A senior employee left our Korean subsidiary, took our client list and pricing, and is now competing — what can a foreign-owned company do in Korea, and how fast?

Your local advisor is repeating a half-truth. Korean courts scrutinize non-compete clauses and refuse to enforce overbroad ones; they routinely enforce reasonable ones — one year, a senior employee, compensation, a legitimate interest — and they enforce confidentiality obligations and trade-secret protection independently of any non-compete. Downloading a client database and pricing sheets in the final month is, on those facts, a criminal offense in Korea as well as a civil wrong, and the criminal complaint is not a complication; it is the fastest way to obtain his devices and the evidence. What can be done quickly is an injunction, and it is the first filing.

Non-compete and confidentiality

Korean courts assess a non-compete (경업금지 약정, gyeongeop geumji yakjeong) against the constitutional freedom to choose an occupation and enforce it where it is reasonable: a protectable interest (trade secrets, key client relationships), a limited duration and scope, the employee's position, and consideration — which may be the compensation and position he held rather than a separate payment. A one-year clause on a country manager with access to pricing and clients is squarely within what courts have enforced; a two-year clause on a junior salesperson is what gives the clause its reputation. Even where a court trims the duration, it enforces the trimmed version.

Confidentiality obligations do not depend on any of that; they are enforced as contract and, for information that qualifies, under statute.

Trade secrets: civil and criminal

The Unfair Competition Prevention and Trade Secret Protection Act (부정경쟁방지법, bujeong gyeongjaeng bangji-beop) protects information that is not publicly known, has economic value, and has been kept secret by reasonable measures — access controls, confidentiality agreements, marking. A client database with contact and purchasing history, pricing sheets and internal templates typically qualify if your subsidiary managed them as confidential. Acquiring or using a trade secret by improper means, or by an employee in breach of a duty to keep it, is infringement; the Act provides an injunction, damages — with a court's power to award up to treble damages for willful infringement under amendments in recent years — and the destruction of the misappropriated material.

The same conduct is a crime under the Act's criminal provisions, with a penalty of up to ten years' imprisonment or a fine of up to KRW 500 million for use or disclosure of a trade secret, and the Criminal Act's breach of trust (업무상 배임, eommusang baeim) is commonly charged alongside when an employee removes company data for a competing venture. Our firm files the criminal complaint and handles the police; a criminal investigation can obtain his devices and the new company's systems by warrant, which a civil plaintiff cannot do on its own. The criminal and civil cases run in parallel, and the evidence from the first feeds the second.

What can be done now

A preliminary injunction (가처분, gacheobun) prohibiting him and his new company from using or disclosing the data, soliciting your clients, and — for the non-compete period — carrying on the competing business. Courts decide these on paper on an expedited basis where the applicant shows a likely right and urgency; a country manager, a company registered the week after he left, three clients moved, and a witness to the download is the profile that obtains one. The order carries daily penalties for violation. Evidence preservation is the other immediate step: your own access logs, the download records from your systems, the timeline of the client moves, and the colleague's account in a written statement.

Damages follow — lost profits on the three clients are quantifiable — and the non-compete clause's liquidated damages, if any, are enforceable to the extent reasonable.

The foreign-owned side

Your subsidiary is a Korean company and sues as one; the parent's ownership is irrelevant to standing. What foreign-owned subsidiaries often lack is the documentation that makes information a trade secret in Korea — the confidentiality marking, the access restrictions, the signed policies. Confirm what exists before filing; the injunction application will be judged on it.

What to do now, and what not to do

Preserve the logs before anyone at the subsidiary "cleans up." Do not contact the clients about him; a client who is told "he stole our data" before a court has said so is a defamation counterclaim. Do not contact him. Do have counsel send the preservation demand and file the injunction application within the week, with the criminal complaint prepared to follow.

Practical insight

Foreign companies write off Korean trade-secret cases because a local advisor told them non-competes fail, and they wait while the clients settle in with the new supplier. The clause is the least important tool; the statute, the injunction and the criminal complaint are the real ones, and they work on a timeline measured in weeks — if the download evidence is preserved and the filing is made before the second quarter of client losses.

Send us his contract, the access logs and the client timeline and we can assess the injunction application within days — by text consultation or at +82-2-522-3959.

— MEGA X Law Firm Korea, Corporate Disputes Team