SAINT ISLAND INTELLECTUAL PROPERTY GROUP

Preventing former employees from divulging trade secrets to competitors has been a common concern for Taiwan’s technology companies in recent years. In addition to using a contractual mechanism to impose non-competition and confidentiality obligations on employees within a certain period after termination of employment, technology companies generally need the support of regulation sanction and an efficient judicial system to protect their trade secrets. 
 
The Taiwan IP Court rendered a decision in favor of Foxconn Technology Group, the world’s largest electronics contract manufacturer, on October 31, 2014, one year after filing of a civil action by Foxconn against a former senior manager who went to work for Foxconn’s competitor in October 2013. The Court granted all the claims of Foxconn, including compliance with the covenant in restraint of trade for a two-year term and returning the compensation Foxconn paid for the covenant, and the bonuses and stock received in the last three years of employment. 
 
There are two things worth noting about the measures Foxconn has taken against divulgement of trade secrets. First, they have asked the former employee to sign clearly-stated restrictive and confidentiality agreements that comply with the local labor law. The local authorities have provided guidelines that suggest that a restriction period of two years would be reasonable and that a considerable compensation should be paid in return for the agreements. It is therefore recommended that the compensation be particularly distinguished from salary and bonus. 
 
Second, Foxconn has a very strict control over internal communication, which allows them to quickly gather evidence proving that the former employee, who sent information about Foxconn’s production cost, pricing, profits, etc., to his personal email account shortly before leaving Foxconn, breached the restrictive and confidentiality agreements and violated the Trade Secrets Act. 
 
In principle, the Court will publish the full text of a decision on its official website. However, due to the sensitive nature of the facts involved in the case, the Court only published a press release to protect Foxconn’s interests.