Caught trying to leak Samsung’s core technology to China; seven company executives and employees indicted

[Financial News] Company officials who attempted to leak Samsung Display Co., Ltd.’s national core technology to China and illegally used Samsung SDS’s factory automation program source code have been indicted. They are accused of hiding technical data in production equipment and trying to take it overseas, while also carrying out domestic and overseas projects worth 36.9 billion won using the source code even after A Company’s contract with Samsung SDS had ended.
On the 11th, the First Division for Serious Crime Prosecutions of the Seoul Eastern District Prosecution Office, headed by Chief Prosecutor Lee Han-ul, said it had indicted without detention four employees of Company A, a factory automation solutions provider, including an executive identified as B, 52, on charges including violating the Act on Prevention of Divulgence and Protection of Industrial Technology and the Unfair Competition Prevention and Trade Secret Protection Act. Two former CEOs and a former vice president of Company A, among three people, and the company itself were also indicted for allegedly using and disclosing Samsung SDS source code without authorization.
According to the prosecution office, Company A was responsible for on-site inspections at Samsung Display Co., Ltd.’s LCD production facility in Asan, South Chungcheong Province, to check the network configuration and operating condition of equipment slated for sale.
Prosecutors allege that, in the process, B and three others conspired to obtain log files stored on the equipment and use them in relocating and modifying equipment for a Chinese display company.
Investigators found that on three occasions between September and December 2020, they compressed log files stored on the control PCs of photo, sputter and CVD equipment and concealed them in Windows system folders and elsewhere. When Samsung Display Co., Ltd. began “neutralization” measures to delete technical information from equipment being sold, they hid the data in folders excluded from deletion.
The files contained key conditions for the manufacturing process of 8th-generation-class LCD panels, including temperature, pressure and gas flow rates, as well as information on equipment operations. The process information constituted national core technology, and the attempted transfer overseas was foiled when a Samsung Display Co., Ltd. engineer discovered the concealed files.
They were also found to have allegedly carried out projects worth several tens of billions of won by using Samsung SDS’s factory automation program source code without authorization.
In November 2011, Samsung SDS acquired from Company A the economic rights to the copyright of its factory automation program and other rights for 7.4 billion won. Company A later used the program under a resale agreement, but investigators found that it continued to use the source code without authorization even after the agreement was terminated in May 2019.
Company A’s former executives and others are accused of using Samsung SDS’s trade-secret source code without authorization to carry out factory automation implementation projects from June 2019 through March this year: 33 projects for overseas companies worth about 32.1 billion won and 10 for domestic companies worth about 4.8 billion won, for a total of 43 projects worth about 36.9 billion won.
The former CEO and vice president are also accused of developing a product for a Chinese company based on the source code in June 2019 and providing the Chinese side with source code containing core trade secrets.
Separately, Company A officials are also accused of infringing copyright by copying and modifying Samsung SDS programs without authorization in 33 domestic and overseas projects worth about 15.7 billion won between August 2017 and June 2022.
The Seoul Metropolitan Police Agency referred the case in stages between July and November 2023. After supplementary investigations, including searches and questioning people involved, the Seoul Eastern District Prosecution Office indicted seven company employees and the corporation without detention.
The Seoul Eastern District Prosecution Office said, “If a competing company uses such materials, it can reduce the time and cost required to build production facilities, potentially weakening the competitiveness of the companies that developed the technology,” adding, “We will respond firmly to high-tech crimes, including the infringement or leakage of national core technologies and trade secrets.”
[email protected] Lee Dong-hyeok Reporter