YOON&YANG

The amendment to the Act on the Promotion of Mutually Beneficial Cooperation between Large Enterprises and Small and Medium Enterprises (the “Amendment”) was passed by the National Assembly plenary session on January 29, 2026, formally introducing the K-Discovery system—a Korean-style evidence disclosure mechanism (the “K-Discovery System”) that is expected to significantly reshape the landscape of technology dispute litigation in Korea.

The Korean civil litigation system has traditionally lacked a robust evidence disclosure mechanism comparable to the U.S. discovery system. As a result, particularly in technology disputes where key evidence is often concentrated in the hands of the opposing party, plaintiffs have faced significant limitations in accessing the materials necessary to substantiate their claims. Although the Civil Procedure Act provides for a document production order system, its practical effectiveness has been limited for several reasons: (i) the requesting party must identify the documents with considerable specificity at the application stage; (ii) the responding party frequently refuses production or challenges the scope of production on various grounds; and (iii) even where a party fails to comply with a court order to produce documents, the available means to directly compel compliance or impose meaningful sanctions have been limited. Consequently, plaintiffs have faced material constraints in securing the evidence necessary to establish infringement and quantify damages.

The Amendment adopts a hybrid model tailored to the Korean legal framework, drawing on elements of the U.S.-style deposition system and the German-style court-appointed expert inspection procedure. As similar amendments are currently under discussion in other key statutes, including the Patent Act, the Unfair Competition Prevention Act, and the Civil Procedure Act, companies should anticipate fundamental changes to their litigation strategies and internal document management practices in the near future.

We provide below a summary of key features of the Amendment, along with practical considerations and recommended response strategies for companies.

1. Key Features of the Amendment

2. Future Outlook and Implications

3. Response Strategies and Key Takeaways - A Comprehensive Review of “Evidence, Documentation, and Communications” Framework

4. Conclusion: Building a Strategic Response Framework for the Evolving Litigation Landscape

1. Key Features of the Amendment

(a) Expert fact-finding inspection procedure

In damages litigation involving the misappropriation of technical data, the court may, upon a party’s motion, appoint an expert and authorize them to enter the opposing party’s managed premises, such as offices or manufacturing facilities, to conduct necessary inspections. The scope of the expert’s inspection may extend beyond the review and copying of documents to include technical verification activities, such as operation, measurement and testing of the equipment. The expert’s inspection results are then submitted to the court in the form of a written report.

✓ Significance. Given that key evidence in technology disputes is often concentrated within a party’s internal control and thus difficult to access, this mechanism is expected to serve as a powerful tool for bringing such critical evidence to light in litigation.

✓ Sanctions for Non-Compliance or Obstruction. If a party refuses or obstructs the inspection without justifiable ground, the court may impose sanctions, including deeming the requesting party’s allegations regarding the relevant facts to be proven as established.

✓ Exclusion of Attorney-Client Privileged (ACP) Materials. Communications exchanged for the purpose of seeking or providing legal advice, as well as related documents and materials, are expressly excluded from the scope of inspection under the ACP.

(b) Party-led out-of-court deposition procedure

A new procedure has been introduced that closely resembles the U.S. deposition system, allowing counsel to examine witnesses or opposing parties and record their testimonies prior to trial.

✓ Procedure. The deposition may be conducted upon motion by both parties and with counsel present. Unlike traditional in-court witness examinations, this procedure is conducted outside the courtroom and the counsel take the lead in questioning the parties.

✓ Sanctions for Non-Compliance or Obstruction. If a party or witness refuses to appear for examination or obstructs the deposition without justifiable ground, the court may impose sanctions, including deeming the opposing party’s allegations as established facts.

✓ Application of Attorney-Client Privilege (ACP). A deponent may refuse to answer questions that implicate ACP matters, and they are guaranteed the right to request that privileged portions be redacted from transcripts or recordings after the witness examination.

(c) Introduction of an evidence preservation order

The court may, upon a party’s motion, issue an evidence preservation order for materials necessary to establish infringement or assess damages in a misappropriation of technical data case. This order may be granted not only when a lawsuit has already been filed, but also when litigation is reasonably anticipated.

✓ Duration. The preservation period is, in principle, set within one year, with the possibility of extension if necessary.

✓ Sanctions for Non-Compliance or Obstruction. If a party destroys or conceals materials in violation of the preservation order, the court may deem the opposing party’s allegations concerning those materials to be factually true. In addition, the introduction of criminal penalties for the intentional destruction or concealment of such materials is expected to further heighten the practical burden to comply with the preservation order in litigation settings.

2. Future Outlook and Implications

(a) Expansion across the broader landscape of technology disputes

The Amendment will take effect after a two-year grace period following promulgation. Similar amendments have already been proposed for important intellectual property and competition-related laws, including the Patent Act, the Unfair Competition Prevention Act, and the Subcontracting Act. As a result, the K-Discovery System is expected to become a standard framework for technology-related disputes.

(b) Increased technology litigation and higher damages awards

By making it easier to identify internal corporate decision-making processes and specific acts of alleged infringement, the K-Discovery System is likely to alleviate what has long been considered the greatest obstacle to filing technology-related lawsuits; the difficulty of obtaining evidence. This change is expected to lead to a rise in such lawsuits.

In addition, statutes such as the Patent Act and the Unfair Competition Prevention Act allow courts to award up to five times the actual damages in cases of willful infringement. In practice, however, enhanced damages have been difficult to obtain because willfulness—being a subjective state of mind—has largely had to be proven through circumstantial evidence.

Going forward, internal documents and testimony obtained through discovery may serve as decisive evidence of intent, potentially leading to a significant increase in both the number of cases awarding enhanced damages and the overall size of damages awards.

(c) Enhanced potential for strategic litigation

The introduction of the K-Discovery System is expected to provide rights holders with more diverse and strategic avenues for litigation. It is also anticipated that the Korean litigation environment is likely to evolve in a direction more familiar to multinational corporations, particularly those accustomed to U.S.-style depositions or German-style court-appointed expert inspection procedures.

At the same time, foreign companies operating in Korea should be mindful that their local business operations will be subject to the same level of evidence disclosure obligations. While this reform offers significant opportunities from an enforcement perspective, it also calls for proactive risk assessment and preparedness from a defense standpoint. In light of these changes, companies would be well advised to fundamentally reassess their litigation strategies in Korea and to strengthen their internal compliance, record-keeping, and document management systems.

3. Response Strategies and Key Takeaways - A Comprehensive Review of “Evidence, Documentation, and Communications” Framework

(a) Strategic use of Attorney-Client Privilege (ACP)

ACP will likely constitute the most effective line of defense under the K-Discovery System. Accordingly, companies should ensure that internal reports and legal documents are prepared with the involvement of counsel so that ACP requirements are properly satisfied. Sensitive materials should also be clearly identified, separately classified and managed under a structured privilege protocol.

(b) Strengthening document management systems and company-wide compliance training

Considering the three core pillars of the K-Discovery System—(i) court-appointed expert fact-finding inspections, (ii) party-led out-of-court depositions, and (iii) evidence preservation orders—companies will need to establish robust, ongoing compliance practices and well-structured evidence management systems.

Moreover, inadvertent statements made by officers or employees during out-of-court depositions may expose the company to broader liability. Accordingly, companies should consider implementing systematic, preemptive legal training for relevant personnel, covering not only best practices in document drafting and internal communications but also practical guidance on responding to witness examinations.

4. Conclusion: Building a Strategic Response Framework for the Evolving Litigation Landscape

The introduction of the K-Discovery System represents a pivotal shift in the landscape of technology disputes in Korea. Going forward, the outcome of litigation will hinge less on the mere possession of evidence and more on the strategic management of that evidence. While rights holders will be better positioned to pursue claims more proactively through strengthened evidence collection mechanisms, both domestic and foreign companies operating in Korea will face the parallel imperative of proactively managing defense risks through enterprise-wide enhancements to document management systems and employee training.

Accordingly, companies should undertake a comprehensive review of their existing litigation response frameworks and align them with the K-Discovery System. By doing so, businesses can leverage this reform as a strategic opportunity to reinforce intellectual property protection while strengthening overall corporate competitiveness.

Yoon & Yang’s Trade Secret PG operates as a multidisciplinary platform, bringing together professionals with expertise across diverse technical fields, including electronics, machinery, and chemistry. The PG includes former prosecutors from the Industrial Technology Crime Investigation Division, as well as former officials from the Korea Fair Trade Commission and the Ministry of Trade, Industry and Energy, enabling us to provide solutions grounded in deep institutional insight. Yoon & Yang’s Trade Secret PG delivers swift and effective legal services across domestic and international disputes, legal advisory, and regulatory responses involving trade secrets and industrial technologies. To further enhance our capabilities, Yoon & Yang operates both an in-house Digital Forensics Center and a Discovery Center, uniquely positioning us to investigate trade secret leaks and to support clients in cross-border disputes with differentiated expertise and effective solutions.