Criminal Investigation Against Kyung Dong Navien Involving Theft of Winia Dimchae Trade Secrets
2022.11.23.
Winia Dimchae Co., Ltd. (“Winia”) (formerly known as Dayou Winia, the surviving entity of Daewoo Electronics) is a major Korean manufacturer of home appliances, such as refrigerators, air conditioners, and air purifiers. Winia is known in the market for its technology relating to noise and vibration prevention.
Kyung Dong Navien (“Navien”) is one of the largest manufacturers of residential boilers and water heaters. Since Navien’s business had traditionally been focused on winter season items, the company decided to develop and manufacture air conditioners in order to generate profits even during the warm seasons. As Navien had never manufactured air conditioners, it lacked the necessary technology. Instead of starting this business expansion from scratch, the company hired three former employees of Winia.
The former employees left Winia with a large amount of design drawings and R&D materials (“Information”) and used the Information for the benefit of Navien, a competitor of Winia. Shortly after the three former employees joined Navien, Winia learned that the former employees left Winia with the Information and used the Information for the benefit of Navien. Upon learning of this theft of trade secrets, Winia immediately sought Yulchon’s assistance, and Yulchon advised Winia to seek a criminal investigation after reviewing the evidence.
However, since the police initiated the criminal investigation even before Navien used the information to launch any commercial products, it was difficult to prove that Navien actually used the Information. As a result, Yulchon closely cooperated with the police in order to meticulously collect the relevant evidence showing Navien’s use of the Information. Yulchon not only assisted with the criminal investigation but also persuaded the prosecutor to indict and the court to criminally charge the former employees. Due to Yulchon’s support, the two employees were held to be criminally liable for the theft of Winia’s trade secrets.
The significance of this case is as follows: First, Yulchon successfully managed to persuade the prosecutor that Navien “used” the Information although Navien had not commercially released any products manufactured by using the Information. This case will serve as an example that victims of trade secret theft may now be able to take legal measures even before their competitors launch any products using any misappropriated trade secrets. Second, the success in the criminal proceeding is expected to provide a positive impact on a civil proceeding pending against the former employees and Navien seeking an injunction and monetary damages (partial damages of approx. USD 4.3 million).
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