Joint Development Partner Illegally Copied Source Code?” Immediate Restraint Through Trade Secret Infringement Injunction in South Korea

When a partner company illegally copies and uses source code after a joint development project ends in the IT sector, how should you respond? Through Kim & Park Law Firm’s trade secret infringement injunction case representing Company A in South Korea, we examine swift and effective legal response methods.

Case Overview – IT Company A’s Source Code Leakage Case

Kim & Park Law Firm successfully obtained a favorable injunction decision representing IT Company A in a trade secret infringement case in South Korea. This case was a typical example of trade secret infringement where a partner company illegally used source code after the termination of a joint development project.

Case Background

Company A and Company B entered into a contract for joint development of financial automation equipment-related programs. During the project, Company A provided its core source code to Company B. However, after the joint development contract terminated, Company A discovered that Company B was illegally copying and continuing to use the source code.

Company A determined that Company B’s actions constituted clear trade secret infringement and applied for a use prohibition injunction through Kim & Park Law Firm.

Injunction Application Contents

Kim & Park Law Firm, representing Company A, applied for an injunction with the following contents:

• Prohibition of storing, using, copying, and distributing the target programs
• Prohibition of adapting or modifying the programs
• Prohibition of storing, using, copying, and distributing programs adapted or modified using the original programs

Issue Analysis – Boundary Between Joint Development and Trade Secret Infringement

The core issue in this case was the attribution of rights to source code provided during joint development and the scope of its use.

Major Legal Issues

First, whether the source code provided by Company A constituted trade secrets. The question was whether technical information provided for joint development could have independent trade secret value.

Second, it was necessary to determine whether use beyond the purpose and scope of the joint development contract constituted trade secret infringement. Company B argued that it had acquired usage rights to the source code for the purpose of the joint development contract.

Third, the judgment of necessity for preservation was important – whether damages from trade secret infringement were of a nature that could not be recovered through monetary compensation.

Company B’s Main Defense Arguments

Company B refuted Company A’s injunction application as follows:

Ownership Acquisition Claim

Company B argued that since the purpose of the joint development contract was to “secure AP that can directly improve and manage financial companies’ requirements,” it had acquired ownership of the relevant programs. In particular, it strongly argued that it owned programs other than middleware-related DLLs (monitoring, DID, download/upload, main scheduler, customer UI control, etc.).

Source Code Disposal Claim

Company B argued that there was no necessity for preservation to seek use prohibition since it had already disposed of the relevant source code. The logic was that the injunction was unnecessary as there was no concern about future use.

Monetary Compensation Possibility Claim

Company B argued that there was no necessity for preservation since damages that Company A would suffer could be sufficiently recovered through monetary compensation. The position was that it could be resolved through damage compensation without necessarily prohibiting use.

Court’s Judgment – Rights to be Preserved and Necessity of Preservation

The court granted Company A’s injunction application and made the following judgment:

Recognition of Rights to be Preserved

The court clearly determined that “after reviewing the entire case record and examination, it is established that Company B illegally copied the target programs and infringed Company A’s trade secrets.”

Regarding Company B’s ownership claims, the court rejected Company B’s arguments, stating that “the acquisition of ownership by Company B over specific control-related source code is unclear” and citing “programs developed beyond the scope of joint development contracts or lack of separate agreement on copyright.”

Recognition of Necessity for Preservation

The court made particularly detailed judgment on the necessity for preservation:

“Company B’s acquisition of source code was fundamentally improper, and damages from trade secret infringement are damages that cannot be recovered through monetary compensation alone, and there is a possibility that Company A will suffer irreparable damages.”

Furthermore, “considering that the benefits Company B can obtain by illegally acquiring trade secrets are significant, the necessity for preservation is sufficiently established.”

Rejection of Source Code Disposal Claim

Regarding Company B’s claim that it had disposed of the source code, the court stated that “it is not sufficiently established that Company B disposed of the source code or that there is no concern about future use” and did not accept this claim.

Final Decision

The court ordered the prohibition of the following acts by Company B, conditional on Company A depositing a specific amount (1 billion KRW) or submitting a payment guarantee entrustment contract document with the same amount as insurance:

• Acts of storing, using, copying, distributing, or adapting/modifying the target programs
• Acts of storing, using, copying, and distributing financial automation equipment programs adapted or modified using the relevant programs

Victory Point Analysis

Let’s analyze the key points that enabled Kim & Park Law Firm to win this case.

Clear Proof of Trade Secret Nature

First, we clearly proved that the source code provided by Company A had independent trade secret value. We effectively applied the legal principle that trade secret nature is not lost simply because it was provided for joint development.

Proof of Use Beyond Contract Scope

Second, we specifically proved that Company B’s use of source code clearly exceeded the purpose and scope of the joint development contract. We clarified that continuing use after the termination of the joint development contract was both contract violation and trade secret infringement.

Claim of Irreparable Damages

Third, we effectively argued that damages from trade secret infringement were of a nature that could not be recovered through simple monetary compensation. We particularly highlighted the seriousness of source code leakage in the IT field and the irreparable nature of competitiveness loss.

Effective Refutation of Opposing Arguments

Fourth, we presented specific refutation logic against Company B’s ownership and disposal claims. Based on the language of the joint development contract and the actual implementation process, we proved that Company B’s claims lacked foundation.

Practical Implications of Trade Secret Infringement Injunctions

This case is a representative example showing how effective injunctions can be as relief measures in IT sector trade secret infringement cases.

Importance of Swift Response

Swift response is most important in trade secret infringement cases. As time passes, the scope of infringement expands and damages increase. In this case, Company A’s immediate application for injunction upon discovering the infringement was an important factor in the victory.

Need for Clear Contract Drafting

When entering joint development contracts, rights attribution to each party’s existing technology and joint development results must be clearly stipulated. It is also important to specifically specify use restrictions and return obligations for technical information received after contract termination.

Evidence Collection and Preservation

Specific evidence of infringement facts is necessary to prove trade secret infringement. Particularly in the IT field, professional technical review such as source code comparative analysis may be required, so systematic evidence collection plans should be established from the beginning.

Kim & Park Law Firm has recent experience successfully protecting clients’ rights and interests through injunctions and main litigation in numerous trade secret infringement cases in South Korea. Based on professional response capabilities that combine complex technical issues in the IT field with legal logic, we provide swift and effective legal services to companies experiencing difficulties due to trade secret infringement.

In trade secret infringement cases, initial response often determines success or failure. When suspicious situations are discovered, it is most important to immediately consult with professional attorneys to establish optimal response strategies.