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The Difference of Elements between Industrial or Commercial Secrets and Trade Secrets
As there was no criminal responsibility for infringing on trade secrets in the Trade Secrets Act in the past, when there were relevant infringing activities, the criminal liability such as disclosure of industrial or commercial secrets, offenses of theft, offenses of embezzlement, breach of trust and unduly obtaining, deleting or altering the magnetic record of others were mostly applied at that time depending on the actual illegal situations. It was not until the Trade Secrets Act updated and promulgated the relevant provisions (i.e. Articles 13-1 to 13-4) on January 30th, 2013, that there are applicable criminal liabilities for infringing on “trade secrets”.
As to whether the application of the crime of disclosing “industrial or commercial secrets” currently stipulated in Article 317 of the Criminal Code and infringing on trade secrets should be different, the Intellectual Property Court clarified in the 2019 Xing Chi Shang Yi Zi No. 10 criminal judgment (dated May 2nd, 2019) that Article 317 of the Criminal Code was enacted in 1935, more than 60 years earlier than the Trade Secrets Act, and has not been amended since then. According to the legislative background of the said Article 317 drafted under the Criminal Code at that time, it is indeed difficult for the industrial or commercial secrets formulated at that time to satisfy the three elements of trade secrets as required by the current Trade Secret Act. Moreover, the legislative purpose of the Trade Secrets Act does not intend to restrict the application of the crime of disclosing industrial or commercial secrets, and its penalty is different from that of business secrets, too. Therefore, the trade secrets defined in the Trade Secrets Act shall not be used to restrict the application of Article 317 of the Criminal Code on trade secrets. The connotation of industrial or commercial secrets is not exactly the same as that of trade secrets. As the crime of industrial or commercial secrets aims to protect industrial or commercial secrets, the information should certainly be regarded as the industrial or commercial secrets stipulated in Article 317 of the Criminal Code under the condition that the information can be used by the owner to produce his/her economic interests, and the owner subjectively does not want others to know the information and protect it as a secret, while objectively enabling the person who holds the information by law or by contract to know not only that it is the industrial or commercial secrets, but also that the confidentiality action by the owner has made such information truly an information that has not yet been made public. That is to say, the criteria for determining industrial or commercial secrets seem to be more lenient than those for trade secrets.
In this case, the evidence shows that both the defendant and the witness are aware that the “Engineering Control Form” is an internal document of the company that should be kept confidential, but the document "is usually posted on the office cabinet, and can be seen by the company's employees and the actual or potential partners... anyone can see it as long as he/she is an employee of the company". In this regard, “considering that there are only 13 employees in the plaintiff company (i.e., Yu Long Technology Co., Ltd. ("Yu Long"), the court judged that Yu Long does not have to or need to control the people who have access to the information in the company with the manner of hierarchical encryption with view to the size of the company and the function of the engineering control form. In addition, as the control form is only in A4 size, even if it is posted on the company's official cabinet, it is impossible to know the content of the control form easily unless one watches it closer.” The court therefore deemed that "even the engineering control form is placed on the official cabinet, it is not easily accessible by others at will." Namely, it is non-public information. Accordingly, the court finally concluded that "as the aforesaid action performed by Yu Long has objectively made the engineering control form unpublished, and the defendant can also subjectively recognize that said information is the secret of Yu Long, the engineering control form in this case is spontaneously sufficient to be regarded as the undisclosed industrial or commercial secrets of Yu Long, which have economic value and do not intend to be made known to others.” While being aware that the "Engineering Control Form" should be kept confidential, the defendant still disclosed it to a third party. The defendant’s act is sufficient to be regarded as disclosing the industrial or commercial secrets of the said company.
In the case of trade secrets, if the engineering control form is placed on the official cabinet and can be seen by anyone, such situation usually leads to the perception that the company has not taken certain measures of confidentiality and does not meet the requirement of confidentiality. However, the court determines that the confidentiality action of the owner has made such information truly an information that has not yet been made public, such information can be deemed as the industrial or commercial secrets stipulated in the Criminal Code. In other words, industrial or commercial secrets do not require the extent in which trade secret is required to be kept.
In light of the above, even though there has been criminal liability for infringing on trade secrets, it is more difficult in establishing the required elements. Thus, in specific cases, the legal basis should be investigated individually to explore if the circumstances for the crime of disclosing industrial or commercial secrets can be met so as to protect the right holder via such alternative approach.