Investigation begins in alleged tech leak

Prosecutors said yesterday that they have begun an investigation into whether Hyundai Syscomm illegally transferred core telecommunications technology to another company. Earlier this year, the company sold patents involving CDMA, a cell phone technology standard, to UTStarcom, which is based in the United States. Prosecutors are looking into whether the sale was illegal. In August, the Ministry of Commerce, Industry and Energy accused Hyundai Syscomm of violating trade laws that ban the exports of core technology, although it is not clear whether the laws apply to the patents in question. Prosecutors said they are questioning people related to the sales, especially Hyundai Syscomm’s former major shareholder, 3R, which carried out the patent sale. Yesterday, prosecutors arrested Jang Seong-ik, who was the president of 3R when the contract was signed. Mr. Jang is also suspected of embezzling corporate funds of about 10 billion won last year to invest in the stock market. “At the time, 3R got a $7 million loan from UTStarcom’s Korean branch, putting up CDMA-related equipment as collateral, but when it was unable to pay back the money, it handed over its technology developers and equipment,” the prosecutor’s office said. The patents are still being held by Hyundai Syscomm, which now has a new owner. After the current major shareholder, Haniel, took over in July, it announced that the contract signed by 3R was illegal and that it would not part with its patents. Although basic patents for CDMA are held by Qualcomm, a U.S. company, the Korean government and companies have developed technology to commercialize it. Since 1997, the government alone spent 78.1 billion won, in a project that was estimated to be over 1 trillion won. Also, since the technology was developed jointly, many patents have joint owners, including Samsung Electronics, the Electronics and Telecommunications Research Institute, and KTF. Before these patents can be sold, all parties must consent. Meanwhile, UTStarcom said it should be given the remaining patents. Vice President Michael Skarzynski said recently in a press conference that the company has not exported or transferred any technology or product outside of Korea since the acquisition but that it is seeking export control authorization from the Korean government to manufacture the CDMA technologies his company acquired. by Wohn Dong-hee, Jo Kang-su