[비즈한국] Companies sometimes make decisions that are difficult to explain based solely on money. Understanding the laws and systems hidden within them can provide a deeper look at the inner workings. ‘Useful Business Tips’ introduces clues to help understand business trends.
What measures can a company take if an employee leaks important information externally or moves to a competitor? To get to the point, it is not easy for a company to recover damages or correct the situation through legal action. The reasons are that courts generally view lawsuits filed by companies against their employees negatively, and given Korea’s business environment, there are few cases where information was managed as a secret with its value pre-assessed, making it difficult to prove damages caused by information leaks.
Looking at precedents, courts view that companies have discretion in exercising personnel and disciplinary authority over their employees. Therefore, courts do not strictly examine the propriety of cases where a company promotes or demotes employees, assigns positions, or reassigns duties. The same applies to the exercise of disciplinary rights that do not lead to dismissal.
However, courts strictly examine cases where companies file lawsuits against former or current employees. For example, when a company files a damages lawsuit or requests an injunction based on a non-compete agreement, it is rare for the court to grant it, as they scrutinize whether the requirements are met very strictly. Having handled such cases directly, it seems the court views the very situation of a company suing its employee as inappropriate.
From an individual's perspective, a lawsuit against their company causes immense stress in itself, so the court's attitude is understandable to some extent. Conversely, a company's competitiveness lies in its technology and information, and if it cannot control employees from leaking such information and moving to competitors, the company cannot maintain its competitiveness. In fact, many companies around us are struggling with this issue.
As can be seen from the above, if an employee commits misconduct or causes harm to the company while still employed, the company has room to exercise its personnel and disciplinary authority. However, once the employee leaves the company without regrets, it becomes difficult for the company to find a means to recover damages or have the wrongful nature of the act legally confirmed.
For this reason, when consulting with companies, I recommend preparing various legal devices in advance to prevent problems rather than trying to recover damages through litigation after an issue has occurred. However, incidents and accidents always occur at unpredictable moments. Most companies are more interested in cleaning up problems that have already occurred than preparing for ones that have not. This column examines the aspects and issues of legal disputes between companies and employees when an employee leaks important company information and moves to a competitor.
It is a well-known fact that a company's competitiveness lies in information such as trade secrets and technical data. Therefore, companies require employees to sign non-compete agreements, stating they cannot work for a similar company for a certain period after leaving. Employees, finding it difficult to refuse the company's demand if they wish to keep working, sign the confirmation letter; however, if an opportunity arises, they move to a competitor regardless. The company then sues for a penalty or requests an injunction against the employee based on the non-compete agreement. This is a typical scene of such disputes.
To conclude, courts tend to recognize the validity of non-compete agreements only if the company provided special economic compensation in advance, the employee actually handled important information, and the non-compete period is short—less than 6 months. If all these requirements are not met, the court judges the non-compete agreement as invalid for excessively restricting the freedom to choose an occupation and labor rights.
What about cases where a company sues or claims damages against an employee on the grounds that the leaked information constitutes a trade secret under the Unfair Competition Prevention Act? There are not many cases where trade secret infringement has been recognized. To be recognized as a trade secret, it must satisfy all requirements, such as economic utility, secret management, and non-public availability. However, unless it is a special case where a large corporation strictly manages cutting-edge technical information, it is rare for small and medium-sized enterprises (SMEs) in Korea to thoroughly manage their major information as secrets. For example, if an employee took out company information via USB or exchanged it through KakaoTalk, and the company was aware of such practices but did not take prior action, the requirements of secret management and non-public availability are highly likely to be denied.
What if the company specifically proves that the employee leaked important information? In this case, the court recognizes liability for damages. However, it is not easy to prove both that the information was "important" and that it was "leaked externally." The company and the employee often have different views on the value of the information, and traces of external leakage are difficult to find; even with digital forensics, only fragmented facts like log records can be confirmed.
Perhaps for this reason, in the past, there was a tendency to recognize an employee's liability for damages only if they were punished for breach of trust due to the information leak. Recently, however, there have been cases where companies have received damages by responding meticulously and proving individual facts. The Seoul Northern District Court ruling 2023Gadan100497 is one such example.
Looking at the above ruling, the employee worked as a CSO (Chief Strategy Officer) and signed a non-disclosure agreement. However, after leaving the company having leaked client transaction information and major business headquarters issues, they established their own business. In this matter, the court ruled that the employee was liable for damages as they had violated the non-disclosure agreement. Considering that the company lost existing clients after the employee left while the employee's new business signed contracts with those clients, and the circumstances of the leakage, the court calculated the damages at 15 million KRW.
To summarize the above: it is difficult to assert an employee's wrongdoing based solely on the fact that you obtained a non-disclosure agreement or a non-compete agreement from them. Furthermore, even if the employee is in the wrong, it is not easy to stop a job change or transfer itself because the court strictly scrutinizes lawsuits filed by companies against their employees.
However, if an employee leaks major company information and the company suffers damages, such as the loss of clients as a result, it is possible to file a claim for damages against the employee. Above all, regardless of the previous discussion, since it is difficult to dispute issues that have already occurred after the fact, it is most desirable to prepare various legal and technical measures to prevent them.