Session 3: “Regulatory Challenges in Trade Secrets: Rethinking the Penalty System for Trade Secret Infringements”

Deputy Director Kai-Ping Su served as the primary speaker, with Professor Hung-Yi Hsiao rom Soochow University School of Law acting as the discussant. As technological advancements continue to emphasize the importance of safeguarding trade secrets, this session explored criminal corporate liability under the Trade Secrets Act.

Deputy Director Su clarified that although Article 13-4 of the Act presumes corporate negligence, prosecutors are still required to prove that the information involved qualifies legally as a trade secret. Confidentiality is vital; the trade secret’s owner must show that they took objectively reasonable steps to protect the information and had a subjective intent to maintain its secrecy.

Su introduced the EONA framework—Existence, Ownership, Notice, Access—highlighting that plaintiffs typically need to demonstrate the existence of the information, their ownership, notification to defendants about its confidentiality, and defendants’ access to it. Taiwanese courts primarily assess whether defendants knew about the confidential nature of the information and whether plaintiffs/alleged victims implemented robust protective measures. If plaintiffs cannot prove“reasonable protective measures,” their cases are likely to fail.

Professor Hsiao pointed out that trade secret laws in Taiwan are sometimes exploited by companies to stifle competition or retaliate against former employees. Official statistics show a relatively high frequency of non-indictments and acquittals, indicating that criminal proceedings for trade secrets are used frequently but not necessarily the most effective deterrent.

Vice President and Director Wang-Ruu Tseng delivered closing remarks that responded to the main concerns raised in each session.

Regarding financial influencers, she stressed the importance of determining whether influencer behavior substantially differs from conventional marketing or advisory practices and whether additional regulations could impose disproportionate compliance costs.

Turning to fintech and consumer protection, she drew on her personal experience as a commissioner for the Financial Ombudsman Institution to illustrate how the “fair and reasonable” principle sometimes produces inconsistent outcomes due to subjectivity among individual commissioners.

Finally, addressing the session on trade secrets, she observed that trade secret law is frequently employed when non-compete clauses fail to bar employees from joining rival firms, yet the discussion showcased inherent limitations in the current legal framework, indicating a gap between statutory provisions and real-world applications.

The Center will continue researching these issues in order to foster improvements in Taiwan’s legal landscape!