Supreme Court reduces plaintiff’s burden of proof in trade secret misappropriation cases

The Trade Secrets Act was amended in 2013 in response to complaints that existing regulations were insufficient to safeguard the trade secrets of corporations and to better align the Taiwanese regime with international standards. The amendments included:

• significantly higher fines and imprisonment terms for offenders; and
• additional penalties for the misappropriation or delivery of trade secrets abroad.

Therefore, anyone who improperly acquires or copies a trade secret is now subject to a maximum sentence of five years and a minimum fine of NT$1 million.

To better protect the interests of trade secret holders, in a decision rendered on January 4 2017 the Supreme Court held that the burden of proof of the injured party in such cases shall be reduced. In this case, the appellees (former employees) had been hired by the appellant (their former employer) after the execution of confidentiality agreements. Once the former employees had left, the employer discovered that they had emailed its trade secrets to external email accounts. Therefore, the employer filed suit against them. The former employees denied leaking any trade secrets and contended that the emails containing trade secrets had been sent only to facilitate overtime work. The district court rejected the employer’s claim, holding that it had not met its burden of proving that the former employees had leaked its trade secrets. The High Court upheld this decision.

The Supreme Court reversed and remanded the High Court decision. It emphasised that, since the former employees had sent emails externally in order to facilitate overtime work, they should have also sent the results of that work back to their employer by email. However, there was no evidence that any emails had ever been sent back from the former employees’ external email accounts. Additionally, the former employees had no reason to work overtime so frequently after they had submitted their resignations. Thus, the High Court conclusion was questionable without investigating the possibility that the former employees had leaked the trade secrets by sending these emails to external accounts.

The Supreme Court further pointed out that in cases involving the misappropriation of trade secrets, plaintiffs face greater difficulties than defendants when collecting evidence. Therefore, based on the rule of fairness, the burden of proof should be reduced, so that plaintiffs are not required to prove all facts of the misappropriation. If a plaintiff presents facts which support the possibility of infringement, the defendant must clarify the likelihood of misconduct.

Like other civil law jurisdictions, Taiwan has no discovery, which makes it difficult for an injured party to collect evidence to build a case in a civil action. Plaintiffs usually try to seek assistance from police or the Ministry of Justice Investigation Bureau to gather evidence by initiating a criminal procedure. However, the timeline in such proceedings is unpredictable.

This Supreme Court ruling greatly increases the incentive for trade secret holders to choose the civil procedure route for trade secret misappropriation cases in Taiwan.