South Korea is reassessing how it protects startup innovation at a moment when technology theft is increasingly treated as an economic security issue. During the government’s 2026 policy briefings, President Lee Jae-myung openly questioned whether existing penalties deter misconduct at all. His remarks triggered a policy review that could reshape intellectual property enforcement, carrying direct implications for startups, investors, and foreign companies entering the Korean market.
President Lee Questions KRW 2 Billion Cap at 2026 Policy Briefing
On December 17, 2025, President Lee Jae-myung expressed concerns over Korea’s current penalty framework for technology theft during ministry policy briefings held at the Government Complex Sejong. The session covered reports from the Ministry of SMEs and Startups, the Ministry of Trade, Industry and Energy, and the Korean Intellectual Property Office.
The Ministry of SMEs and Startups reported plans to impose administrative penalties of up to KRW 2 billion (~USD 1.5 million) on companies found guilty of repeated or malicious technology theft. The proposal represented a sharp increase compared with past administrative fines, which were generally capped at KRW 30 million to KRW 100 million.
President Lee challenged the deterrent effect of the proposed ceiling, arguing that penalties disconnected from corporate revenue or illicit gains fail to curb misconduct at scale, saying:
“If penalties do not have deterrent effect, this needs to be reconsidered.”
Why Technology Theft Has Become a Policy Priority
Technology theft has moved to the center of policy debate as Korea’s startup ecosystem matures and attracts deeper cross-border collaboration. Policymakers increasingly frame the issue as one of national competitiveness rather than isolated corporate disputes.
Officials acknowledged that criminal prosecution has delivered limited results, given high evidentiary burdens and frequent suspended sentences. As a result, the government is shifting toward stronger administrative and financial sanctions, paired with structural reforms to speed up damage assessment and enforcement.
The 2026 policy direction is part of a broader effort to restore what the ministry describes as the “growth ladder” for small businesses, ventures, and manufacturing startups.
President Lee and Minister Han Signal Shift Toward Revenue-Linked Tech Theft Penalties
During the briefing, President Lee was explicit about the limits of the current framework. “The maximum fine is KRW 2 billion, and that is too cheap,” he said, adding that penalties need to reflect real economic impact. The president argued that sanctions should be calculated “as a percentage of revenue” or “as several times the gains obtained through technology theft” to create genuine deterrence.
President Lee then illustrated the point bluntly, warning that penalties without teeth fail to change behavior:
“For example, if someone earned 100 billion won but only must pay 2 billion won, I feel like even I would probably keep stealing the technology. If there is no deterrent effect, I ask that you reconsider and improve this aspect further.”
Minister of SMEs and Startups Han Seong-sook responded by acknowledging internal limitations in how penalties had been viewed,
“We were trapped by existing numbers: we thought KRW 2 billion was large compared to KRW 100 million or KRW 50 million. That assumption deserves reflection.”
The minister added that raising the standards “is something we must pursue actively,” and confirmed the ministry would review higher thresholds within its authority.
Minister Han also confirmed that a cross-ministerial task force has already been formed, led by the ministry’s first vice minister, to refine damage calculation standards and coordinate enforcement across related agencies, saying:
“Within the scope of what the Ministry of SMEs and Startups can do, we will respond more proactively than we have up to now, to the maximum extent possible.
We view the issue of technology theft as critical, and we will hold a separate briefing regarding the detailed measures as they are prepared.”
Implications for Startup IP Risk and Regulatory Compliance in Korea
The debate signals a shift toward stronger protection of intangible assets as Korea pursues its future ambition to become top four global venture powerhouse. If adopted, revenue-linked penalties could bring Korea closer to enforcement approaches seen in major innovation markets, where sanctions scale with economic impact rather than fixed caps.
The government has also outlined complementary measures. These include a Korean-style discovery system designed to reduce proof burdens, expanded authority to commission expert damage assessments, and a relief fund under review that would be financed through penalties to support startups during legal disputes.
Foreign startups entering Korea face a clearer compliance landscape under this direction. Higher enforcement standards and more explicit consequences for IP violations raise expectations, especially in partnerships involving local SMEs and technology suppliers.
Enforcement Credibility Becomes the Real Test
And in the end, Korea’s tougher rhetoric on technology theft now faces a credibility test. President Lee’s call for revenue-linked penalties sends a strong policy signal, yet it’s the legislative and regulatory follow-through that will determine its impact.
As the country moves into its 2026 policy cycle, the outcome will shape confidence across the startup ecosystem. Founders are watching for credible protection, investors are assessing regulatory risk, and global partners are evaluating whether Korea can match innovation incentives with enforcement strong enough to protect what it helps create.
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