Trade Secret Leaks Abroad and Criminal Proceeds in South Korea: Supreme Court Treats “Salary” Paid Before the Leak as Remuneration for the Crime

In September 2023, a man who ran a company in the United States was introduced to an expert in the production technology for POE (polyolefin elastomer). The expert was an employee about to retire from the company that owned the technology. The employee met executives and staff of a Chinese company four times in Seoul and answered their questions, and after leaving he photographed a production condition table and a process document and sent the images. Meanwhile, he received KRW 30.5 million and USD 10,188 as salary and similar payments.

The trial court ordered collection against the employee, but the appellate court (Seoul High Court) declined to do so because most of the money had been paid before the leak and partly paid for attending meetings and answering questions. On October 8, 2026, the Supreme Court of Korea reversed: all of the money was remuneration for the crime (Supreme Court of Korea, October 8, 2026, 2026Do7031). By contrast, it upheld the decision not to collect from the other defendant, who had received USD 1,528,299 in technology transfer fees from the Chinese company. The reason one defendant’s money was collectible and the other’s was not lies in what each of them was charged with.

This article uses that decision to explain what crimes a departing employee commits by taking technology abroad, how far the money paid for it can be taken back, and what companies in South Korea should do. It is based on 13 Supreme Court decisions and the statutes, all checked against the original Korean texts.

What crimes does a departing employee commit by taking technical data in South Korea?

If the data is a trade secret, taking it violates the Unfair Competition Prevention and Trade Secret Protection Act, and the penalty is heavier if the employee knows it will be used abroad. Even if the data does not qualify as a trade secret, misappropriating a company’s “major business asset” can be occupational breach of trust (eommusang baeim).

Three requirements for a trade secret

The statute defines a trade secret as information on a production method, sales method or other technical or business information useful for business activities that is not publicly known, has independent economic value and is managed as a secret (Unfair Competition Prevention and Trade Secret Protection Act, Article 2(ii)). These are usually called non-public status, economic usefulness and secrecy management.

The Supreme Court of Korea explained that information is not publicly known when, because it has not been published or otherwise made known to an unspecified number of people, it cannot ordinarily be obtained except through its holder, and that secrecy management means a state in which it is objectively recognizable that the information is being kept and managed as a secret, for example by marking it as confidential, limiting who may access it and how, or imposing confidentiality obligations on those who access it (Supreme Court of Korea, January 25, 2017, 2016Do10389). The former provision applied in that case referred to information “kept secret through considerable efforts”; since July 9, 2019, the statute has referred to information “managed as a secret.”

Leaking abroad carries up to 15 years’ imprisonment

Article 18 of the statute punishes trade secret infringement differently depending on whether it involves use abroad.

The punishable acts fall into three groups.

• For the purpose of obtaining an improper benefit or causing damage to the trade secret holder: acquiring, using or disclosing a trade secret to a third party; taking it outside a designated place without permission; or continuing to retain it after being asked by the holder to delete or return it (Article 18(1)(i)(a) to (c))
• Acquiring a trade secret by theft, deception, intimidation or other improper means (Article 18(1)(ii))
• Acquiring or using a trade secret knowing that such an act was involved (Article 18(1)(iii))

Imprisonment and a fine may be imposed together (Article 18(6)), and attempts are also punished (Article 18-2). These penalties have been in place since July 9, 2019. In the 2026 case, the departing employee (Defendant 1) was charged with continued retention and disclosure, and the other defendant (Defendant 2) with acquiring the disclosed trade secrets (Supreme Court of Korea, October 8, 2026, 2026Do7031).

Occupational breach of trust can apply even if the data is not a trade secret

The Supreme Court of Korea held that even where materials are not trade secrets, taking them out constitutes occupational breach of trust if they have not been disclosed to an unspecified number of people and are major business assets that the employer produced with considerable time, effort and cost (Supreme Court of Korea, April 24, 2008, 2006Do9089). If an employee takes such materials without permission while employed in order to leak them to a competitor or use them for his own benefit, the offense is complete when he takes them; if he lawfully held them but fails to return or destroy them at departure for the same purpose, it is complete when he leaves (Supreme Court of Korea, June 29, 2017, 2017Do3808).

In the 2026 case, Defendant 1 was also charged with occupational breach of trust. The appellate court acquitted him on the portion relating to some of the materials, and the Supreme Court upheld that part, finding no misunderstanding of the law on “trade secrets” or on “major business assets” for breach of trust (Supreme Court of Korea, October 8, 2026, 2026Do7031).

Is it a crime to keep the data after being asked to return or delete it?

Yes. Article 18(1)(i)(c) of the statute, which took effect on July 9, 2019, punishes continuing to retain a trade secret, for an improper purpose, after being asked by the holder to delete or return it. Article 18(1) applies if the person knew the secret would be used abroad, and Article 18(2) applies otherwise.

When the request was made matters

The Supreme Court of Korea held that both being asked by the holder to delete or return the trade secret and continuing to retain it are elements of this offense. It therefore concluded that punishing a person who was asked to delete or return a trade secret before the provision took effect, and who retained it, violates the principle against retroactive criminal punishment, and that this is so even if the retention continued after the effective date (Supreme Court of Korea, April 30, 2026, 2025Do21522).

In that case, the defendants had signed a confidentiality pledge when resigning in December 2017, or had submitted a confirmation of returning and destroying materials in November 2018 and been asked to delete data around January 14, 2019. The lower court convicted them because retention continued after the effective date, but the Supreme Court reversed that part, finding no evidence that they had been asked to delete or return the data after the effective date (Supreme Court of Korea, April 30, 2026, 2025Do21522).

In the 2026 case, Defendant 1 was asked by the company to delete or return all related materials when he left on January 12, 2024, and was charged with continuing to retain them until March 4, 2024. The appellate court convicted him, and the Supreme Court rejected his grounds of appeal against the conviction (Supreme Court of Korea, October 8, 2026, 2026Do7031), although the whole conviction was later sent back because of the collection issue (Section 7).

Leaks after departure are hard to reach as breach of trust

The Supreme Court of Korea held that, absent special circumstances, an employee who has left the company no longer occupies the position of a person handling another’s affairs, and that leaking or using materials he failed to return at departure is merely the execution of a breach of trust that has already been completed, so it does not constitute a separate occupational breach of trust. A third party who joins in such a leak is likewise not an accomplice to breach of trust unless the third party itself occupies the position of a person handling another’s affairs. The court noted that whether the leak or use violates the trade secret statute is a separate question (Supreme Court of Korea, June 29, 2017, 2017Do3808).

To punish conduct after departure, the conduct must therefore fit the elements of the trade secret statute, such as disclosure, use or continued retention. That is why it matters to request the return and deletion of materials in writing when an employee leaves (Section 8).

Can the money paid for the technology be taken away?

Yes. Under the Act on Regulation and Punishment of Criminal Proceeds Concealment, crimes committed to obtain an improper property benefit that are punishable by death, life imprisonment or imprisonment with a maximum of three years or more (Article 2(i)(a)), together with the crimes listed in its schedule (Article 2(i)(b)), are “serious crimes” (Article 2(i)(d)), and property derived from them or obtained as remuneration for them can be confiscated or its value collected. Trade secret infringement aimed at property gain carries a maximum of 15 years (abroad) or 10 years (domestic) and is therefore a serious crime under item (a).

Criminal proceeds: property “derived from” the crime and “remuneration” for it

Criminal proceeds are “property derived from a criminal act falling under a serious crime or property obtained as remuneration for such criminal act” (Article 2(ii)(a)). Criminal proceeds may be confiscated (Article 8(1)(i)), and if they cannot be confiscated or confiscation is inappropriate, their value may be collected from the offender (Article 10(1)). In Korean practice this collection of equivalent value is called chujing. The current item (a) threshold of a three-year maximum has applied since January 4, 2022.

The trade secret statute’s own forfeiture clause works differently

Since August 21, 2024, the trade secret statute has also had a forfeiture clause providing that “articles that constituted the act, or articles generated from the act” of trade secret infringement shall be forfeited (Unfair Competition Prevention and Trade Secret Protection Act, Article 18-5). It applies only to crimes committed after it took effect (Addenda to Act No. 20321, February 20, 2024, Article 3), and it contains no provision for collecting equivalent value. The 2026 decision was based on Articles 10 and 8(1)(i) of the Act on Regulation and Punishment of Criminal Proceeds Concealment (Supreme Court of Korea, October 8, 2026, 2026Do7031).

Collection is discretionary, but the court cannot skip the analysis

Forfeiture and collection under the Act on Regulation and Punishment of Criminal Proceeds Concealment are discretionary. Even so, the Supreme Court of Korea held that “even if collection under the Act on Regulation and Punishment of Criminal Proceeds Concealment is discretionary, the lower court must decide whether to order collection on the premise that the money Defendant 1 received is subject to collection under that Act” (Supreme Court of Korea, October 8, 2026, 2026Do7031). It had reached the same conclusion on forfeiture (Supreme Court of Korea, June 26, 2025, 2025Do6485). In other words, a court must first correctly decide whether the property is subject to collection before exercising its discretion.

Discussing collection under the Act on the Punishment of Arranging Commercial Sex Acts, the Supreme Court of Korea said that collection “aims to deprive the offender of illicit gains so that they cannot be retained” and that where several people jointly commit the offense, “the gains actually attributed to each must be collected individually” (Supreme Court of Korea, September 27, 2024, 2024Do8707). The 2026 decision likewise stressed that forfeiture and collection are needed to remove at the root “the economic benefit that serves as the incentive for the crime” (Supreme Court of Korea, October 8, 2026, 2026Do7031).

What happened in the 2026 Supreme Court case?

The case involved POE production technology that reached a Chinese company. The Supreme Court of Korea reversed the appellate court’s refusal to collect the money the departing employee received, and upheld the decision not to collect from the other defendant, who had received technology transfer fees through a U.S. company (Supreme Court of Korea, October 8, 2026, 2026Do7031).

The facts

Why the appellate court declined to collect

The appellate court convicted Defendant 1 but reversed the trial court’s collection order for three reasons: most of the money was paid before the leaks; because Defendant 1 also attended meetings with the Chinese company and answered its questions, the money was hard to regard as property derived from the crime or as remuneration for it; and even if part of it was consideration for the crime, there was no evidence from which to calculate that portion (Supreme Court of Korea, October 8, 2026, 2026Do7031).

The appellate court also reversed the trial court’s collection order against Defendant 2, reasoning that the USD 1,528,299 the U.S. company received appeared to be the installments due through the third stage of the agreement, that Defendant 1’s attendance at meetings appeared to be part of performing the agreement, and that the first leak occurred after all of that money had been received (Supreme Court of Korea, October 8, 2026, 2026Do7031).

The Supreme Court’s conclusions

Is money paid before the leak, or mixed with pay for other work, subject to collection?

Yes, if it was paid in return for the crime. The Supreme Court of Korea looked not at when the money was paid but at whether it was paid as consideration for the crime, and treated the whole amount as remuneration for the crime even though it also paid for incidental work that shared the crime’s purpose (Supreme Court of Korea, October 8, 2026, 2026Do7031).

The two tests the Supreme Court set

The Supreme Court of Korea defined “remuneration for a criminal act” as money or goods the defendant received in return for committing the crime, and held: “Even if the acts for which remuneration is paid partly include acts that are not crimes, where such acts are merely a series of incidental or auxiliary acts sharing the purpose of the criminal act, or are acts for which there would have been no reason to pay separately had the crime not been committed, all of the money or goods paid constitute ‘property obtained as remuneration for a criminal act’ and are subject to forfeiture or collection under the Act on Regulation and Punishment of Criminal Proceeds Concealment.” (Supreme Court of Korea, October 8, 2026, 2026Do7031)

On timing, it added that the character of a payment as consideration for a crime “should not be lightly denied merely because the payment was made before or after the criminal act” (Supreme Court of Korea, October 8, 2026, 2026Do7031).

Applying the tests

The Supreme Court found that the money Defendant 1 received was consideration for continuing to retain the trade secret after leaving and disclosing it to Defendant 2 so that it could be used abroad. Attending meetings with the Chinese company and answering its questions and requests for materials during that period were “merely a series of incidental or auxiliary acts sharing the purpose of the criminal act consisting of the continued retention and disclosure of the trade secret.” The money was therefore “in its entirety property obtained as remuneration for the charged criminal act” (Supreme Court of Korea, October 8, 2026, 2026Do7031). Once all of it is remuneration, the appellate court’s concern that there was no basis for calculating a portion does not arise.

The same approach in other offenses

In solicitation and influence-peddling cases, the Supreme Court of Korea has long held that where consideration for the crime and for other services is “inseparably combined,” the entire payment is solicitation money. In a case where KRW 25 million covered actual expenses, the defendant’s efforts in assisting investigations and the solicitation itself, the court found that the items “cannot be separated, so the entire KRW 25 million” was paid as solicitation money (Supreme Court of Korea, April 10, 2008, 2007Do3044).

The result was the same where the other consideration was labeled as service fees. Where a defendant received a total of KRW 96,700,020 in five payments, combining solicitation money and fees for M&A-related services without any breakdown, the Supreme Court upheld collection of the entire amount. It added, however, that where money was received on several occasions and the consideration may be assessed differently for each act, the connection to the solicitation must be examined act by act (Supreme Court of Korea, March 22, 2017, 2016Do21536).

Salary is treated the same way. Where consideration for influence peddling was paid as salary under a sham employment contract, the Supreme Court held that the amount received was “not the nominal salary but the amount actually received” after withholding of earned income tax and the like, and that this amount was to be confiscated or collected (Supreme Court of Korea, June 14, 2012, 2012Do534). The court has also held that salary received as remuneration for the crime by an employee who was an accomplice in arranging commercial sex acts can be collected under the Act on Regulation and Punishment of Criminal Proceeds Concealment (Supreme Court of Korea, September 27, 2024, 2024Do8707).

But collection of the whole amount is not automatic

Some decisions point the other way. In a bribery case, the Supreme Court of Korea held that where KRW 80 million combined consideration for duty-related work and gratuities unrelated to the official’s duties, and the two “cannot objectively be separated,” the court must either refrain from collection altogether or identify the duty-related bribe amount, and it reversed a judgment that had estimated the bribe by proportion without a clear basis. The bribe amount must be proved, and “if the bribe amount cannot be identified, its value cannot be collected” (Supreme Court of Korea, May 26, 2011, 2009Do2453).

The result also differs when proceeds of a separate, uncharged crime are mixed in. Where KRW 177,047,696 received by the operator of an online gambling venue combined consideration for recruiting members with winnings from his own gambling, and there was no evidence separating the two, the Supreme Court held that only the KRW 78,450,896 proven to be consideration for recruiting members could be collected as proceeds of opening the gambling venue, and reduced the collection accordingly (Supreme Court of Korea, April 13, 2023, 2022Do13121).

The 2026 test can be read together with these decisions. If the mixed-in work was incidental or auxiliary to the charged crime and shared its purpose, or was work for which there would have been no reason to pay absent the crime, the whole amount is subject to collection. If instead part of the money paid for unrelated work or for a separate crime, it must be separated and proved.

Why was the USD 1.53 million paid by the foreign company not collected?

Because collection is available only for property derived from the charged offense or received as consideration for it. Defendant 2 was charged with acquiring the trade secrets from Defendant 1, and the technology transfer fees he received from the foreign company were not consideration for that acquisition.

The Supreme Court of Korea held that even if there are signs that a defendant received money in connection with crimes such as disclosure or leaking of trade secrets, “if it cannot be regarded as derived from or as consideration for the criminal act charged against the defendant, it cannot be confiscated or collected from that defendant.” The USD 1,528,299 Defendant 2 received through the U.S. company “cannot be regarded as property derived from the act of ‘acquiring’ the trade secret from co-defendant 1, nor as property obtained as consideration for that act” (Supreme Court of Korea, October 8, 2026, 2026Do7031).

This rule is not new. The Supreme Court of Korea has held that “our legal system has no system for imposing forfeiture or collection alone without an indictment,” that the requirements for forfeiture or collection must relate to the crime charged, and that this applies equally to forfeiture and collection under the Act on Regulation and Punishment of Criminal Proceeds Concealment (Supreme Court of Korea, April 13, 2023, 2022Do13121).

Lessons for victim companies

Even within the same flow of money, what can be taken back depends on which acts are charged. In this case, the money Defendant 1 received was linked to the charged retention and disclosure, while the money Defendant 2 received was not linked to the “acquisition” with which he was charged. When filing a criminal complaint over a technology leak, a company should therefore give investigators not only who handed over what, but also who received money from whom and under what label.

The law is also changing. From March 16, 2027, “introducing, arranging or inducing” trade secret infringement will itself be punishable, and disclosing to a third party a trade secret obtained by improper means, or obtained knowing of such conduct, will be expressly covered (Unfair Competition Prevention and Trade Secret Protection Act as amended by Act No. 21952, promulgated September 15, 2026, Article 18(1)(ii) to (iv)). As criminal provisions, these will not apply to conduct before they take effect (Criminal Act, Article 1(1)).

Why does a missing collection order send the whole conviction back?

Because if the appellate court did not order collection at all, there is no “collection portion” to cut out and reverse. The Supreme Court of Korea therefore reversed the entire conviction portion of the appellate judgment against Defendant 1 and remanded it to the Seoul High Court (Supreme Court of Korea, October 8, 2026, 2026Do7031).

The court explained that where only the forfeiture or collection portion of an appellate judgment imposing a principal sentence and forfeiture or collection is defective, the Supreme Court may reverse that portion alone, but where it reverses because the appellate court failed to order forfeiture or collection, there is no such portion to identify and reverse separately (Supreme Court of Korea, October 8, 2026, 2026Do7031; to the same effect, Supreme Court of Korea, October 28, 2005, 2005Do5822; Supreme Court of Korea, June 26, 2025, 2025Do6485). On remand, the Seoul High Court will rehear the conviction portion against Defendant 1 and decide whether to order collection on the premise that the money is subject to collection.

Defendant 1 also argued that his sentence was too heavy, but the Supreme Court rejected the argument because an appeal on the ground of excessive sentencing is allowed only in cases where death, life imprisonment or imprisonment of ten years or more has been imposed (Supreme Court of Korea, October 8, 2026, 2026Do7031; Criminal Procedure Act, Article 383(iv)). The judgment does not state the sentence imposed below, only that it was lighter than that.

As to the corporate defendant, the appellate court dismissed the indictment as filed against a party lacking capacity to be a party, and the Supreme Court upheld that ruling, finding no misunderstanding of the law on correcting an indictment. It also held that refusing the prosecution’s request to reopen arguments was within the court’s discretion (Supreme Court of Korea, October 8, 2026, 2026Do7031). The judgment does not explain why the corporation lacked that capacity.

What should companies do?

In ordinary operations: leave a record of secrecy management

• Mark core technical data as confidential, restrict who can access it and how, and impose confidentiality obligations on those who do. Courts ask whether it was objectively recognizable that the information was managed as a secret (Supreme Court of Korea, January 25, 2017, 2016Do10389).
• Record the development history and cost of key materials so that they can be protected as major business assets through breach of trust even if trade secret status is not established (Supreme Court of Korea, April 24, 2008, 2006Do9089).

When employees leave: request return and deletion in writing

• At departure, request in writing the return and deletion of all company materials and obtain a confirmation. Receiving such a request is an element of the continued-retention offense (Supreme Court of Korea, April 30, 2026, 2025Do21522). In the 2026 case, too, the request made at departure was the starting point of the retention charge (Supreme Court of Korea, October 8, 2026, 2026Do7031).
• Leaks after departure are difficult to punish as breach of trust (Supreme Court of Korea, June 29, 2017, 2017Do3808), so review records of materials taken during employment (email, storage devices, printing logs) before the employee leaves.

When a leak is discovered: include the money trail in the complaint

1. Preserve evidence, including records of downloads and transmissions and the return requests made at departure.
2. In the complaint, describe the acts (disclosure, use, continued retention and so on) together with who received money from whom and under what label. Collection reaches only money linked to the charged offense (Supreme Court of Korea, October 8, 2026, 2026Do7031; Supreme Court of Korea, April 13, 2023, 2022Do13121).
3. If assets may be moved, consider a preservation order for collection. The Act on Regulation and Punishment of Criminal Proceeds Concealment applies the preservation provisions of the Act on Special Cases concerning the Prevention of Illegal Trafficking in Narcotics (Article 12), and a prosecutor may obtain a preservation measure from a judge even before an indictment is filed (Article 53(1) of that Act).
4. In civil proceedings, seek an injunction to stop or prevent the infringement (Unfair Competition Prevention and Trade Secret Protection Act, Article 10) and damages (Article 11). For intentional trade secret infringement, the court may award up to five times the damages found (Article 14-2(6)). The five-times cap applies to violations occurring on or after August 21, 2024; earlier violations are subject to a three-times cap, which itself applies only to infringements that began on or after July 9, 2019 (Addenda to Act No. 16204, January 8, 2019, Article 2). For how damages are calculated, see How are trade secret damages calculated in South Korea?

What does this mean for foreign companies in IFEZ?

Foreign-invested manufacturers, biotech firms and R&D centers in the Incheon Free Economic Zone (IFEZ), including Songdo International Business District, Cheongna International City and Yeongjong International City, are protected by the same trade secret and criminal proceeds rules as Korean companies.

• When engineers or researchers leave, a written return-and-deletion request at departure is the foundation for the continued-retention offense (Supreme Court of Korea, April 30, 2026, 2025Do21522), and it should be part of every exit procedure.
• If a former employee is recruited by a competitor abroad and is paid as an “adviser” or “consultant,” the label does not shield the money from collection when the work was incidental to the leak (Supreme Court of Korea, October 8, 2026, 2026Do7031).
• Companies that hire Korean engineers should also take care: acquiring a trade secret knowing that it was obtained through an infringing act is itself a crime (Unfair Competition Prevention and Trade Secret Protection Act, Article 18(1)(iii)), and for violations on or after August 21, 2024 a corporation can be fined up to three times the fine for the individual offender unless it exercised due care and supervision (Article 19).

For help in English with a trade secret complaint or investigation in IFEZ, see English-Speaking Lawyer in Incheon Free Economic Zone.

Frequently asked questions

This article summarizes Korean court decisions and statutes on trade secret infringement and the collection of criminal proceeds, based on published judgments, and is not legal advice for any particular case. Because the 2026 Supreme Court decision remanded the case, whether and how much will be collected from Defendant 1 will be decided by the Seoul High Court. 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

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