Supreme Court rules on jurisdiction in landmark trade secret dispute

On 22 September 2022, the Supreme Courts announced a ruling concerning first-instance jurisdiction in a civil trade secret case involving labour-related issues. Jurisdiction over such cases has been heavily disputed over the last few years, making this a monumental decision.

Background

The following statements are useful for understanding the context behind this ruling.

Article 2(13) of the Labour Incident Act states that the term ‘labour cases’ refers to tort disputes occurring “due to violations of workplace gender equality, employment discrimination, occupational hazards, labour unions and protesting activities, non-competition and other tort disputes pertaining to labour relations”.

Article 6(1) of the act also sets out that for labour cases with plaintiff workers: “The court of the region where the defendant's domicile, residence, main business, or main office is located, or where the plaintiff provides labour service, shall have the jurisdiction over the case.”

Article 3(1) of the Intellectual Property and Commercial Court Organisation Act then states:

Jurisdiction of the Intellectual Property and Commercial Court includes the following: the first and second instances of civil actions for the protection of intellectual property rights and interests arising under the Patent Act, Trademark Act, Copyright Act, Optical Disk Act, Trade Secret Act, Integrated Circuit Layout Protection Act, Plant Variety and Plant Seed Act, or Fair Trade Act as well as commercial actions under the jurisdiction of the Commercial Court in accordance with the Commercial Procedure Act.

According to these articles, there is no exclusive jurisdiction over the first instance of a trade secret civil case involving labour issues, so plaintiffs may choose to initiate litigation in any one of those courts. The defendant, if defined as an employee under the Labour Incident Act, may petition to transfer the case to the jurisdictional court of their choice before the beginning of oral arguments.

However, for trade secret cases, plaintiffs (usually employers) often want to expedite proceedings to avoid incurring further damages. These cases generally require technical support from professionals (eg, technical examination officers) during hearings. Therefore, employers tend to choose the Intellectual Property and Commercial Court as the first instance court. Employees, on the other hand, are likely to choose district courts due to their special focus division.

The case

In this particular case, the employer petitioned against both former employees and other co-defendants. This case is significant because it asks the critical question: do former employees have the right to petition to transfer the case to the jurisdictional court of their choice?

The Supreme Court ruled that this right should be restricted, since other infringers’ rights share the same factual and legal grounds as those of the former employees, and have no employment relationship with the employer.

To resolve this issue, on 24 June 2022 the Judicial Yuan announced a draft amendment to the Intellectual Property Case Adjudication Act. According to this, in matters relating to civil actions for protection of intellectual property and labour cases, exclusive jurisdiction resides in the Intellectual Property and Commercial Court. The draft amendment has now been reviewed by the Executive Yuan and will be sent to the Legislative Yuan.