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A flag of the Public Prosecution Office flies in Seocho District, Seoul, on Nov. 9. /Yonhap News Agency

Employees and executives of a company accused of attempting to leak Samsung Display's nationally designated core LCD technology to China have been indicted. They also face charges of unauthorized use of Samsung SDS's factory automation source code in projects worth tens of billions of won.

The Major Crimes Indictment Division 1 of the Seoul Eastern District Public Prosecution Office, headed by chief prosecutor Lee Han-ul, announced on Nov. 11 that it had indicted seven people, including employees and former executives of Company A, a factory automation solutions provider, without detention on charges including violations of the Act on Prevention of Divulgence and Protection of Industrial Technology, the Unfair Competition Prevention and Trade Secret Protection Act, and the Copyright Act. Company A itself was also indicted.

Four employees of Company A, including a 52-year-old executive surnamed B, are accused of attempting to steal log files containing nationally designated core technology while inspecting equipment slated for sale at Samsung Display's LCD production facility in Asan, South Chungcheong Province, between September and December 2020. Log files store records generated during the operation of machines or systems.

Investigators found that the employees had compressed the log files and hidden them in Windows system folders and other locations exempt from deletion, intending to transfer them to China along with the production equipment. The files contained nationally designated core technology related to the manufacturing and processing of eighth-generation LCD panels, including temperature, pressure and gas flow rates. However, the attempt was discovered during inspections by Samsung Display engineers and subsequent investigations, preventing the files from being taken overseas.

Three former executives of Company A, including two former CEOs and a former vice president, were indicted on charges of unauthorized use of Samsung SDS's factory automation program source code and providing it to a Chinese company. Company A had transferred the economic rights to the copyright in the relevant program and other rights to Samsung SDS for 7.4 billion won in 2011, and had continued using the program under a resale agreement. However, investigators found that the company continued using the source code even after the agreement was terminated in May 2019.

The former executives are accused of using the source code without authorization while carrying out 33 factory automation system installation projects worth a total of 32.1 billion won for overseas companies, including Chinese display manufacturers, between June 2019 and March this year.

Investigators also found that the source code had been used without authorization in 10 domestic projects worth 4.8 billion won. In some cases, products were developed for Chinese companies to operate independently, and materials containing core source code were provided to them.

The Seoul Metropolitan Police Agency referred the related cases to prosecutors in stages between July and November 2023. Following supplementary investigations, including searches and seizures and questioning of people involved, the Public Prosecution Office indicted the individuals without detention on Nov. 11.

The Seoul Eastern District Public Prosecution Office said, "Manufacturing and operational information remaining on control PCs and other equipment must also be protected when production facilities are sold." It added, "We will respond firmly to high-tech crimes, including the leakage of nationally designated core technology and trade secrets."

                                                                                                             Kim Tae-hoon