Co-published

On 21 September 2018 Taiwan’s Legislative Yuan announced that the amendment draft of the Trade Secrets Act will be a top-five priority act for discussion. The draft amendment was proposed and prepared by the legislative committee and has been sent to the Legislative Yuan for inspection and formal amendment through three successive readings.

The Trade Secrets Act was originally promulgated and made effective on 1 January 1996. Since then, there has been one amendment, which took effect in 2013, adding criminal penalties. The first case tried under the amended act arose when the design department chief at HTC was accused of taking the company’s trade secrets to China. The most severe penalties were imposed in a case in which a retired engineer of a subsidiary of the famous Chang Chun Group was sentenced to seven-and-a-half years’ imprisonment for stealing ethylene-vinyl acetate production methods (17 January 2018, IP Court 105 Sinzi Shansu Zi 35).

Pursuant to Article 11 of the Intellectual Property Case Adjudication Act, the court may, upon motion, issue a confidentiality preservation order. However, there is no protection order available during the prosecutor’s investigation process. Therefore, many companies are concerned that their trade secrets may be disclosed during such investigations and are thus reluctant to bring claims to prosecutors, according to the legislative committee member who proposed the amendment.

Cases of infringement of business secrets often involve highly technical complexities; meanwhile, the confidentiality of the internal business secrets of the infringed enterprise must be considered. To enable prosecutors to conduct investigations smoothly and promptly, and to enhance the protection of business secrets, there is an urgent need to update the secrecy order mechanism to protect investigative content. The mechanism that is being considered is similar to the order available under the Intellectual Property Case Adjudication Act. The table below provides a comparison of the amendment draft and the Intellectual Property Case Adjudication Act.

Intellectual Property Case Adjudication Act Trade Secret Act (amendment draft)

Article 4 The court may, whenever necessary, request a technical examination officer to assist in injunctive procedures or compulsory enforcement procedures.

N/A.

Article 11 The court may, upon motion with preliminary proof submitted by the motioning party or a third party, issue a confidentiality preservation order on the other party, agent, assistant ad litem or related party to the action.

Article 14.1

The prosecutor may ex officio issue a confidentiality preservation order over the content of the investigation.

Article 12 A motion seeking a confidentiality preservation order must specify in writing:

  • the persons to be subject to the confidentiality preservation order;
  • the trade secrets to be protected by the order; and
  • confirmation that conditions described in Paragraph 1 of the preceding article are met.

Article 14.2 A confidentiality preservation order over the content of the investigation must specify in writing:

  • the persons to be subject to the confidentiality preservation order;
  • the content of the investigation to be protected by the order;
  • confirmation that conditions described in Paragraph 2 of the preceding article are met; and
  • the consquences of a violation.

Article 14 A person subject to a confidentiality preservation order may file with the court a motion to revoke the order over which the action is pending when:

  • the requirements specified in Paragraph 1, Article 11 are not met;
  • the situation described by Paragraph 2, Article 11 arises; or
  • the grounds on which the order was granted no longer exist.
Article 14.3 The prosecutor may stop or revise the ex officio-issued confidentiality preservation order over the content of the investigation.

Article 35 Parties that violate a confidentiality preservation order under the act will be subject to up to three years’ imprisonment, detention and/or a fine of up to NT$100,000.

Prosecution for an offence described in the preceding paragraph may be initiated only upon complaint.

Article 14.4 Parties that violate a confidentiality preservation order will be subject to up to three years’ imprisonment, detention and/or a fine of up to NT$100,000.

In the case of a violation of the content of an investigation in a foreign country, China, Hong Kong or Macao, the preceding paragraph will apply regardless of the law of the country in which the crime was committed.

From this table, we can see that pursuant to Article 4 of the Intellectual Property Case Adjudication Act, the court may, whenever necessary, request a technical examination officer to assist with injunctive procedures or compulsory enforcement procedures. A similar article may be added to the amendment draft for the Trade Secrets Act during successive readings at the Legislative Yuan.