Cabinet approves proposal to tighten Trade Secrets Act

RIGHTS PROTECTION::The proposal will expand the definition of criminal activity and impose tougher prison sentences and fines on offenders

By Shih Hsiu-chuan  /  Staff reporter

Fri, Oct 26, 2012 - Page 1

The Cabinet has approved a proposal to address inadequacies in the regulatory system covering infringement of trade secrets to better safeguard intellectual property rights and create a level playing field for businesses, Executive Yuan spokesperson Cheng Li-wun (鄭麗文) said yesterday.

The amendment to the Trade Secrets Act (營業秘密法) was approved by the Cabinet against a backdrop of increased number of incidents of trade secrets being stolen, misappropriated, or leaked by former employees, Cheng said.

Premier Sean Chen (陳冲) urged officials to step up communication with lawmakers to push the amendment through at the earliest possible time, she said.

The most recent case to highlight the urgent need to strengthen the system was the allegation that two former executives of AU Optronics Corp (友達光電), the nation’s second-largest LCD panel maker, stole display panel technology secrets and gave them to a competitor in China.

Under the current system, the Criminal Code only covers crimes related to the disclosure of trade secrets without authorization and illegal acquisition of trade secrets.

The Intellectual Property Office (IPO), which initiated the amendment, proposed broadening the coverage of the Trade Secrets Act by identifying four types of criminal activity.

First, the amendment prohibits the acquisition of a trade secret through theft, embezzlement, fraud, coercion, unauthorized reproduction or other improper conduct and bans use or disclosure of illegally obtained trade secrets.

Second, an individual who knows of or possesses a trade secret is prohibited from using, reproducing or disclosing that trade secret without authorization or in a manner that exceeds authorized authority.

Third, people who know of or possess a trade secret are held liable under the act if they fail to delete or destroy that trade secret, or if they continue to conceal that trade secret after having being told by the owner of the trade secret to delete or destroy it.

And fourth, the amendment forbids acts to acquire a trade secret from people who know of or possess it and any attempt to commit such a crime.

If approved by the legislature, violators will be subject to a prison term not exceeding five years and may be fined from NT$50,000 (US$1,712) to NT$10 million.

People who commit any of these offenses with the intent to use that trade secret in a foreign country would be imprisoned for not less than six months and no more than five years, and may additionally be fined between NT$500,000 and NT$50 million.

A failed attempt to commit such a crime would also be punishable under the act.

Historically, offenders were often given a one-year prison sentence, the IPO said. Although the Criminal Code provides for a maximum five-year imprisonment, it is only applicable to the protection of trade secrets kept in magnetic form, it said.