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Atlas Legal obtained a trade secret injunction prohibiting the unauthorized possession, use, reproduction, distribution, and modification of misappropriated software source code, with the court ordering a KRW 1 billion security deposit as a condition of the interim relief.
Case Overview
Our client (Company A) is a developer and manufacturer of industrial automation device software that entered into a joint development agreement with Company B in December 2018, under which it supplied 1,500 automated kiosk units. A subsequent police investigation revealed that a Company B employee had covertly connected a USB drive to a Company A employee’s laptop during an unattended moment, copying the entire AP source code. The files were later found stored on Company B’s computers with only their filenames altered. Company B claimed that, having paid the agreed development fee under the contract, all AP (Application Program) ownership had transferred to them and their possession of the source code was therefore lawful.
Key Legal Issue: Defining the Scope of “AP” Under the Joint Development Agreement
Article 7 of the joint development agreement provided that “ownership of the AP shall vest in Company B upon payment of the development fee.” However, the software delivered by Company A included not only the user-facing AP but also a middleware component called DevCntl — a DLL (Dynamic Link Library) developed separately around 2020 to accommodate a hardware change in the upgraded model, specifically the replacement of the payment module from Vendor X to Vendor Y. The court examined the contractual language alongside the timeline of development and the parties’ course of conduct, ultimately finding insufficient grounds to conclude that Company B had acquired ownership over DevCntl through the original joint development agreement.
Technical Analysis: Distinguishing Middleware from Application Software
A central pillar of the litigation strategy was presenting a precise technical analysis of the software architecture to the court. Atlas Legal demonstrated that DevCntl functions as a hardware abstraction layer — enabling the upper-level AP to operate identically regardless of which payment module manufacturer’s hardware was installed. This meant DevCntl was architecturally, functionally, and developmentally distinct from the AP: it operated at a different layer of the software stack, was developed years after the original contract, and served a purpose not contemplated at the time of contracting. The court accepted this characterization in its assessment of ownership scope.
Court’s Ruling: Trade Secret Status and Urgency Established
The court found that the disputed programs satisfied all three requirements for trade secret protection under Korea’s Unfair Competition Prevention and Trade Secret Protection Act: non-public disclosure, independent economic value, and reasonable measures to maintain confidentiality. On the issue of urgency (a prerequisite for interim injunctive relief), the court rejected Company B’s argument that the injunction would cause it disproportionate harm. The court reasoned that the harm Company B faced was “fundamentally self-inflicted,” arising from its own unlawful acquisition of the source code rather than from the injunction itself.
Outcome: Injunction Granted on KRW 1 Billion Security
The court granted the injunction, ordering Company B to immediately cease all possession, use, reproduction, distribution, adaptation, and modification of the disputed source code. A security deposit of KRW 1 billion was required as a condition of the order, which Company A satisfied through a payment guarantee arrangement rather than a cash deposit, minimizing the financial burden of enforcement. The court declined to grant the accompanying indirect compulsion order (a per diem financial penalty for non-compliance), finding insufficient evidence that Company B would fail to comply voluntarily.
Legal Expertise
Atlas Legal’s strength in this matter lay in translating complex software engineering concepts into legally actionable arguments — bridging technical architecture analysis with the precise legal standards governing trade secret protection and interim injunctive relief in Korea. The firm’s approach integrates intellectual property litigation, corporate dispute resolution, and rapid-response interim measures to protect clients’ technological assets at every stage of a dispute. For consultation on trade secret protection, software IP disputes, or commercial litigation, please contact Atlas Legal.