Information that does not qualify as a ‘trade secret’ may still be protectable under the Criminal Code

Trade secret protection is a significant issue for business owners today. Among the challenges that a trade secret holder may face when seeking judicial remedy, it is crucial that the legal requirements of what constitutes a trade secret are met. Recent developments in IP court practice make it easier for a trade secret holder to protect its intangible assets under the Trade Secret Act, as well as the Criminal Code.

On 2 May 2019 the IP Court handed down its judgment in the 2019 Hsing-Zhi-Shang-Yi-Zhi case, holding that the connotation of ‘commercial or industrial secrets’ and ‘trade secrets’ are not exactly the same, so the definition of a ‘trade secret’ under the Trade Secrets Act does not limit the application of a commercial or industrial secret under Article 317 of the Criminal Code.

Background

The defendant was an engineer who worked  in a corporation from 19 August 2015 to 5 December 2016. In order to manage and control the schedule for projects, this company created an engineering management sheet. The defendant was familiar with the management sheet, which was the company’s commercial/industrial secret, and was bound by confidentiality pursuant to their employment contract. However, without consent, the defendant used Line (communication software) to take pictures of the 2016-April-8-tabulated engineering management sheet and sent these to C, the person in charge of a telecommunication engineering firm, the downstream sub-contractor vendor of the corporation, thus  leaking the commercial/industrial secrets.

Decision

There is no definition of a ‘commercial or industrial secret’ under Article 317 of the Criminal Code. Previous cases have held that commercial or industrial secrets are secret or confidential facts, events, products or data in industry or in commerce, which cannot be accessed by outsiders, in order to protect the entity’s economic benefits. However, according to the Trade Secrets Act, trade secrets must meet the following criteria:

• be unknown to persons generally involved in information of this type;
• have economic value; and
• be the subject of reasonable measures to maintain its secrecy.

The legislative purpose of the Trade Secrets Act is not to limit the application of the offence of leaking commercial or industrial secrets, while the penalty for violating the act is different from that set out for leaking commercial or industrial secrets under the Criminal Code. Thus, the court should not use the definition of a ‘trade secret’ under the Trade Secrets Act to limit the application of the Article 317 of the Criminal Code with regard to commercial or industrial secrets – the connotation of commercial or industrial secrets and trade secrets is not exactly the same.

Even though the engineering management sheet was pasted on the company’s cabinet, no one could easily have known the content unless they got close enough to read it. Further, the company’s building was not one that the public could arbitrarily enter and leave. The way in which the engineering management sheet was stored was not obvious to outsiders. Others could not easily know what engineering projects had been contracted by the corporation via ordinary means, so therefore the engineering management sheet was not public information.

Objectively, the corporation’s way of dealing with the engineering management sheet shows that it was not public information. Subjectively, the defendant was aware that the information was secret.

The court recognised that the issued engineering management project was the corporation’s commercial/industrial secret, which held economic value and was not intended to be known to the public. Although C was the corporation’s sub-contractor, it merely contracted partial projects of the engineering management sheet and had never previously been aware of the contents of the issued sheet. Therefore, the way that the defendant knowingly shared the engineering management sheet with C constituted a leak of commercial/industrial secrets.

Comment

In Taiwan, information that contains secret or confidential facts, events, products or data in industry or in commerce can be protected under the Trade Secret Act. Where the information does not meet the requirements of trade secrets under the Trade Secrets Act, it may still qualify for protection under the Criminal Code. Trade secret holders should be aware of the different legal weapons that they can use to protect their intangible assets.