TIPO Preparing to Add Criminal Liability in the Amendment to Trade Secret

To strengthen the protection of trade secrets, the Intellectual Property Office (TIPO) of
the Ministry of Economic Affairs (MOEA) has begun preparing a draft amendment to
the current Trade Secret Act, providing that severe infringement of trade secrets will be
subject to criminal penalties.
The current Trade Secret Act was promulgated on January 17, 1985, which contains a
total of 16 articles. According to Articles 11 to 13 of the Act, acts of trade secret
infringement are subject to civil but not criminal liabilities. When a proposed revision
was first reviewed at the Legislative Yuan, there sparked a heated debate over whether
criminal liability should be included to the Act. Since there had been provisions in the
Criminal Code that govern trade secret leakage, larceny, fraud, criminal conversion, and
breach of trust, it was then decided not to include criminal liability into Trade Secret Act
for fear that the infringer could be forced to agree on any civil requests made by the
other party during criminal procedure.
As generally understood, trade secrets are the result of huge capital investment by
enterprises, particularly in the field of science and technology, and damage would be
irreparable once secrets were disclosed. In recent years, Taiwan has witnessed a series of
severe trade secret leakage and embezzlement cases in the industries, which led to huge
losses and wreaked havoc on domestic R&D. Because of these incidents, people are
having doubts about whether the current Criminal Code can provide proper protection
and they believe that legislative authorities should reconsider adding criminal liability to
the Trade Secret Act and increasing criminal penalties. After a careful study of related
laws and regulations of other countries, in particular the Economic Espionage Act of
1996 in the United States and the gradual increase of both civil and criminal liabilities
regarding trade secret infringement in Japan, it has become obvious to TIPO that while
other countries are heightening their protection on trade secrets, Taiwan should follow
suit by strengthening relevant legislation.
To curb illegal outflow of high-tech trade secrets, Taiwan’s National Science Council
(NSC) once drafted a Technology Protection Law stipulating criminal liability for trade
secret infringement. The draft was submitted to the Legislative Yuan for review on
October 15, 2002 but was put to a halt due to expiry of the term of legislators. The
Executive Yuan took over the review wherein provisions stipulating the use of penalty
for the protection of private rights of professional scientific and technical services were
excluded, focusing instead on export control of sensitive science and technology and the
revision of Technology Protection Act (draft) into Sensitive Scientific Technology Draft
Bill, with special emphasis on the exportation and administrative control over sensitive
science and technology. The draft was resubmitted to the Legislative Yuan on April 20,
2005; the legislative procedure has yet to be completed.
On February 17, 2012, the NSC held a meeting and invited representatives from the
industry, the Ministry of Justice, Fair Trade Commission, the Department of Industrial
Technology and TIPO of the MOEA to learn more about the inadequacies deemed by the
industry in the existing Trade Secret Act and to exchange views on the proposed
amendments to the Criminal Code, Fair Trade Act, and Trade Secret Act. It was then
decided that TIPO would take charge in drafting an amendment to the Trade Secret Act.
On February 23, 2012, TIPO convened a meeting and invited experts, scholars and
representatives from relevant government agencies to exchange views on the following
topics: whether criminal liability should be added to the Trade Secret Act, how to define
acts that constitute trade secret infringement, whether a provision on criminal liability of
legal persons should be added, and whether amendment should be made to provisions
governing civil damages. There was a high degree of consensus among participants
regarding strengthening protection for trade secrets. Opinions from industry
representatives in this regard included: adding criminal liability, reducing the burden of
proof provided by victims of disclosed trade secrets, mandatory submission of
documents, raising the amount of damages, extending the duration of claims, and
strengthening the training of judicial officers. TIPO will carefully review these opinions
while drafting the amendment and, when completed, will continue to hold meetings and
seek expert opinions from the Judicial Yuan and the Ministry of Justice regarding
specific provisions relevant to the two competent authorities.
Currently, TIPO has begun preparing a draft amendment to the Trade Secret Act,
wherein the provisions will include adding criminal liability, defining acts that constitute
trade secret infringement, and adding provision on criminal liability of legal persons.
TIPO will continue to organize public hearings to seek more opinions from all sectors in
the hope of achieving maximum social consensus.
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