Draft regulations will give teeth to national security trade secret protection

New draft regulations to the amendment to Taiwan’s National Security Act lay out guidelines to help determine whether an item can be classed as national core key of them in their business plans.

Amendment to the National Security Act

Military tensions between Taiwan and China continue to rise, with espionage cases involving Chinese companies increasingly prevalent. In light of this, the Legislative Yuan passed an amendment to the National Security Act and Act Governing Relations between the People of the Taiwan Area and the Mainland Area just under a year ago (see Taiwan reinforces protections of technologies and trade secrets). The main aim of this was to protect trade secrets involving national core technologies and to provide multiple layers of protection for these.

According to the amendment, ‘national core key technology’ refers to a technology the inflow of which into foreign countries, Mainland China, Hong Kong, Macau or overseas hostile forces will significantly undermine national security, industry competitiveness or economic development. To qualify, this technology also needs to meet one of the following two conditions:

• control must be imposed based on “international conventions, national defense needs, or national key infrastructure security protection considerations”; or
• the “technology can lead to the generation of leading technologies or significantly enhance the competitiveness of important industries in this country”.

Draft regulations

To decide what items qualify as national core key technology as regulated in the amendment, the National Science and Technology Council (NSTC) has now published its draft Regulations on the Determination of National Core Key Technologies, the  key points of which are as follows:

• to handle determination, change or other matters involving national core key technologies, the NSTC shall set up a council committee of national core key technologies;

• the NSTC shall also set up the office of national core key technologies, which will follow the world’s key technologies and advise the committee to determine whether an increase or adjustment to the list is necessary;
• the committee shall call a review meeting at least once a year to determine the technologies on the list and may invite interested parties to attend and provide opinions;
• the office may submit technologies to the committee for review. Any submission must include the following:
  • a description, characteristics and efficacy of the technology;
  • an explanation as to why it meets the definition of a national core key technology under the act, along with opinions from experts, scholars and industry representatives; and
  • the Executive Yuan shall promulgate the technologies and the competent administration of them.

According to the amendment, any person who misappropriates, leaks or engages in prohibited actions on behalf of any of the aforementioned foreign countries, regions or institutions that they establish or substantially control will face imprisonment for between five and 12 years and may also be fined between NT$5 million and NT$100 million.

When the draft takes effect, the national core key technologies will be determined by the NSTC committee on a year-by-year basis. Therefore, it is recommended that potential investors or counterparties keep a close eye on the latest version of the list when deciding whether to conduct further business involving technologies belonging to Taiwanese companies or individuals.