IP-Labor Law Cases Transferred out from the IP Court

In the past 12 months, we reported three court cases where IP law crossed path with labor law.  Two of them pertained to compensation for employees’ works made for hire (see here and here).  The third one involved a company’s trade secrets assertedly embezzled by an employee (see here).  All of them were tried at the IP Court, as the plaintiffs’ claims were partially if not primarily based on IP rights or IP laws and thereby warranted the IP Court’s priority jurisdiction over these cases. 1

Since January 1, 2020, with the implementation of the Labor Incident Act (LCA), the IP Court’s priority jurisdiction over civil IP-labor law disputes has been somewhat diminished. Chances are that, when a civil dispute of similar nature as any of those three cases is now brought to court, it might end up being tried at a district court or, more precisely, by a district court’s “professional labor tribunal or panel” which most Taiwanese courts are required to set up according to the stipulation of LCA.

Under the LCA, an employee has a wide range of choices in terms of forum selection.  First, in a case where an employee sues his/her present or former employer, the list of courts of competent jurisdiction now expands to include the district court situated in the region where the employee’s services are provided. As such, an employee seeking compensation for his/her invention made for hire can bring the dispute to a district court for the city/county where he/she works, if he/she is not happy to see the case tried at the IP Court. 

When an employee is sued by his/her present or former employer, the employee can, before the oral argument proceeding starts, move to transfer the case to a court of competent jurisdiction of his/her choice, including the court situated in the region where his/her current or latest services are/were provided. 

More, a defendant employee can file the said motion to transfer even if he/she is sued by the employer in a court which has duly obtained jurisdiction through a pre-lawsuit forum selection agreement signed by the employee. The motion to transfer can be likewise filed in an IP dispute, which means even if the employee is sued at the IP Court (due to alleged trade secrets infringement for example), he/she is still allowed to file a motion to transfer to a district court.

As the LCA does not say a court is obligated to grant a defendant employee’s LCA-based motion to transfer, to keep or not to keep an IP-labor law case is therefore up to the court’s discretion. So, the question arises as to how the IP Court would decide when it is the court from which a defendant employee motions to transfer the case out. 

Since the implementation of LCA on January 2020, the IP Court has rendered four rulings granting defendant employees’ LCA-based venue transfer motions. This number is not altogether surprising since IP Court does not have a labor law panel owing to a special exemption.  We do not know yet in how many cases the IP Court has ruled otherwise, since a court’s ruling denying a venue transfer motion is not rendered in writing.  Still, we can draw some quick takeaways from these four cases briefed as follows. 

  1. A software engineer was sued by his former employer at the IP Court for alleged failure to deliver electronic files of his work products to the employer before leaving the company. Acknowledging this is a “labor incident related to IP rights,” the IP Court granted the employee’s motion and transferred the case to the district court for New Taipei City where the plaintiff company was located (and probably also where the employee lived.) June-Shine Int’l Corp. v. Wu, 108 Min Zhu Su 126 (Taiwan’s IP Court, February 2020).
Takeaway: suing an employee at the IP Court with no genuine IP law related cause of action involved is susceptible to an LCA-based venue transfer motion from the employee.
  1.  A sales manager was sued by his former employer for alleged trade secrets infringement as well as breach of confidentiality and non-competition covenant.  The lawsuit started at a district court in Taipei where the employee lived. When the employer appealed the district court’s decision to the second instance level of the IP Court, the employee filed a motion to transfer.  Applying a “main claim test,” Judge Han-Ching Wang transferred the case as the employee moved to Taiwan High Court.  According to Judge Wang’s findings, the employer raised an injunctive claim based on Trade Secrets Act and a damages claim based on employment contracts, but his appeal addressed the former part only.  Flytech Technology Co., Ltd. v. Hsieh, 108 Min Ying Shang Yi 2 (Taiwan’s IP Court, April 2020).
Takeaway: suing an employee at the IP Court in the absence or weak presence of an IP law related claim is also susceptible to an LCA-based venue transfer motion from the employee.
  1. Two defendants were sued by their former employer at the IP Court for alleged trade secrets infringement and breach of confidentiality by unauthorizedly downloading the plaintiff’s intangible assets on the eve of leaving the plaintiff for a competitor.  The case ended up with the IP Court’s sua sponte ruling to transfer the case to the district court for Hsin Chu City where the employer was located and where the defendants’ services in dispute were provided.  More importantly, Hsin Chu District Court was also the forum selected in the employment agreement between the parties.  It is interesting to note that the employees actually moved IP Court to transfer the case to the district court for the county where they lived, but the judge did not find it to be an appropriate venue given the forum selection agreement.  United Biopharm, Inc. v. Hwang & Li, 109 Min Ying Su 4 (Taiwan’s IP Court, April 2020).
 Takeaway: a forum selection agreement is a big plus to an LCA-based venue transfer motion of a defendant employee sued at the IP Court, even in the face of a genuine IP-related claim. 
  1. Fourteen waitresses who used to work at a “maid restaurant” in Taipei were sued by its owner at the IP Court.  The lead waitress was alleged to have breached a covenant not to compete during the employment term by (i) hosting a show for a third party and, (ii) together with the other 13 defendants, reproducing dances and characters designs allegedly created by the plaintiff.  For the latter part, she was sued also for copyright infringement and violation of Fair Trade Act.  Recognizing that the breach of contract claim was the main and dominant claim, the judge transferred the lead waitress’ case, as she moved, to the Taipei District Court which had been nonexclusively selected by the parties as the dispute resolution forum through the noncompetition covenant. As for the other 13 waitresses, they were sued for copyright infringement and violation of Fair Trade Act only, since their performances in dispute were made after leaving the plaintiff. All the same, the judge transferred their cases to the Taipei District Cour, on the grounds that “the basis cause of action still derives from disputes arising from the employment relationship” and that the eatery was located in Taipei (hence the location of the defendants’ services in dispute).  MarsCat Technology Co., Ltd. v. Cheng et al, 109 Min Gong Su 3 (Taiwan’s IP Court, June 2020).
Takeaway: when a co-defendant employee has a strong LCA-based venue transfer motion, it is good news to other co-defendant employees (or alleged joint infringers of the plaintiff employer’s IP rights) wishing to follow suit. 

  For the definition of the IP Court’s “priority jurisdiction,” please see this article.