Trade Secrets Act update: meeting at NSC this Friday (13 April)

The Taiwan Intellectual Property Office (TIPO) announced today that it has completed a preliminary draft of its amendments to the Trade Secrets Act and that it has invited industry representatives and officials from the Ministry of Justice and the Fair Trade Commission to meet at the National Science Council to discuss the proposed amendments in detail this Friday (13 April).

The TIPO now anticipates that public hearings will be held at the end of this month. The Ministry of Economic Affairs has identified this bill as priority legislation for this year.

The TIPO also disclosed that it undertook a comprehensive review of Taiwan’s protection of trade secrets in February in response to industry concerns and that a preliminary meeting was held on 6 April with the Judicial Yuan, the Ministry of Justice, and other related agencies to discuss trade secret protection.

At 6 April meeting, the various agencies exchanged views on industry recommendations on

  • adding criminal liability to the Act,
  • corporate liability,
  • strengthening criminal and civil procedure relating to trade secret cases,
  • amending the Communication Protection and Surveillance Act to allow law enforcement to apply for electronic surveillance warrants, and
  • excluding application of the Personal Information Protection Act.

The TIPO has identified the following as the highlights of its proposed legislation at this preliminary stage:

Prohibited Acts

  1. Unlawfully (e.g. by theft, or fraud) obtaining, using, or disclosing trade secrets;
  2. Employees’ duplicating or carrying away trade secrets without authorization or concealing or failing to delete trade secrets after having been instructed to delete or destroy the trade secrets;
  3. Employees who violate their duty of confidentiality by using or disclosing trade secrets; and
  4. Third parties who maliciously obtain, use, or disclose trade secrets.

Criminal Penalties

  1. Maximum sentence of five years
  2. Fine of NT$50,000 (c. US$1,700) to NT$10 million (c. US$333,000)

Enhanced Penalties for Extra-territorial Use

Mandatory sentence and fine enhancements for persons who violate the criminal provisions of the Trade Secrets Act with the intent to use trade secrets in foreign jurisdictions including China, Hong Kong, and Macau.

Double Penalties

According to the TIPO, corporations and their employees will both be subject to fines where the employee has misappropriated the trade secret except where the corporation has made due efforts to prevent the misappropriation.

Criminal Proceedings

Criminal proceedings for misappropriation of trade secrets may be instituted by private complaint. This is intended to allow the parties to settle, thereby reducing litigation and the burden on judicial resources.

Civil Remedies

Damages of NT$100,000 (c US$3,300) to NT$50 million (c. US1.65 million ) may be awarded.

Please see here for the TIPO’s summary (in Chinese) of the legislation.

WP’s Peter Dernbach is closely monitoring this quickly developing legislation and would welcome any comments from concerned members of the business community before Friday’s meeting.

Please also watch here for further updates on the draft legislation as details emerge in the run-up to the public hearing at the end of the month.