Newsletter
On Preliminary Injunction in Trade Secrets Cases
A recent ruling issued by the Supreme Court once again clarified that the relevant elements of preliminary injunction applicable to trade secrets cases (i.e. the 2018 Tai Kang Zi No. 213 ruling). As stipulated in Article 22, Paragraph 2 of the Intellectual Property Case Adjudication Act, and Article 37, Paragraph 1 and 3 of the Intellectual Property Case Adjudication Rules, for an applicant’s seeking preliminary injunction in an intellectual property infringement case, the elements to be considered by the court should cover: (1) an existence of such legal relation in dispute; (2) a likelihood of success of the applicant in the principal case in the future; (3) potential irreparable harm to the applicant or opposing party, and the balance on the degree of damage to both parties; (4) the impact on public interest. In the said case, in the agreements signed by the two former employees (who were senior supervisors) when they first came to work for the former employer, they agreed to the confidentiality, non-compete and non-solicitation obligations within two years from the date of their departure; however, they joined a manufacturer that has a competitive relationship with the former employer within two years from the date of their departure. With this typical type of case, the Supreme Court considers in principle that it meets the aforesaid elements, and may rule on preliminary injunction. The Supreme Court's ruling is hereby summarized as follows:
I. An existence of such legal relation in dispute: The Supreme Court held that the disputed legal relationship existed therein because the former employer claimed that the former employees had violated the aforementioned obligations but the former employees denied the violations.
II. A likelihood of success of the applicant in the principal case in the future: During their jobs, the two former employees had known, accessed or obtained trade secrets from their former employer concerning "8-inch and 12-inch single crystalline wafer growth technology" and "customer list, product categories and sales information." These documents were all marked with the confidentiality level, and only a minority of persons like senior supervisors was aware of them, indicating that reasonable measures to maintain its secrecy were taken. Although such information may contain patents or related technologies known to the industry, the former employer may still be possible to grasp the technology protected as trade secrets. Based on the above facts, the Supreme Court considered that the former employer has a likelihood of success in the principal case in the future.
III. Irreparable harm to the applicant or opposing party, and the balance on the degree of damage to both parties:As the two former employees become the employees of the competitors in the former employer’s market, once the former employer’s trade secrets are leaked, they may be copied or infringed, making the said employer suffer from irreparably major harms. Since the two former employees were originally obliged to keep confidentiality, there was actually no damage at all for the two former employees. As for the non-compete part, the damage for them is at most two-year work loss, which is less damaged than their former employer.
IV. The impact on public interest: Such private dispute did not affect the interest of justice.
It can be seen from the above-mentioned summary that if the elements of trade secrets can be proved to comply with the facts (i.e. having confidentiality, economic value and reasonable secrecy measures taken), and if the facts on the former employees’ knowing, accessing or obtaining trade secrets during their jobs, and working for the competitive firms after departure can be justified, the court will in principle hold a stronger interpretation in support of the rights holder when weighing the interests of both parties, which therefore the probability of the court’s granting preliminary injunction is quite high.