Tsung-Yuan Shen December 12 2022 Draft amendments address controversial confidentiality preservation orders Lee and Li Attorneys at Law | Intellectual Property - Taiwan Tsung-Yuan Shen Intellectual Property IntroductionConfidentiality preservation orderControversy of previous practiceResulting amendmentIntroductionOn 24 June 2022, the Judicial Yuan passed the Draft Amendment to the Intellectual Property Case Adjudication Act, which aims to establish an IP litigation system that is more professional, effective and aligned with international trends. The Act was passed after extensive consultation and reference to foreign legal systems and practices, and matches the draft amendments to the Patent Act and the Trademark Act submitted by the Ministry of Economic Affairs to the Executive Yuan on 19 April 2021.The draft amendment covers a wide range of issues, including:the change of the administrative remedy proceedings for patent and trademark cases to inter partes proceedings, applicable (with certain changes) to civil proceedings; andincreased protection for litigation documents involving trade secrets.This article discusses the confidentiality preservation order system.Confidentiality preservation orderThe confidentiality preservation order system was introduced with reference to the systems of the United States, Japan and other countries in the course of formulating the Intellectual Property Case Adjudication Act in 2007. It enables trade secret owners to file a request with the court for the issuance of a confidentiality preservation order to the other party, advocates, assistants or other persons concerned in the litigation. The system aims to restrict the disclosure of the trade secrets only to the persons subject to the confidentiality preservation order and to prohibit the use or disclosure of the trade secrets to other persons. At the same time, it aims to balance the litigation rights of the litigation parties and protect trade secret owners.However, the system raises various issues. It seems that only the trade secret owner may request the issuance of a confidentiality preservation owner; the other party is not allowed to file such a request. This may lead to disputes between the trade secret owner and the other party as to who should be listed as the person subject to the confidentiality preservation order. On the ground of the need to protect trade secrets, the trade secret owner may believe that the number of the persons subject to the confidentiality preservation order should be as small as possible. The other party may consider that other advocates, assistants or persons concerned in the litigation should be included due to the quantity, complexity or high degree of expertise of the trade secrets involved.If the two parties fail to agree, problems may arise. Article 11 of the Intellectual Property Case Adjudication Act stipulates:Where any one of the following situations occurs with respect to trade secrets held by a party or a third party, the court may, upon motion along with preliminary proof by such party or third party, issue a confidentiality preservation order upon the other party, agent, assistant ad litem, or other related party to the action.If a trade secret owner refuses a motion to make additional persons subject to the confidentiality preservation order, such refusal may prevent the other party from being informed of the contents of their case in a timely manner and impede the smooth progress of the proceedings. This in turn may affect the speed and accuracy of the decision.In this regard, if the case is a criminal case relating to trade secrets, the preceding request for the court's issuance of a confidentiality preservation order may be alternatively filed by the prosecutor. Article 14-3(4) states:The trade secret owner(s) or the prosecutor may, pursuant to the provisions of the Intellectal Property Case Adjudication Act, file a request with the court for the issuance of a confidentiality preservation order.Controversy of previous practiceWith respect to other IP cases, the Intellectual Property and Commercial Court has affirmed that the party which does not own the trade secret may also request the issuance of a confidentiality preservation order to increase the number of persons subject thereto.(1) However, such a practice is controversial.In one such case,(2) the Court's ruling was initially revoked(3) on the ground that "the movant entitled to request the issuance of a confidentiality preservation order shall be the trade secret owner(s)". However, it later became final and binding after the appealed ruling was revoked by the Supreme Court(4) on the ground that a movant whose request for the issuance of a confidentiality preservation order was approved is not allowed to file an appeal against the approved ruling. Nevertheless, the trade secret owner in the case again initiated a rehearing action against the approved ruling and the Intellectual Property and Commercial Court once again revoked it(5) on the ground that "the movant entitled to request the issuance of a confidentiality preservation order shall be the trade secret owner(s)". Ultimately, the Superior Supreme Court ruled(6) that the rehearing action was revoked and that no rehearing action could be initiated on the ground that the trade secret owner in the case was not a party subject to the original final and binding approved ruling. Accordingly, it can be seen that the above opinions are indeed controversial under the existing law.Resulting amendmentTo address this controversy, the draft amendment adds a new paragraph 3 to article 37 (corresponding to article 11 of the current law):Where the court deems it necessary to issue a confidentiality preservation order, and the party or the third party fails to file a request for such order despite being informed by the court per the provision in Paragraph 1, the court may issue a confidentiality preservation order to the persons not subject to the confidentiality preservation order specified in Paragraph 1 at the request of the other party or the party after hearing the opinions of the party or the third party.For further information on this topic please contact Tsung-Yuan Shen at Lee and Li Attorneys at Law by telephone (+886 2 2763 8000) or email ([email protected]). The Lee and Li website can be accessed at www.leeandli.com.Endnotes(1) 2019 Min Mi Sheng Zi No. 42 and 2019 Min Mi Sheng Zi No. 54.(2) 2019 Min Mi Sheng Zi No. 42.(3) 2019 Min Ying Kang Zi No. 483.(4) 2020 Tai Kang Zi No. 483.(5) 2020 Min Sheng Zai Zi No. 1 and 2020 Min Ying Kang Zi No. 8.(6) 2020 Tai Kang Zi No. 1282.