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Amendments to Trade Secrets Act proposed

by Christine Chen and Michael Fahey

The Taiwan Intellectual Property Office (“TIPO”) has recently held a series of public hearings on proposed amendments to Taiwan’s Trade Secrets Act (the “Act”). The amendments under discussion include provisions that would give foreign corporations standing to bring private prosecutions for trade secret misappropriation and extend trade secret protection to foreign nationals from jurisdictions that are parties to multilateral treaties. Participants in the hearings also took the opportunity to urge that a mechanism be created to redact sensitive parts of judgments and that the Act address fair competition issues in trade secret protection.

Private Prosecutions and Scope of Trade Secret Protection

Currently foreign corporations without a presence in Taiwan do not have standing to file criminal complaints or private prosecutions for trade secret misappropriation.[1] The TIPO has proposed adding a new Article 13-5 to the Trade Secrets Act that would create a statutory exception permitting such private prosecutions.

The TIPO has also proposed amending Article 15 of the Act to extend trade secret protection to jurisdictions that are members of multilateral treaties to which Taiwan is also a party. Since Taiwan is a member of the WTO, this amendment would extend trade secret protection to businesses from other WTO member jurisdictions. Article 15 currently provides that Taiwan’s protection of trade secrets extends to those jurisdictions whose laws protect Taiwanese trade secrets. The draft amendment of Article 15 clarifies that such laws need not be statutory laws. In other words, if a jurisdiction’s case law protects Taiwanese trade secrets, Taiwan trade secret protection would reciprocally protect trade secrets from that jurisdiction.

Access to Confidential Information

The Act currently permits a judge to issue a protective order restricting access to party filings during litigation. A judge can also order closed hearings to protect trade secrets. The TIPO is proposing a new Article 13-6 that would give prosecutors similar powers during the investigative proceedings that precede an indictment. This amendment has been controversial and it is unclear whether the TIPO will revise its draft of 13-6 or abandon it entirely.

Judgements and Fair Competition

In addition to the amendments proposed by the TIPO, participants in the hearings also discussed whether there should be a mechanism to allow parties to trade secret litigation to comment on judgments before they issue. Proponents of this mechanism take the view that the court should consider the views of the parties as to whether a judgment discloses confidential information before the judgment is published. Such a mechanism could ultimately lead to partial redactions of published judgments to avoid disclosures.

Others at the hearings recommended adding language to the Act prohibiting competitors from obtaining trade secrets by means of coercion, incentives, or other unfair means. A similar prohibition in the Taiwan Fair Trade Act was removed in 2015.

Future Developments

The proposed amendments to the Act reflect the continuing concerns that Taiwanese technology companies have about the adequacy of Taiwan’s trade secret protection. The TIPO will now consider the views expressed during the hearings with a view to revising the proposed amendments prior to submitting them to the Executive Yuan for approval. If approved by the Executive Yuan, a bill will be introduced to the legislature where lawmakers may make further changes before enacting or rejecting the bill.

We recommend that businesses concerned with trade secret protection in Taiwan monitor these amendments as they make their way through the legislative process. There will be further opportunities for international businesses to make their voices heard on this important issue before the law is changed.

For more information about trade secret protection and other intellectual property matters in Taiwan, please contact Christine Chen at cchen@winklerpartners.com.


[1] A 1931 Judicial Yuan interpretation generally precludes unregistered foreign corporations from filing private prosecutions under Article 319 of Taiwan Code of Criminal Procedure unless the legislature has created a statutory exception. Judicial Yuan Interpretation 533. Taiwan Copyright, Trademark, and Patent Acts already have statutory exceptions for unregistered foreign corporations. Taiwan’s Supreme Court has however held that US companies may file private prosecutions under the Treaty of Friendship, Commerce and Navigation between the United States of America and the Republic of China.

 

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