By Hung Ou Yang
In July 2021, Taiwan Ministry of Justice announced draft amendments to the National Security Act and to the Act Governing Relations between the People of the Taiwan Area and the Mainland Area, to strengthen control and increase penalties for the protection of trade secrets of domestic enterprises and industries when facing fiercer international competition nowadays. Therefore, both sides of enterprises and employees should understand the concept of trade secrets so that they may strengthen the protection of their trade secrets as well as prevent themselves from infringing trade secrets unintentionally.
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The definition of "trade secret" as provided by Taiwan Trade Secrets Act refers to any method, technology, process, formula, program, design, or other information that may be applied in the course of production, sales, or business operations. And the information shall be protected if and only if it is commercially valuable because of its secrecy and reasonable confidentiality measures have been taken to keep it secret. In short, if a company believes that the information such as a method or technology applied by its own factory is a secret of economic value, the company should be kept it confidential by marking it as confidential, giving it to the custody of a specific personnel and restricting access to it, so that the law would provide legal protection of it. Of course, the so-called reasonable confidentiality measures, in practice, may vary among different industries and some may require more special measures in light of industrial characteristics. Domestic enterprises should check whether they have the above-mentioned trade secrets as soon as possible and take confidentiality measures accordingly. For example, in the recent the trade secret litigation between United Microelectronics Corporation and Micron Technology, Inc., whether the DRAM manufacturing process is secret became a key issue intensely contested in court. If the information has been openly circulated on the internet or widely known to the industry, it shall not be protected by the Trade Secrets Act due to lack of secrecy; however, if it is information of a key step that even competitors do not know, it is undoubtedly a trade secret. If it is difficult for a company to judge whether it is a trade secret, it should be listed as a trade secret and reasonable confidentiality measures should be taken as soon as possible therefore legal protection and commercial advantages may be obtained as soon as possible. Or, there should be no chance to obtain the protection of the Trade Secrets Act.
In order to strengthen trade secrets protection, the draft amendment to the National Security Act provides, any perpetrator of economic espionage who steals the "critical technology" of the domestic high-tech industries is punishable for much more severe penalties than that provided by the Trade Secrets Act; On the other hand, the draft amendment to the Act Governing Relations between the People of the Taiwan Area and the Mainland Area provides, persons who have worked in this type of industrial technology research and development department is required to undergo prior inspection and then get a permission to go to China (Mainland Area). Taiwan government expects to implement more strict measures via these two amendments to prevent our country's trade secrets from being stolen by foreign economic spies. If this is the case, the regime of trade secrets that originally only aimed at protecting private business secrets will be elevated to the level of national security, turning the violation of trade secrets into a violation of national security, and thus aggravating the punishment for perpetrators. In other words, a perpetrator who steals or leaks critical technologies that are closely related to the country's competitiveness will certainly be deemed to be a threat to national security and involve serious penalties.
However, it is worth pondering whether these amendments will have a deeper impact on the future attitudes of judicial authorities towards law enforcement. In other words, when determining whether trade secrets have been infringed, it is a serious issue that judicial authorities should first consider the interests of the enterprises and swiftly protect the trade secrets at issue, or judge the case more prudentially to safeguard former employees' basic rights from jeopardy of criminal prosecution. A case once happened in Taiwan was, a former employee of Nanya Technology Corporation (Nanya) was charged with infringing Nanya's trade secrets by connecting his phone and Nanya's computer system via USB. Nanya alleged that this employee cracked Nanya's corporate cyber security system via his phone so that he could download and actually downloaded substantial trade secrets of Nanya. For this reason, Nanya filed criminal complaint and civil complaint against this employee claiming for enormous damages. However, during the trial, it has never been proven why a USB connection between a phone and a computer could crack Nanya's corporate cyber security system. After a long trial, the court of first instance finally found this former employee not guilty. See 107 Taiwan New Taipei District Court Intellectual Property Litigation No. 9 (2018). But he still faced jailhouse jeopardy because he had been detained for two months in jail during the phase of investigation. Supposing his defense was true, he was just charging his phone by connecting his phone to the computer via USB, but then he would have to face criminal and civil lawsuits charging him with alleged theft of trade secrets long after leaving the job and even to be detained by the government, this is indeed unfair. Therefore, in order to avoid injustice, it is still worth pondering if future amendments that aim at protecting the country's critical technologies further would cause the judicial authorities to tend to protect enterprises rather than employees, or even selectively protect specific enterprises or industries, in practice.
AUTHOR: Hung Ou Yang
Managing Partner
Taipei
+886-2-2707-9976
[email protected]
Copyright Brain Trust International Law Firm
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
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