The Taiwan Intellectual Property Office (TIPO) has announced plans to add criminal penalties to the Trade Secrets Act.

Currently, the Act permits victims of trade secret theft to recover damages without imposing criminal sanctions. While Taiwan’s Criminal Code (Art. 317) criminalizes the theft of industrial  commercial secrets during the course of employment, the maximum sentence of one year is relatively light. In practice, proof is difficult, convictions are rare, and suspended sentences or fines are common.

Trade secret theft is major problem in Taiwan, affecting both Taiwanese and foreign companies.

In comments reported in the Chinese-language media last week, TIPO Director-General Wang Mei-hua referred specifically to the well-known Mediatek case as an example of the problem. In January, the Taipei District Court convicted a  former employee of the fabless chip designer of disclosing confidential information obtained in the course of his employment to a competitor after he went to work for a Taiwanese  competitor. The employee was sentenced to nine months commutable to a fine of NT$270,000 (c. US$9,000).  The Intellectual Property Court dismissed the appeal of the criminal sentence and Mediatek’s civil suit for NT$20 million (c. US$666,000) at the end of March but noted that Taiwan’s protection of trade secrets was inadequate.

Director-General Wang stated that Mediatek’s losses were about NT$10 billion (US$333 million).

She also noted the Kuen-Yao Lee, Chairmain of TFT-LCD manufacturer AU Optronics, had urged President Ma Ying-Jeou to introduce legislation to fight trade secret espionage.
Wang said that the TIPO was aware that other countries including the US and Japan had increased penalties for trade secret misappropriation and that the TIPO was drafting legislation to follow suit.

Trade secret protection is also a vital concern for Taiwan’s international partners. As co-chair of the American Chamber of Commerce in Taipei’s Intellectual Property and Licensing Committee,  WP partner Peter Dernbach is working closely with the TIPO to ensure that the concerns of the international business community are being addressed in the drafting process.
The National Science Council and the TIPO held two  meetings with industry representatives, government agencies, and experts in late February to seek views on the TIPO’s draft legislation.

The TIPO will hold public hearings on the proposed amendments over the next few months.