Proposal to Add Criminal Sanctions for Material Violations of Trade Secrets Act

In response to the outburst of several significant cases of misappropriation or theft of trade secrets in recent years, Taiwan’s Intellectual Property Office (TIPO) has recently proposed to amend the Trade Secrecy Act (the “Act”) to criminalize certain significant types of violations of the Act. The Act was initially signed into law by the president in January of 1996 and provides only compensatory damages (in the case of intentional conduct, treble damages may be ordered in addition to proven losses). Although there is a section of Taiwan’s Criminal Code dealing with offenses against secrecy, it is perceived by many to be insufficient deterrence – for example, art. 317 of the Criminal Code provides a sentence of up to 1 year imprisonment for someone who has access to industrial or commercial secrets by virtue of a contract or statutory ground but divulge such secrets without legal cause. Similarly, the section of the Criminal Code dealing with computer security (though with a maximum of a 5 year imprisonment) has been found difficult to apply in the cases of trade secrecy violations. Since the island has become populated by high technology firms that not only develop valuable trade secrets but also rely on the same for their competitive advantage, it seems a stronger deterrence will be necessary, in particular, in light of the recent trends of foreign legislation to criminalize certain types of violations of trade secrecy law. One such example is the Economic Espionage Act 1996 of the United States.