive result worth protecting long after 10 years.

Finding that the lower court had misunderstood the law on limiting the protection period for results and misjudged the facts, the Supreme Court set aside the claims for injunction, destruction and damages relating to the fourth delivery. Because it set aside the main claim on that point, it also set aside the inseparably linked alternative claim in tort (Supreme Court of Korea, October 8, 2026, 2024Da226825). The defendant’s appeal on the first three deliveries was dismissed, so the findings of misappropriation and tort, the injunction and destruction order, and the KRW 806,811,264 award stand. The Court added that parts of the lower court’s reasoning on the protection period and damages were not entirely appropriate (Supreme Court of Korea, October 8, 2026, 2024Da226825).

What the decision says and what it does not

• The Court did not say that misappropriation has no protection period at all. The question was whether a period could be imposed “uniformly” on this transformer and whether it had expired by the fourth delivery.
• What the Court relied on was the situation at the time of the deliveries rather than the number of years elapsed: whether the products were still near-copies, whether there was evidence the technology had entered the public domain, and whether the technology or the defendant’s capabilities had changed.
• The decision does not address whether information whose trade secret period has expired, or a product configuration more than 3 years old, can be protected under the misappropriation clause. The lower court decisions in section 4 concern those situations.
• The scope of the injunction, destruction and damages for the fourth delivery will be decided again by the Daejeon High Court on remand.

What remedies are available?

A civil action can seek an injunction, destruction of infringing goods and damages. However, misappropriation is not a crime and enhanced damages do not apply, so depending on the facts, trade secret, idea misappropriation and subcontracting law claims should also be considered.

Injunction, destruction and damages

A party whose business interests are infringed or likely to be infringed by unfair competition may seek an injunction or preventive order, together with destruction of the goods that constitute the infringement and removal of the equipment used (Unfair Competition Prevention Act, Article 4(1) and (2)). A party who intentionally or negligently infringes another’s business interests and causes loss must pay damages (Article 5), and if business reputation has been damaged by intentional or negligent unfair competition, measures to restore it may also be sought (Article 6).

Presumptions ease the burden of proving damages

If the infringer profited from the infringement, that profit is presumed to be the plaintiff’s loss (Article 14-2(2)), and where proving the amount is extremely difficult by its nature, the court may award a reasonable amount based on the entire argument and the evidence (Article 14-2(5)). The Supreme Court of Korea has held that “profit received by the infringer” is not limited to profit from sales of infringing goods: if the infringer saved manufacturing costs by using another’s results without permission, the savings may count as its profit. In the lifter drive unit case, purchase-cost savings of KRW 1,142,000 per unit for 299 units, totaling KRW 341,458,000, were presumed to be the loss, and the infringer bears the burden of proving grounds to rebut the presumption (Supreme Court of Korea, April 28, 2022, 2021Da310873). In the advertising case, an award of KRW 50 million in reasonable damages, based on the time and labor costs invested and the extent to which the deliverables were used, was upheld (Supreme Court of Korea, July 23, 2020, 2020Da220607).

What misappropriation alone does not provide

The Fair Transactions in Subcontracting Act also prohibits a prime contractor from wrongfully using a subcontractor’s technical data for itself or a third party or providing it to a third party (Article 12-3(4)), and a prime contractor that violates this is liable for up to 5 times the loss (Article 35(2)(ii)). Where the Subcontracting Act has different provisions on matters including the misappropriation clause and the injunction and damages provisions, the Subcontracting Act governs (Unfair Competition Prevention Act, Article 15(2)).

What should companies do before handing over technology and drawings?

In misappropriation litigation, the key questions are whether the materials were used for the purpose for which they were provided and whether the use was contrary to fair commercial practices. Recording the purpose and scope at the time of handover gives the court a basis for that judgment.

For the party providing technology

• Mark drawings and technical documents as confidential and prohibit unauthorized use. The drawings in this case carried such statements, and the Supreme Court noted them in its account of the facts (Supreme Court of Korea, October 8, 2026, 2024Da226825).
• State in the contract the purpose and scope of use, a ban on other uses, return or destruction after the relationship ends, and liability for breach. In this case, the Supreme Court relied on the defendant’s use of the technical information outside the contract’s purpose (Supreme Court of Korea, October 8, 2026, 2024Da226825); in the lifter drive unit case, the lower court found that using the drawings beyond the purpose for which they were provided was contrary to fair commercial practices, and the Supreme Court upheld that finding (Supreme Court of Korea, April 28, 2022, 2021Da310873).
• When supplying samples, consider restrictions on disassembly and reverse engineering. Disassembly of the sample transformer appears in the facts of this case (Daejeon District Court, June 9, 2022, 2021Gahap100797).
• Also manage core technology as a trade secret. Misappropriation alone does not support criminal penalties or enhanced damages.
• In a subcontracting relationship, the prime contractor must sign a confidentiality agreement by the date it receives technical data (Subcontracting Act, Article 12-3(3)), so make sure that agreement is in place.

For the party receiving and using technology

• Keep drawings and samples received from business partners separate internally so they are not used to develop other products.
• If you develop a similar product independently, keep records of how and when it was developed. A finding of independent development has defeated a claim of unauthorized use (Supreme Court of Korea, October 14, 2022, 2020Da268807).
• The passage of time alone is not a safe harbor. The 2026 decision held that products delivered long after 10 years, if still near-copies of the original and with no evidence the technology had entered the public domain, are likely still a result worth protecting (Supreme Court of Korea, October 8, 2026, 2024Da226825).

When you discover copying

1. Identify the other side’s deliveries and their timing. As this case shows, the outcome can differ contract by contract, so organize deliveries by period.
2. Gather records of drawings sent, samples supplied, confidentiality markings and contracts.
3. Consider whether to plead misappropriation together with trade secret infringement, idea misappropriation, subcontracting law violations and, for conduct before the clause took effect, civil tort, as main and alternative claims.
4. If proving the loss is difficult, obtain sales data and use the presumption and reasonable-damages provisions.

What does this mean for foreign suppliers and companies in IFEZ?

The plaintiff in this case was a French manufacturer, and the Korean courts protected its transformer design under the misappropriation clause and, for the earliest delivery, as a civil tort. Foreign suppliers and companies operating in the Incheon Free Economic Zone (IFEZ), including Songdo International Business District, Cheongna International City and Yeongjong International City, often share drawings, samples and specifications with Korean partners, and the same rules apply to them.

• Foreign suppliers should treat the supply contract as the first line of defense: define the purpose of any drawings or samples, prohibit other uses and reverse engineering, and keep copies of what was sent and when.
• If a Korean partner starts supplying its own version of your product, act on evidence of each order and delivery. The 2026 decision shows that a long gap since the original supply does not by itself end protection where the products remain near-copies (Supreme Court of Korea, October 8, 2026, 2024Da226825).
• Because misappropriation is not a crime in Korea, consider whether the information also qualifies as a trade secret or whether subcontracting law applies before choosing between civil and criminal routes.

Frequently asked questions

This article summarizes Korean court decisions and statutes on the misappropriation clause of the Unfair Competition Prevention Act and its protection period, based on published judgments, and is not legal advice for any particular case. The Supreme Court decision set aside the lower court ruling in part and remanded it, so the outcome for the deliveries ordered on May 11, 2021 will be decided by the Daejeon High Court. Statutes may be amended, so in an actual case the provisions in force at the time of the conduct should be checked. Please consult Atlas Legal about your specific situation.

About the Author

Taejin Kim | Managing Partner

Corporate Counseling, Corporate Disputes, White-Collar Crime

Former Public Prosecutor | Judicial Research and Training Institute, 33rd Class

Korea University LL.B. & LL.M. (Criminal Law), University of California, Davis LL.M.

Atlas Legal | Incheon Songdo, South Korea

Visit Atlas Legal Homepage →