Newsletter
Recognition of Damages in Trade Secret Misappropriation
Under Section 1 of Article 12 of Trade Secrets Act: “One who intentionally or negligently misappropriates another's trade secret shall be liable for damages. If two or more parties jointly misappropriate, such parties shall be jointly and severally liable.”The legislative reason proclaimed that: “…misappropriation of trade secret often cause damages to the owner of trade secret, based on damages jurisprudence, when infringer intentionally or negligently misappropriates another's trade secret, the victim shall be entitled the rights to claim for damages, to recover the damage.” and “as the calculation and recognition of the amount of damages for trade secrets is more difficult than the corporeal property” (as stated in the legislative reason) hence Section 1 of Article 13 of Trade Secrets Act provide two methods of calculating damages which the victim may alternatively claims one of them. Among the methods, as stated in the legislative reason, Clause 1 of that section is: “To make a claim based upon Article 216 of the Civil Code. However, if the injured party is unable to prove the amount of damages, the party may take as damages the amount of profits normally expected from the use of the trade secret minus the amount of profits earned after the misappropriation” while Clause 2 is “to request for the profits earned through the act of misappropriation from the one who misappropriated. However, if the one who misappropriated is unable to prove the costs or the necessary expenses, the total income gained from the act(s) of misappropriation shall be deemed the profits; while the proviso stated the reversion of the burden of proof, the burden of proof whereof shall lie upon the infringer to reduce the amount of damages.”
Accordingly, when the victim could not grounded on Article 216 of Civil Code to prove its damages or profits derived from it, there is other ways to prove and calculate damages. In that behalf, a civil judgment Tai Shang Zi No.1501 made by the Supreme Court on August 31th 2016, concerning the issue that the lower court rejected the judgement based on the fact that the victim cannot prove the damages, clarified again “It was verified that trade secrets have economic value, as the concept of citizenship, if there is any unlawful infringement made, the appellant may be suffered property damage to a certain extent. The lower court held unfavorable judgment to the appellant just because he himself cannot prove any damage is improper.” which means when there are misappropriation of trade secrets, even if the victim has difficulty proving the damages, the court recognize the damages it might have suffered based on the rules of logic and experience, and shall not dismiss the victim’s claim directly, otherwise it makes the special enactment in Trade Secrets Act that is made to protect the victim useless.
As for future trade secrets misappropriation cases, when the victim can hardly prove the damages, the opinion of this judgment shall be invoked, to procure the court to recognize there are damages according to the rules of logic and experience, and the amount of damages shall be calculated according to Section 1 of Article 13.