Appeals Court Confirms Conviction of Intercos Korea in Kolmar Korea Tech Theft

Intercos Korea to be held criminally liable for leaking and misusing Kolmar Korea’s trade secrets

Kolmar Korea (KRX: 161890) has won the victory in the remand trial against Intercos Korea, the Korean subsidiary of Italian cosmetics firm Intercos, concerning the misappropriation of its core sunscreen technology. The latest ruling has confirmed Intercos Korea is guilty of stealing Kolmar Korea’s technology.

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Kolmar Korea R&D Complex (photo: Kolmar Holdings)

The 3-2 Criminal Division of the Suwon District Court sentenced a fine of KRW 5 million on Intercos Korea for breaching the Unfair Competition Prevention and Trade Secret Protection Act on October 18. While the court reduced the fine from an initial KRW 10 million to KRW 5 million, it upheld the conviction of Intercos Korea. The ruling became final as Intercos Korea opted not to file an appeal.

Intercos Korea was alleged to have recruited “A”, a former Kolmar Korea employee, in order to acquire Kolmar’s sunscreen technology unlawfully. Joining Kolmar Korea since 2008, “A” had been in charge of research and development of sun care products. He suddenly resigned in 2018 due to immigration to the U.S. However, it was found that he joined Intercos Korea just one week after his departure. In the process, he reportedly leaked hundreds of Kolmar Korea's confidential documents via Google Drive.

Intercos Korea's sales of sun care products surged after “A” joined the company. Intercos Korea had no record of selling any UV protection products in 2017. However, it began selling sun care products after 2018 when “A” left Kolmar. The prosecution conducted a digital forensic analysis on the laptop used by "A", thereby uncovering evidence of his criminal activities.

In August 2021, the Suwon District Court sentenced “A” to ten months in prison. Additionally, “B”, an accomplice in the fraudulent activities, received a six-month sentence suspended for two years, and Intercos Korea was fined KRW 5 million. The appeal court reaffirmed the prison sentence for “A” and increased the fine for Intercos Korea to KRW 10 million.

“A” appealed the lower court’s decision, but the Supreme Court upheld the ten-month prison sentence, rendering the decision final. However, the Supreme Court found that the portion of the second trial decision imposing a KRW 10 million fine on Intercos Korea required further review and remanded it to the Suwon District Court. This decision was based on the Supreme Court’s finding that penalizing the company under joint penalty provisions for the "attempted" act of former employee “A” was unjustified.

In the subsequent retrial, the court recognized the harm suffered by Kolmar Korea. Although the fine against Intercos Korea was reduced due to the absence of legal grounds to penalize a juridical person for a “failed attempt”, the court maintained the conviction.

An official from Kolmar Korea said, "Intercos Korea is now proven guilty of misappropriating Kolmar Korea’s sun care technology. Hopefully, other Korean companies with world-class technologies will not face similar harm.”

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