On July 14, 2021, the Ministry of Trade, Industry and Energy (the "MOTIE") amended the Notification Regarding Designation of National Core Technologies (MOTIE Notification No. 2021-130) ("NCT Notification"). The amendments to the NCT Notification include: (i) addition of certain semiconductor technology and electrical/electronic technology as national core technologies ("NCT(s)"), as well as (ii) a modification made to an existing NCT in the display area. The relevant details are as follows.
| Area | Newly designated NCTs | |
| Semiconductor | Design technology for OLED DDI (Display Driver IC) for display panel driving | |
| Electrical / Electronic |
Design, processing, manufacturing, and evaluation technology for lithium secondary batteries based on ultra-high performance electrodes or solid electrolytes of 600mAh/g or higher | |
| Area | Before Amendment | After Amendment |
| Display | Design, processing, and manufacturing (excluding the module assembly processing technology) technology for AMOLED panel | Design, processing, manufacturing (excluding the module assembly processing technology), and driving technology for AMOLED panel |
Under the current Act on Prevention of Divulgence and Protection of Industrial Technology (the "ITA"), an institution that owns a technology designated as an NCT ("Subject Institution") must take protection measures required by the ITA such as designating protected zones for the NCT and personnel dedicated to NCT management (Article 10 of the ITA). Also, any person who intends to export an NCT must seek approval from or report to the Minister of MOTIE (Article 11 of the ITA). Furthermore, when a foreigner intends to acquire or merge with a Subject Institution that owns an NCT through a cross-border M&A transaction, he/she must also seek approval from or report to the Minister of the MOTIE (Article 11-2 of the ITA).
In terms of the "export" of NCTs, sharing and delivery of a domestic NCT by a Subject Institution for the purpose of joint research with a foreign entity may be seen as an "export" of NCTs. Also, a cross-license agreement between a company holding a patent identified as an NCT and a foreign entity may be seen as an export of NCT as well as the granting of a non-exclusive license. For this reason, when entering into patent licenses and other agreements with foreign entities, the applicability of NCT regulations should be reviewed.
NCT violations also have the potential for criminal penalties. In particular, any person who exports an NCT to use or cause such NTC to be used in a foreign country without seeking approval from or reporting to the Minister of MOTIE may face imprisonment of up to 15 years concurrently with a fine of up to KRW 1.5 billion (Article 36 of the ITA). In addition, there is a punitive damages system in place for NCT violations (Article 22-2 of the ITA). As such, the risk for penalties is growing with the government focusing more on NCTs.
We recommend reviewing for potential NCTs, and if so, confirming that all applicable regulations are being properly followed.
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