JONES DAY PRESENTS®: Taiwan's Enhanced Trade Secret Restrictions and Stricter Penalties

Economic forces attracting Taiwanese workers to China have resulted in the development of a stricter National Security Act regulating trade secrets in Taiwan. Jones Day partner Po-Chien Chen explains Taiwan's trade secret laws and new penalties for trade secrets violations.

A full transcript appears below.

Po-Chien Chen:

There are increasing number of cases that happen in China that a competitor in China actually attract the engineer from Taiwan working in China. And so, Taiwan's government just stipulate another law. It's National Security Law and this include the trade secret issues in this National Security Law. And so we not only have the Trade Secret Act in Taiwan but now we have more severe regulations and articles stipulated in our National Security Law.

The normal trade secret and the national security, especially the core technologies identified in the National Security Act is actually totally different things because the trade secret needs to meet the three requirements. And you need to contain the secrecy. You need to have an economic value and also you need to have reasonable measure to protect the interest. But for the trade secret stipulated in the National Security Act, the government in Taiwan is right now prepare a list of the core technologies. And we expect that like semiconductor, like IC design technology will all be included in the list. And the list actually filter by several elements. For example, whether it is a matter of national security, whether it is a matter of economic growth, and whether it is a matter of the competitiveness of the industry. And if there's a trade secret related to these three elements, then it will be included in the list.

The government's still preparing the list because there are different voice from different industry and people still think that this is a good trend and good way to protect the trade secret in Taiwan. But this will still cause some negative impact to the Taiwanese industry. The most severe punishment is criminal liability. It's from 1 year to 10-year imprisonment. But for the trade secret misappropriation stipulated in the National Security Act, you will increase from 5 year to 12 years' imprisonment. And so we are dealing with a lot of trade secret matters across the Taiwan strait.

This trade secret misappropriation matters will increase in the next few years, especially that the US government has posed a sanction against the companies in Mainland China.