To strengthen the protection of trade secrets, the amended Unfair Competition Prevention and Trade Secret Protection Act (“UCPA”) took effect on May 28, 2026. This amendment introduces a monetary reward system designed to incentivize the early detection, reporting, and prevention of overseas trade secret leaks.

Expanded Eligibility (UCPA Article 16): Rewards are now available to individuals who report overseas trade secret leaks, as well as to those who make significant contributions to preventing them. Under the amended UCPA, specific details regarding the criteria, methods, and procedures for paying rewards are delegated to the Presidential Decree.

Covered Offenses (UCPA Article 18(1)): The reward system specifically targets crimes involving the overseas leakage or misappropriation of trade secrets – that is, the infringement of trade secrets that are used abroad, or that the infringer knows will be used abroad. Under this article, targeted offenses include: (i) acquiring, using, or leaking trade secrets for the purpose of obtaining unfair profits or causing damage to the trade secret holder, or continuously retaining them despite a demand for their return or deletion; (ii) acquiring trade secrets through unfair means such as theft, deception, or coercion; and (iii) acquiring or using trade secrets with the knowledge that an act falling under the aforementioned categories was involved.

Specific Reward Criteria (Enforcement Decree & Payment Regulations): Pursuant to the UCPA amendment, the Enforcement Decree and the “Regulations on the Payment of Rewards for Trade Secret Protection” were concurrently implemented to establish detailed payment standards:

• Rewards for Reporting: Up to KRW 200 million per case may be awarded to individuals who report violations or significantly contribute to investigations conducted by the Ministry of Intellectual Property (“MOIP”). An application for the reward must be submitted to the Minister of MOIP within 5 months from the date the case is forwarded for prosecution.
• Rewards for Merit: Up to KRW 5 million can be awarded to individuals with a proven track record (3+ years) of contributing to the prevention of overseas leaks, selected either ex officio by the Minister of MOIP or through institutional recommendations.
• Reward Calculation & Additional Rewards: The reward amount is based on the seriousness of the violation and the applicant’s contribution. Furthermore, once a court judgment becomes final and conclusive, an additional reward may be paid through a review process within 6 months, factoring in the final sentencing.

Application Timeline: For rewards based on merit, an individual’s career history accumulated prior to the enforcement date (May 28, 2026) is recognized toward the three-year eligibility requirement. In the case of rewards for reporting, the system applies to cases starting with the first case formally registered as a criminal matter by MOIP after the enforcement date, so that violations committed prior to the enforcement date can be subject to these rewards.

Legislative Background and Strategic Implications for Businesses

Previously, while financial rewards based on merit and reporting were available for “industrial technology” under the Act on Prevention of Divulgence and Protection of Industrial Technology, the old UCPA reward system was strictly limited to the distribution of counterfeit goods bearing registered trademarks, offering no separate rewards for trade secret offenses. This amendment finally establishes a solid legal framework for rewarding individuals who protect trade secrets, facilitating the early detection of leaks. This measure directly addresses an issue of growing concern, given the increasingly severe consequences of technology theft.

With substantial financial rewards now authorized by the UCPA and its subordinate regulations, hidden corporate disputes are more likely to come to light through proactive reporting. For multinational companies operating in or partnering with South Korea, this shift creates a critical incentive to strengthen internal compliance.

To mitigate potential risks under this heightened enforcement environment, companies should ensure robust compliance mechanisms are in place. Specifically, organizations must carefully verify that no third-party trade secrets are inadvertently held or utilized within their operations, while rigorously reviewing all external technical data to prevent infringement on another entity’s proprietary rights.

Kim & Chang will continue to monitor these developments and provide timely updates on policy trends affecting your business.