ED Ban on tech theft

Win-win cooperation needed between large, small companies

Small- and medium-sized enterprises (SMEs) have high expectations that an amendment to the Act on the Promotion of Mutually Beneficial Cooperation between Large Enterprises and Small and Medium Enterprises, which took effect Feb. 18, will effectively prevent big companies from stealing technology from smaller suppliers.

According to the Ministry of SMEs and Startups, 1.7 percent of SMEs have been robbed of technology in the past three years. The amount of damage per company reached 580 million won ($481,300). Considering that many subcontractors hide their losses, there must be far more actual cases.

Large enterprises have asked small suppliers for technical data, and then used such information to slash supply prices and stop doing business with uncompliant subcontractors. The government has continued improving the system to prevent technology theft, but with much difficulty. That is why many SMEs pin high hopes on the enforcement of the revised law.

The law calls for, among others, signing a non-disclosure agreement (NDA) between large and small companies and imposing fines on violators. It also presents a standard form with specific details in the NDA to prevent unfair contracts stemming from SMEs' lack of bargaining power. So far, SMEs have had to prove their damage complete with all detailed documents to raise an issue. However, large enterprises will have to submit data to refute SMEs' accusations of technology theft from now on. If they don't, the small companies' arguments are recognized.

Small businesspeople expect the amendment to reinvigorate their technological development, support their innovative growth and ease their financial difficulties. However, at stake is how faithfully the revised law will be implement to crack down on big companies' unfair practices.

The government should go all out to help the new system take root smoothly. Large businesses also need to change their perceptions, recognizing that technology theft is a crime and realizing the new system is not overregulation but a minimal device to protect SMEs. We hope the revised system will eliminate unfair business practices between large and small companies and help establish a win-win business culture.