Five years after its first amendment to adopt criminal penalties, Taiwan’s Trade Secrets Law, enacted and promulgated in January 1996, is now preparing to embrace another amendment initiated by legislators in 2018. The proposed amendment, currently under deliberation by Taiwan’s Legislative Yuan (equivalent to a parliament in other democracies) with a good chance of being passed this year, aims to achieve two objectives. Firstly, confidentiality protective orders will be available in criminal investigation proceedings to better safeguard trade secrets in dispute. Secondly, but no less important, non-Taiwanese trade secret owners will be accorded more complete protection than now, almost to the extent of national treatment. The details are as follows.
Confidentiality Protective Orders (CPO) in criminal investigation proceedings
An issue often encountered by prosecutors when investigating trade secret infringement cases is how to probe into matters around highly complex technologies without compromising the protection of the complainant’s trade secret. As such, the mechanism of confidentiality protective order, as manifested in the following rules, is proposed to be introduced, in a bid to provide prosecutors with better procedural tools to delve into trade secret charges while deterring a second-time trade secret leak.
- A prosecutor may, when he or she deems it necessary, issue a CPO to the suspect, the accused party, the infringed party, the complainant and/or its agent, a defense attorney, a court-appointed expert, a witness, or any other related persons, thereby imposing an obligation on such persons to keep confidential the information they are allowed to access during an investigation proceeding for a trade secret infringement charge. A CPO can be issued only on an ex officio basis.
While the current draft amendment provides that a CPO shall be issued in the form of a written ruling, prosecutors suggest that a hearing transcript shall be deemed a legitimate form as well.
- A person subject to a CPO, unless having obtained or possessed the information described in a CPO before the investigation proceeding commences, shall not (1) use the information for non-investigation purposes or (2) disclose the information to any person not subject to a CPO.
- A prosecutor may terminate or amend a CPO, either ex officio or upon a motion moved by a person subject to a CPO, under any of the following circumstances:
(1) the cause for which the information is required to be kept in confidentiality has ceased to exist;
(2) a court has issued a CPO to protect the same information of concern; and
(3) a period of 60 days has passed after the case in which the CPO was issued is indicted before a court.
Before making a decision on whether to terminate or amend a CPO, a prosecutor may allow the persons subject to the CPO, as well as an interested party, a chance to express opinions. These persons/interested parties, if dissatisfied with the prosecutor’s ruling to terminate or amend the CPO, may file an appeal under the rules provided in the Code of Criminal Procedures, mutatis mutandis.
- The criminal liability for violating a CPO
A person who violates a CPO is punishable by imprisonment for a maximum of 3 years, short-term imprisonment and/or a fine of a maximum of NT$1 million. For a CPO violation occurring outside of Taiwan, the same punishment shall apply regardless whether the offense is punishable by the law of the place where the offense is committed.
Enhancement of protection to non-Taiwanese trade secret owners
- If the amendment is passed as proposed, a foreign juristic person shall have the same right as a Taiwanese entity to bring a civil lawsuit, a criminal complaint (with a prosecutors’ office) or a private prosecution (with a district court), even if the foreign juristic person has yet to be recognized by Taiwan’s Ministry of Economic Affairs. This rule also applies to juristic persons incorporated in Mainland China, Hong Kong or Macau.
Under the traditional practice, a non-recognized foreign juristic person has no right to file a private prosecution, and whether it is allowed to file a criminal complaint is up to the discretion of prosecutors and judges, even though the Trademark Law and the Copyright Law which also impose criminal sanctions on infringers each stipulate that a non-recognized foreign juristic person has the right to file a criminal complaint. This inconsistency in Taiwan’s IP law regime creates a loophole in the protection of foreign juristic persons’ IP rights, and the loophole has become even more salient and unreasonable after the Company Law abolished in 2018 the rules for the recognition of foreign companies.
- Relaxation of the reciprocity principle in terms of protection to non-Taiwanese trade secret owners.
The current reciprocity principle is stipulated in Article 15 of the Trade Secret Law, which reads, “[a] foreign national’s trade secret(s) will not receive protection in the R.O.C., if the foreign national’s home country has not signed a bilateral trade secrets protection treaty or agreement with the R.O.C., or does not provide protection to trade secrets owned by R.O.C. nationals according to the laws and regulations of the foreign national's home country.” This rule does not include the circumstance involving a multilateral international treaty, for example, the TRIPS agreement in the WTO system in particular.
To remove this loophole, Article 15 is now proposed to be amended as: “[a] foreign national’s trade secret(s) will not receive protection in the R.O.C., if the R.O.C. and the foreign national’s home country have not both acceded to an international treaty for trade secrets protection, or if the foreign national’s home country has not signed a bilateral trade secrets protection treaty or agreement with the R.O.C., or does not provide protection to trade secrets owned by R.O.C. nationals.” (Underlines added)
- A recent judgment
The necessity and urgency of the amendment is manifested by a second instance criminal judgment made by Taiwan’s IP Court in March 2019. Clean Air Technology Ltd. v. Jiang et al, 108 Xing Zhi Shang Su 5, Taiwan’s IP Court (March 2019).
In Clean Air v. Jiang, the complainant Haldor Topsoe A/S, a Danish company that owns the trade secrets in dispute, was not recognized in Taiwan, and Denmark has yet to sign a bilateral trade secret protection agreement with Taiwan, either. For these reasons, even though the defendant was indicted before the district court, the case was dismissed by the judge holding that the Danish company has no standing to request for trade secrets protection in Taiwan. Fortunately, after the prosecutor appealed the case before the IP court, the district court’s opinion was vacated and remanded. The IP court held that the mere absence of an explicit rule granting equal protection to foreign trade secret owners cannot be interpreted as an intentional denial of protection, since the principle of equality shall prevail.
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The above contents are intended as general discussion of the subject matter only and shall not be deemed as legal advice to any particular case or issue.