Trade Secrets Act to be revised

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.

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.