The Supreme Court has ruled that employees of a domestic company that supplies camera module inspection equipment to Apple and Samsung Electronics committed the crime of divulging trade secrets when they leaked technology to China. The lower court had recognized only the conspiracy to use the trade secrets as guilty, but the intent is that guilt should be recognized more broadly.
The Supreme Court's Third Division (Justice Oh Seok-jun) on Jan. 15 overturned the lower court ruling that sentenced seven people, including a person identified as A, who had been indicted on charges of violating the Act on Prevention of Divulgence and Protection of Industrial Technology, the Unfair Competition Prevention Act (overseas divulgence of trade secrets, etc.), and breach of trust in the course of duty, to one to two years in prison, and remanded the case to the Seoul High Court.
Izmedia, founded in 2022, is a corporations that manufactures inspection equipment for ultra-compact camera modules (CCM) installed in mobile phones and other devices. At Izmedia, the image grabber board (grabber) is a component that converts digital signals received from an image sensor into digital video signals. This technology is compatible with Samsung and Apple products and is said to be technology held only by Izmedia. In Dec. 2022, Izmedia received advanced technology product certification for the grabber from the Ministry of Trade, Industry and Energy.
A, who worked as sales director at Izmedia, decided to move to a Chinese company when the company's management deteriorated in 2022, and persuaded six people, including key technical personnel, to resign together. At the end of 2022, they moved to a subsidiary established in Korea by the Chinese company.
In the course of resigning and changing jobs, they exchanged materials such as source code, circuit diagrams, and parts lists related to the grabber, which constituted Izmedia's trade secrets, through a KakaoTalk messenger group chat, email, and USBs. This was to develop a grabber to be mounted on camera module inspection equipment to be supplied to Apple by the Chinese company.
In the first trial, A and others were sentenced to one to two years in prison. The first-instance court ruled them not guilty on the part of divulging or acquiring trade secrets, saying they transferred materials while conspiring to use the trade secrets together. It instead viewed their conduct among themselves as use of trade secrets and found them guilty of violating the Unfair Competition Prevention Act. The appellate court ruled the same way.
The Supreme Court found that the lower court misunderstood the legal principles of the Unfair Competition Prevention Act. The Supreme Court said, "The Unfair Competition Prevention Act defines acts such as acquiring, using, divulging to a third party, and unauthorized removal outside a designated location of trade secrets as separate crimes," and noted, "The legislative intent of the amendment to the Unfair Competition Prevention Act to strengthen protection of corporations' trade secrets must be fully considered."
Accordingly, the seven people including A are expected to face review on charges of divulging and acquiring trade secrets, in addition to using them, in the remand trial, likely increasing their sentences.
Meanwhile, Izmedia was listed on the KOSDAQ market in 2017 but was delisted on July 2024. An accounting firm issued a disclaimer of opinion, saying the financial statements for the 2022 fiscal year lacked reliability. Former co-CEO B of Izmedia acquired Izmedia without capital in Feb. 2021 but made a false disclosure claiming it was acquired with equity capital. Another co-CEO, C, made a false disclosure claiming to have secured the biological older sister of Meta (Facebook) founder Mark Zuckerberg as a client. On Oct. last year in the first trial, A was sentenced to two years and six months in prison and a fine of 100 million won, and B was sentenced to two years in prison and a fine of 100 million won.