Taiwan’s IP Office recently highlighted, in its quarterly bulletin on trade secret judgments, a trade secret case involving theft of parent seeds. In this case, the IPC Court recognized that parent seeds used for breeding first-generation hybrid plants can be protected in their own right as trade secrets, despite the defendants’ contention that seeds per se do not constitute trade secret “information.” The plaintiff was awarded NT$10.2 million in damages. Known-You Seed Co., Ltd. v. Cheng, 112 Min-Ying-Shang No. 5, IPC Court (July 2025).
Whether hybrid breeding materials can be protected as trade secrets is not a new issue in global IP law. In the United States, the 8th Circuit addressed this question as early as 1994 in Pioneer v. Holden and gave a largely affirmative answer. Pioneer Hi-Bred Int’l, Inc. v. Holden Foundation Seeds, Inc., 35 F.3d 1226 (8th Cir. 1994). In Mainland China, the Supreme People’s Court likewise sided with breeders in a 2022 decision, holding that inbred parent lines are inseparable from the confidential genetic information they embody and are therefore eligible for trade secret protection. Hebei Huasui Seed Industry Co., Ltd. v. Wuwei Bosheng Seed Industry Co., Ltd., 2022 Zhi-Min-Zhong (SPC Nov. 2022).
Trade Secret and Plant Variety Right
While parent varieties may qualify for plant variety right (PVR) protection, and such protection may extend to hybrid varieties under Taiwan’s Plant Variety and Plant Seed Act, most breeders choose instead to keep parent lines and other breeding materials as trade secrets and disclose only the hybrid seeds for sale. As commercial hybrid seeds generally cannot stably pass the parents’ traits on to subsequent generations, farmers thus need to repurchase them for each planting season.
► See our report on a PVR infringement lawsuit in 2024.
In the present case, the Taiwanese seed company (the plaintiff) adopted the same strategy. Although the company has been an active PVR applicant since the early 1990s and still holds several valid PVR registrations, the IPC Court’s decision revealed that it devoted equal, if not greater, resources to trade secret protection. In this case alone, 106 parent seeds, constituting 17 varieties, were involved, covering fruits and vegetables such as tomatoes, papayas, pumpkins, and chili peppers. Yet none of these varieties had been the subject of a PVR application at the time the judgment was rendered.
Unlike the circumstances faced by the U.S. 8th Circuit in Pioneer v. Holden, the Taiwanese breeder encountered much less difficulty in proving misappropriation of the disputed parent seeds. The defendants were former employees and did not dispute the alleged pilferage of the parent seeds. Moreover, upon leaving the company, they signed Letters of Undertaking promising to protect the plaintiff’s trade secrets and not to retain or use the plaintiff’s parent seeds and other breeding materials, even for non-commercial purposes.
Can Parent Seeds Qualify for Trade Secret Protection?
It is unclear whether the Letters of Undertaking contained an express acknowledgment that the plaintiff’s parent seeds constituted trade secrets. Nevertheless, the defendants did challenge this issue in the litigation. They argued that, although the Trade Secrets Act defines a trade secret as “information,” parent seeds are breeding results rather than information and should fall within the PVR regime.
► Drawing from Article 39 of the TRIPS Agreement, Taiwan’s Trade Secrets Act defines a trade secret as information satisfying a three-part test. First, the information must not be generally known to persons ordinarily dealing with information of that type. Second, the information must possess actual or potential economic value because of its secrecy. Third, the information must be subject to reasonable measures adopted by the owner to maintain its secrecy.
The IPC Court rejected the defendants’ argument. The three-judge panel stated: “The disputed parent seeds were developed through long-term breeding techniques. The resulting seeds themselves inherently contain genetic traits capable of being used in hybridization to produce commercial seeds for sale and profit in the market.” The panel further held that the Plant Variety and Plant Seed Act does not preempt trade secret protection for parent lines, echoing the reasoning adopted by the U.S. 8th Circuit in Pioneer v. Holden.
The “Reasonable Protective Measures” Requirement
The IPC Court found that the disputed parent seeds at issue were protected through the following measures:
- The parent-seed list was protected by password controls, restricted personnel access, and controlled custody of hard copies.
- The parent seeds were stored in secured facilities subject to access control, surveillance monitoring, and logging requirements for all withdrawals and deposits.
- Distribution of parent seeds occurred quarterly and was limited to authorized personnel, including managers of company-operated farms, in accordance with production plans.
- Documentation relating to the parent seeds used coded identifiers.
- Farm managers were required to submit monthly production reports (although the defendants disputed whether access controls existed at the farmland sites).
The Court considered these measures reasonably adequate. The panel emphasized that the Trade Secret Act does not require “watertight” protection; rather, protective measures are sufficient so long as they are commensurate with the holder’s staffing, financial resources, and available technology.
Damages
The case is also noteworthy for its treatment of damages, particularly because there was no evidence that the defendants had actually leaked the disputed seeds, despite the plaintiff’s allegation that they had attempted to sell them.
Because of this evidentiary gap, the district court at first instance held that the defendants incurred liability only for breach of the Letters of Undertaking, rather than for trade secret misappropriation. The LOU provided for “a penalty calculated at 10 times the total compensation received within the most recent three years.” Applying this clause, and exercising the Civil Code’s authority to reduce excessive penalties, the district court awarded NT$7.1 million in damages.
The IPC Court revoked this part of the lower court’s ruling. First, it clarified that proof of actual damages is not a prerequisite for establishing trade secret misappropriation and therefore held that the defendants were liable for damages under the Trade Secrets Act.
► Under Taiwan’s Trade Secrets Act, a trade secret owner may elect either the infringer’s profits or the owner’s lost profits as the basis for calculating damages, while the Act also permits application of the Civil Code.
The plaintiff primarily relied on a lost-profits theory, claiming R&D expenses totaling NT$259.4 million. However, the IPC Court held that the asserted R&D expenses could not be equated with either lost profits or the defendants’ gains and therefore could not serve as the basis for calculating damages, because: (1) the figures were merely post hoc estimates rather than actual expenditures; and (2) even if accurate, the R&D expenses lacked a sufficiently proximate connection to successful breeding outcomes.
Instead, the IPC Court exercised its discretionary authority and awarded NT$600,000 for each parent variety, resulting in total damages of NT$10.2 million. The Court’s methodology relied on:
- The discretionary authority granted under the Code of Civil Procedure, which provides: “Where a party has proved injury but is unable to, or is under great difficulty in proving, the exact amount, the court shall, taking into consideration all circumstances, determine the amount according to its conviction.” (Article 222)
- A multi-factor analysis considering:
(1) the seriousness of the trade secret misappropriation;
(2) evidence that one defendant attempted to sell a disputed parent variety for NT$500,000;
(3) the actual scale of the plaintiff’s commercial use of the disputed parent seeds;
(4) the substantial R&D expenses generally associated with breeding businesses; and
(5) the plaintiff’s registered capital and the defendants’ income levels.
The case has been appealed to the Supreme Court, possibly (also) by the plaintiff seeking higher damages.
Takeaways
- Trade secret protection has become a particularly active area in Taiwan’s IP landscape in recent years (see our News Alert for an overview). Criminal liability under Taiwan’s Trade Secrets Act can be severe, especially where the misappropriation is intended for overseas use. In the present case, the defendants were also criminally prosecuted and convicted, although their criminal appeal remains pending.
- Burden of proof remains a central challenge in parent seed trade secret disputes. In another recent criminal case, a defendant was acquitted by the Taitung District Court after presenting R&D records dating back to 2010, persuading the court that it had at most engaged in reverse engineering using parent seeds lawfully acquired many years earlier. Taiwan Taitung District Prosecutors Office v. Wu, 111 Zhi-Su 1, Taitung District Court (Sep. 2025) (currently pending on appeal before the IPC Court). Obviously, maintaining detailed records of parent line/seed acquisition and variety development increases seed companies’ burden of proof.
- The above underscores the importance of carefully drafted contractual provisions governing growers, testers, research collaborators, and any persons with access to breeding materials or related know-how.
- The IPC Court’s “no need for watertightness” approach follows a 2019 Supreme Court decision (see our News Alert), after which the IPC Court developed a series of similar opinions. For example, in a recent case, the IPC Court reversed a lower court decision and held that an SME plaintiff had satisfied the “reasonable protective measures” requirement even though its digital and legal safeguards lacked explicit prohibition against employees storing company information on personal devices. Taiwan Hsinchu District Prosecutors Office v. Li, 111 Xing-Zhi-Shang-Su 36, IPC Court (Dec. 2025).