Foreign Trade Secret Owners Are Better Protected under the Newly Amended Trade Secret Law

A bill to amend the Trade Secret Law was passed by Taiwan’s parliament on the last day of 2019. 

Under the amendment, foreign trade secret owners will be accorded more complete protection, almost to the extent of national treatment.  In addition, the amendment introduces into criminal investigation proceedings a mechanism of confidentiality protective orders (CPO), which has already existed in court proceedings.  The details of the amendments are as follows.

Stronger protection for foreign trade secret owners

Under the amendment, a foreign juristic person shall have the same standing 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.

Before the amendment, a non-recognized foreign juristic person had no right to file a private prosecution, and whether it was allowed to file a criminal complaint was 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 led to a loophole in the protection of foreign juristic persons’ IP rights, and the loophole became even more salient after the Company Law abolished in 2018 the rules for recognition of foreign companies. 

Relaxation of the reciprocity principle

Before the amendment, foreign trade secret owners were protected on the basis of strict reciprocity.  Under this rule, a foreign national’s trade secret(s) would not receive protection in Taiwan if his or her home country “has not signed a bilateral trade secrets protection treaty or agreement with the R.O.C. (Taiwan), 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.”  Article 15 of the Trade Secret Law.  However, it was not clear whether a foreign trade secret owner could be protected in Taiwan if it was only proved that his or her home country had signed an international treaty of which Taiwan is also a member. 

To remove this loophole, Article 15 is now amended to read: “[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.” (amendments are underlined)

Introduction of CPO into criminal investigation proceedings

To prevent divulgence of trade secrets in a criminal investigation proceeding, a prosecutor in charge thereof 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 person subject to a CPO, unless having obtained or possessed the information described in a CPO beforehand, 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.

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.