South Korea

The Use and Protection of Credit Information Act (the Act) was recently amended and is scheduled to take effect on September 12, 2015. Accordingly, companies that are subject to the Act should take particular care in establishing and maintaining a system of processing, handling and managing personal credit information (CI) to remain compliant under the amended Act. While the Act contains a number of far-reaching amendments, the provisions with the most significant impacts – with the focus on the newly created provisions – are summarised below.

1. Heightened obligation to protect CI The amended Act provides stricter control on the outsourcing of CI processing. If credit bureau companies, public credit registries or CI providers/users (e.g., financial institutions) outsource CI processing to a third-party service provider, the company which outsources the CI processing must include in its outsourcing agreement, provisions addressing secure management of the CI, training of the staff of the third-party service provider handling CI and processing of the CI to prevent personal CI from being compromised. The act also severely limits the third-party service provider from subcontracting the CI processing again (Article 17, Paragraphs 4 to 7) and requires that the CI providers/users that are larger than the threshold size designate a director-level officer to the position of the CI manager/custodian. The obligations of a CI manager/custodian are detailed in the Act (Article 20, Paragraphs 3 (proviso), 4 and 5).

Furthermore, the Act limits the period that the CI providers/users can retain personal CI to five years after the conclusion of the applicable commercial transaction. Personal CI of individuals whose commercial transactions have been completed must be segregated from personal CI of individuals whose transactions are ongoing, and the CI providers/users who need (or desire) to use the personal CI of individuals whose commercial transactions have been completed must notify the subject individuals (Article 20-2). Also, in the case of a business transfer, spin-off or merger and acquisition, if the CI providers/users transfer the personal CI in its database to another party, the receiving party is required to segregate and separately manage the personal CI so transferred from the personal CI of individuals who are currently engaged in transactions with the receiving party (Article 32, Paragraph 9).

2. Increase of the owner’s control over his or her personal CI: The Act provides that a separate individual consent of the owner of the CI is required in order for a CI provider/user to disclose the owner’s personal CI to a third party or a person to obtain the CI from a credit bureau company or public credit registry. Also, when initially obtaining consent for collecting personal information, the consent-seeking company must first inform each individual whether the information for which consent is sought is mandatory or optional. Companies seeking consent may not refuse to provide services to the owner of the CI based on the owner’s non-consent to the optional items of personal CI (Article 32). The owner of the CI may request deletion of the personal CI after a certain period if the commercial relationship between the owner of CI and the company receiving CI has been terminated, and upon such request, the CI providers/users must delete the personal CI without delay and notify the the owner of the CI of results (Article 38-3).

3. Stronger ex-post protective measures Any credit bureau company, public credit registry or CI provider/user (collectively, the CI Companies) who disclose or use an individual’s personal and confidential information acquired during the course of business for any purpose other than the business purposes, or provide to a third party or use the personal and confidential information with the knowledge that such information was illegally disseminated may be subject to an administrative penalty of up to 3 percent of the company’s revenue generated from the relevant business. Any CI Company which allows personal and confidential information to be lost, stolen, leaked, fabricated or damaged due to their failure to establish a security plan for their CI data processing system may be subject to an administrative penalty of up to KRW5 billion (roughly US$5 million) (Article 42-2). Moreover, a person who suffers actual damages due to his/her personal CI being stolen, lost, leaked, fabricated, or damaged due to the CI Company’s willful conduct or gross negligence may seek a maximum of treble damages from the CI Company (Articles 43, Paragraphs 2 and 3). The CI Company may be required to pay damages of up to KRW3,000,000 (approximately US$3,000) to those whose personal CI has been leaked, etc. due to the CI Company’s willful misconduct or negligence (Article 43-2).

These amendments have strengthened the ex-post protective measures following the leakage of CI and increased the level of punishment and amount of penalty for breach of the obligations related to the information protection (Articles 50 and 52), and thereby reinforced the level of sanctions on the CI leakage.

Lee International IP & Law Group
Poongsan Bldg. 23 Chungjeongro
Seodaemun-gu, Seoul 120-013, Korea
Tel: 82 2 2262 6297
Fax: 82 2 2273 4605
Email: ynkim2@leeinternational.com
www.leeinternational.com

Related Articles by Firm
Amended Patent Act to increase value of Korean IP
The Act has recently been amended primarily to introduce punitive damages and relieve patentees of some responsibility to prove acts of infringement.
New Changes in Korean Labour Law
Many foreign employers find Korean labour law to be a challenging obstacle to running a business in Korea, due to its complexity and the intensity of the regulations ...
In Korea, a licensee is now considered an interested party who may invalidate a patent
On February 21, 2019, the Korea Supreme Court issued a decision making it clear that a licensee is an interested party who may file a petition to invalidate a patent for which he holds a licence ...
The value of a citizen’s participation trial
Since February 2008, pursuant to the Act on Citizen Participation in Criminal Trials, defendants in many types of criminal cases in Korea have had the right to a “citizen’s participation” trial, where a group of five to nine jurors acts ...
Korea promotes a new regulatory “sandbox” system to fuel innovation
Domestic Korean business organisations and foreign chambers of commerce have repeatedly complained about the highly regulated business environment in Korea ...
Patent licensees may file a petition for trial to seek invalidation of the licensed patent
The Korea Supreme Court ruled on February 21, 2019 that a licensee who is granted the right to practise a patent is an interested party who may file a petition for a trial seeking invalidation of the same patent ...
Tax liabilities in Korea for income generated from patents
Recently, the Supreme Court of Korea upheld a lower court judgment finding that under the Korea-US Income Tax Convention, where a foreign corporation has given a patent licence to a company in Korea ...
Preventing allegations of breach of trust for management decisions in Korea
“Is there any chance that I will be accused of breach of trust if I proceed with this transaction?” ...
Major amendments to the Product Liability Act
Since its introduction on July 1, 2002, the Product Liability Act has been enforced for the purpose of holding manufacturers, etc, liable for any damages caused to life, body or property resulting from defects of their products, according to the principle of ...
The Gig Economy: A challenge to conventional labour law
Both employers and workers should pay attention to the issues ...
Major amendments to the Unfair Competition Prevention and Trade Secrets Protection Act
Following its amendment on April 17, 2018, the new provisions of the Unfair Competition Prevention and Trade Secrets Protection Act took effect on July 18, 2018 ...
Amended Law on designation of Chief Information Security Officer by information and communications services providers
The amendment focuses on improving the safety of information and communications networks and protecting personal information.
“Fat finger” mistakes in the Korean stock market
Attention is being focused on typos made in transactions in the Korean stock market.
Brand protection strategies for Korea
Nicholas Park, senior foreign attorney at Lee International IP & Law Group chaired a timely discussion with some of our Seoul in-house thought leaders ...
Ordinary wages in Korea
Calculation of ordinary wages in Korea can have a profound impact on an employer’s labour costs, as ordinary wages are used to calculate other benefits and compensation, including overtime, compensation for unused annual paid leave and severance pay.
Recent amendments to employment and labour laws in Korea
Amendments to several Korean employment and labour statutes were passed on November 28, 2017 and will take effect during the first half of 2018 ...
South Korea: Amendment of the Fair Trade Act
A proposed amendment of the Enforcement Decree of the Monopoly Regulation and Fair Trade Act (Fair Trade Act) was approved by the State Council on September 26, 2017 ...
South Korea: Big data ownership and regulation
On October 16, 2017, the US Supreme Court decided to hear a case in which Microsoft refused to submit requested data to US law enforcement authorities for a criminal investigation ...
South Korea: Compelling foreign-based inventors to provide deposition testimony in the US
As part of the discovery process in US patent litigation, the party accused of patent infringement will seek the deposition testimony of the inventor ...
Are shares donated to a foundation subject to gift tax?
Hwang Pil-sang, the founder of Suwon Kyocharo, a Korean daily newspaper, decided to donate money earned through his newspaper business to help students of the university he attended ...
Constitutional Court’s decision on Specific Crimes Act changes sentencing expectations
Sparked by an increase in the number of repeat offenders committing crimes, Korea has enacted a number of laws designed to prevent crimes by imposing aggravated punishment on repeat offenders...
Revised Korean law to protect privacy in smartphone apps
On March 22, 2016, Korea took steps to strengthen the protection of personal information in smartphone applications through a partial revision of the Korean Act on Promotion of Information and Communications Network Utilisation and Information Protection, etc.
Unfair competition in Korea
The Korean government has taken steps to protect trade secrets more effectively by easing the requirements for trade information to become trade secrets and by enabling ...
Hanjin Shipping’s bankruptcy: is it sailing toward liquidation?
On August 31, 2016, Korea’s largest shipping company and the seventh-largest shipping line in the world, Hanjin Shipping, filed a rehabilitation (bankruptcy) action in Korea. That filing reverberated around the globe...
Comparing liquidated damages and punitive penalties in Korea
Parties to contracts in Korea generally use two types of damages/penalty clauses to prevent breaches of contract: liquidated damages and punitive penalties. ...
The Enforcement Decree of the Act on Fair Agency Transactions
On July 26, 2016, the Korean Fair Trade Commission (FTC) made a pre-announcement of proposed legislation known as the ...
Amendment of the Arbitration Act
The amended Arbitration Act was announced on May 29, 2016. It is the first time in 17 years that the Arbitration Act has ....
Companies face restrictions under Graft Act
Following the Constitutional Court’s decision on the Improper Solicitation and Graft Act, known as the Kim Young-ran Act, ...
Major reform of Korean Trademark Law to follow international trends
The Act Providing Major Amendments to the Trademark Law (the Act) was passed by the National Assembly on February 4 ...
The right to be forgotten
One of the issues created by the Internet concerns the right to delete what one has posted on the web ...
Special act on revitalising companies to take effect in August 2016
On February 4, 2016, the “Special Act on Revitalising Companies” (the Act) was passed by the National Assembly of Korea as temporary legislation ...
The Korean government announces Guidelines on Fair Employee Evaluations and Rules of Employment to help enforce its labour reforms
On January 22, 2016, the Ministry of Employment and Labour (MOEL) announced Guidelines on Fair Employee Evaluations and Guidelines ...
New amendment to the Korean Commercial Code
On November 15, 2015, an amendment to the Korean Commercial Code (the KCC) was announced. The amendment, which will take effect in February 2016...
Status of Executives under the Labour Standards Act
Many multinational companies doing business in Korea perceive the country’s labour law as strict and heavily favouring workers. The Labour Standards Act of Korea (LSA) nullifies “at-will” employment ...
Why is a global understanding of intellectual property laws important?
Start-ups and small companies attempting to grow their businesses globally are increasingly receiving warning letters ...
Risk of issuing a warning letter to customers of an alleged patent infringer
Issuance of a cease and desist letter is usually recognised as the first step to be taken by a patentee against an alleged infringer in a patent infringement dispute in Korea. A warning letter to an alleged infringer ...
Tightened regulations on multinational intercompany transactions in Korea 2015
Multinational enterprises (MNEs) that operate or contemplate operating multinational businesses in Korea need to be aware of recent changes in the Adjustment of International Taxes Act of Korea ...
Review of the amendments to the Commercial Building Lease Protection Act
Under the previous version of the Commercial Building Lease Protection Act (the Act), a commercial tenant could lose the value of its ‘leasehold premium’ (kwon-ri-gum in Korean), which is the monetary ...
Use of in-kind contributions for new shares subscriptions in Korea
When investing in a company by subscribing to new shares, the investor can pay the subscription price in cash or in kind. Contributions …
Patent Protection vs. Fair Competition
There has been a significant increase in the number of cases related to the issue of whether the exercise of intellectual property rights violated the Fair Trade Act. These cases have …
KFTC amends the review guidelines on unfair exercise of intellectual property rights
On December 17, 2014, the Korea Fair Trade Commission (KFTC) amended the review guidelines on unfair exercise of intellectual property rights (Revised Guidelines), effective December 24, 2014. …
The latest win by Lone Star against national tax service
On June 13, 2014, the Seoul Administrative Court ruled in favour of Lone Star Funds and ordered the tax office to refund US$117 million in taxes collected on the sale of a block of shares …
South Korea – success as an FTA hub?
Koreans often think of themselves as the shrimp between whales and, as the Korean proverb has it, when whales fight it is the shrimp whose back is broken. These days, Korea is more of an orca than a shrimp, but ...
Korean court’s position on parallel importing of genuine goods
Parallel importing occurs when a third party imports genuine goods to Korea without the express permission of the sole/exclusive importer of the goods. …
Current trends with Domain Name Disputes
There have been many instances where a company, intending to expand its business into the Internet world, learns that someone already has registered and owns the company’s business name on …
Considerations in Contracting with DAPA
The Defense Acquisition Program Administration (DAPA) of South Korea is responsible for handling and overseeing projects related to military supplies and defense industry procurement. …
Foreign investment into casino-resorts in Korea
In recent years, the Korean regulatory environment has become increasingly aimed at attracting foreign investors and developers to invest into Korea and boost Korea’s tourism industry. Currently eight …
Suggestions for improving Korea’s parallel importation system
‘Parallel Importation’ refers to the importation of genuine foreign products (products covered by the trademark of a foreign company with legitimate trademark rights) by third parties, using different distribution …
The FBPA: South Korea’s Act to prevent bribery of foreign officials
Recently, several former executives of a large multinational corporation were hit with the largest civil penalty ever for individuals in a corporate foreign bribery case - each was ordered to pay US$524,000. …
Amendment to the Foreign Investment Promotion Act
The current Monopoly Regulation and Fair Trade Act (MRFTA) of Korea generally prohibits a second-tier company (i.e., a domestic company …
Project Financing Vehicles (PFVs)
The use of Special Purpose Companies (SPCs) has become prevalent in financing large projects that demand substantial amounts of money …
Understanding the ‘5 percent rule’ for Korean equity holdings
Under Article 147 of the Financial Investment Services and Capital Markets Act (FSCMA), an investor who acquires 5 percent or more …
Liability for a Culpa in Contrahendo in Korean law in light of the Hyundai Group Case
In 2010, Hyundai Group, backed by Hyundai Merchant Marine, was named the preferred bidder for the 34.88 percent stake in Hyundai Engineering & Construction (Hyundai E&C)…
Working with ‘Inter Partes Review’
On September 16th, 2012, the US Patent and Trademark Office (USPTO) initiated a new procedure called Inter Partes Review or …
Worker’s compensation rights and ‘Ordinary Wages’
Under Article 6 of the Enforcement Decree of the Labor Standard Act (the Labor Act), ‘Ordinary Wages’ is defined as …
Franchising in Korea: areas for consideration
Over the past decade the number of franchises launched by domestic and foreign companies in Korea has increased significantly …
Related Articles
Personal Data Protection Act published in the Government Gazette
Business operators should ensure that their businesses comply with the PDPA.
Are you optimising project management skills in your legal department?
Because you should! We all need to upscale our skillset in areas of people, process and technology.
Regulatory Authorities to regulate Relevant Activities in accordance with Economic Substance Regulations announced
Businesses licensed in the UAE should fast track an assessment to determine if they are subject to the regulations.
Related Articles by Jurisdiction
Dispute Resolution Special Report
In the latest issue of Asian-Counsel, we uncover the lofty aims of several arbitration centres in the region. We also receive comprehensive updates from a host of leading law firms, and the SIAC, as to the state of dispute resolution ...
Capital Raising Special Report
Our latest edition of Asian-Counsel takes a look at the various happenings in the region’s capital markets sector. Whilst change is abreast with money flows shifting directions and new industries gaining momentum, we uncover why Hong Kong and Singapore ...
Latest Articles
Personal Data Protection Act published in the Government Gazette
Business operators should ensure that their businesses comply with the PDPA.
Are you optimising project management skills in your legal department?
Because you should! We all need to upscale our skillset in areas of people, process and technology.
Regulatory Authorities to regulate Relevant Activities in accordance with Economic Substance Regulations announced
Businesses licensed in the UAE should fast track an assessment to determine if they are subject to the regulations.