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Do Marking Documents with "Confidential" Indicate "Reasonable Confidentiality Measures" Have Been Taken?
In accordance with Article 2 of the Trade Secrets Act, the term "Trade Secret" shall meet the following three indispensable requirements: (1) it is not known to persons generally involved in the information of this type ("secret nature"); (2) it has actual or potential economic value because of to its secret nature ("economic value"); and (3) its owner has taken reasonable measures to maintain its secrecy ("reasonable confidentiality measures"). In the event of misappropriation of a trade secret, the owner must prove that the claimed information has met the three aforementioned requirements for protection by the Trade Secrets Act.
Among these three requirements, it has always been an issue of great importance to figure out to what extent confidentiality measures can be deemed as reasonable. A common practice is to mark documents containing confidential information with words like "Confidential," but courts in Taiwan hold different opinions as to whether such practice meets the requirement of "reasonable confidentiality measures."
In judgment No. 102-Min-Ying-Shang-4, a second-instance judgment rendered on February 5th, 2016, the Intellectual Property Court of Taiwan took a strict stance on this issue. According to the Court, even though the plaintiff claimed its documents containing trade secrets had been marked with red, handwritten characters "Business Secrets," since trade secrets may vary in type and content, they shall be categorized and classified based on business needs with appropriate control measures taken in accordance with different levels of role-based authorization to manage technical or business information in a confidential manner. The Court further pointed out that the plaintiff neither signed any confidentiality agreement with the recipient of the claimed information, specified any legal obligation of confidentiality on the part of the recipient, nor took any control measures including categorizing and classifying the information, designating particular staff to keep the information, setting limited access to users, or informing the responsible staff of the confidential content or the confidentiality measures. It is difficult to conclude that "reasonable confidentiality measures" have been taken merely on the basis of the words “Business Secrets” and/or “Confidential” claimed by the plaintiff. Therefore, the Court held that requirements for trade secrets were not satisfied on the part of the plaintiff.
However, the Supreme Court of Taiwan seems to have a different position on this case. In its judgment No. 106-Tai-Shang-350 rendered on June 3rd, 2017, the Supreme Court ruled that the fact that the owner of the trade secrets had already, during the delivery of the claimed documents, marked the documents with the warning "Business Secrets" can be interpreted as demonstrating the plaintiff’s subjective intension to manage these trade secrets. Moreover, the documents stating that the information at issue shall not be publicized on any product packaging could prove that the owner of the trade secrets did not want anyone other than the designated recipient of the information to know the content. Therefore, it can be concluded that "reasonable confidentiality measures" had been taken on the part of the plaintiff.