According to the legal community on the 8th, Judge Ryu Ji-mi of the Seoul Central District Court’s Criminal Division 5 sentenced former and current Galaxia SM employees Kim and Jang to two years in prison each on charges including breach of trust on the 20th of last month. A former Galaxia SM employee Jeong, who also stole trade secrets, was fined 50 million Korean won, and Galaxia SM was fined 500 million Korean won.

Kim, who worked as a sales manager at Uyoung Wellness Company and received a resignation notice in 2019 before joining Galaxia SM the following year, colluded with Jang to steal internal information from Uyoung Wellness Company to secure exclusive domestic distribution rights for Technogym, an Italian manufacturer and seller of exercise equipment. They sent a summary of Uyoung Wellness Company’s issues to Technogym’s Asia regional manager and also proposed a distribution agreement with Galaxia SM to Technogym. When Technogym responded negatively, they sent materials evaluating Galaxia SM as significantly superior among potential distributors. Eventually, Technogym notified Uyoung Wellness Company of the termination of the distribution contract in October 2020 and signed a distribution agreement with Galaxia SM in December of the same year.

The court recognized the criminal responsibility of Kim, Jang, and others. The court stated, “The defendants committed breach of trust meticulously and systematically, knowing full well that sales from the exclusive distribution agreement with Technogym accounted for most of the victim company’s total sales, and they exported trade secrets over a long period.” It added, “The defendants’ crimes were grave as they caused the victim company to lose its core business, which is the foundation of its existence. The damage to the victim company is extremely difficult to recover, and it has indeed led to a serious managerial crisis.”

Both the defendants and the prosecution appealed the first-instance ruling from last month.

According to Fitgearsource editorial search, Galaxia SM signed a new distribution agreement with Technogym in December 2020, replacing the former distributor Wooyoung Wellness Company and is currently the official and exclusive distributor of Technogym in South Korea.