In response to the industry's demand and attention for the legal protection of trade secrets, and in compliance with the trend of imposing or increasing criminal liabilities under the international legal system for the protection of trade secrets, Taiwan’s Trade Secrets Act, having been implemented since 1996, added the provisions on criminal liability for violation of Trade Secrets Act, and enhanced penalties for the purpose of using the trade secrets in foreign jurisdictions in the 2013 Trade Secrets Act Amendment. However, with the implementation of the 2013 Trade Secrets Act Amendment, difficulties on the practice of criminal investigation emerge when prosecutors are investigating trade secrets cases.  It is the limitation of Article 245 of the Code of Criminal Procedure, "A prosecutorial investigation shall not be made public," that makes it difficult to provide the investigation materials to the relevant persons for reviewing and defending sufficiently to discover facts.  Besides, there is no legal basis for ordering the relevant persons who may have access to the investigation materials to fulfill the obligation of confidentiality.  Thus, the trade secrets owners face the risk of the further leakage of their trade secrets, which affects the efficiency and correctness of the criminal investigation.

 

In order to maintain the principle of secret investigation, discover facts and meanwhile retain the confidentiality of the evidence materials of trade secrets, the Legislative Yuan passed the amendment to some provisions of the Trade Secrets Act on December 31, 2019, adding the regulations regarding "Protective Order in Criminal Investigation," with the key points as follows:

 

1.   The prosecutors may issue a "Protective Order in Criminal Investigation" to the relevant persons (such as suspects, defendants, victims, complainants, agents ad litem, defense attorneys, expert witnesses, witnesses or other relevant persons) who have access to the investigation content when necessary (Paragraph 1, Article 14-1).

 

2.   The person subject to the "Protective Order in Criminal Investigation" shall not use said investigation content for purposes other than investigation procedures and shall not disclose it to the person not subject to the "Protective Order in Criminal Investigation" (Paragraph 2, Article 14-1).

 

3.   The "Protective Order in Criminal Investigation" shall be made in written form or verbally.  The trade secrets owner is entitled to present their opinions (Article 14-2).

 

4.   The "Protective Order in Criminal Investigation" may be changed or revoked in the course of investigation (such as the circumstances where the grounds for maintaining secrecy become extinguished, or it is necessary to change the content of the "Protective Order in Criminal Investigation") and after the end of investigation (such as the circumstance where a final decision to defer the prosecution, or a final and irrevocable decision not to prosecute has been rendered to a case; the effect of the prosecution does not extend to the scope of "Protective Order in Criminal Investigation"). Also, the "Protective Order in Criminal Investigation" may be linked up with the "Confidentiality Preservation Order" issued by the court after the action of the case has been initiated (Article 14-3).

 

5.   Criminal liability for acts in violation of the "Protective Order in Criminal Investigation" shall be subject to a sentence of imprisonment not more than three years, detention, or in lieu thereof or in addition thereto, a fine of not more than NT$1 million.  Criminal liability for acts in violation of the "Protective Order in Criminal Investigation"in foreign jurisdictions shall also be subject to punishment (Article 14-4).

 

Regulations regarding "Protective Order in Criminal Investigation" newly added to the 2019 Trade Secrets Act Amendment (hereinafter referred to as the "2019 Trade Secrets Act Amendment") is to be implemented on the date of its promulgation by the President.

 

It is quite a good idea to introduce the system of "Protective Order in Criminal Investigation" in the "2019 Trade Secrets Act Amendment."  This amendment intends to balance the principle of secret investigation, the discovery of facts, and the confidentiality of evidence materials of the trade secrets owner.  Nevertheless, several points on future operating practices are still worth observing:

 

1.   At present, the 2019 Trade Secrets Act Amendment only grants prosecutors the right that they may ex officio issue the "Protective Order in Criminal Investigation," and disclose relevant investigation materials to relevant persons (parties, victims, agents ad litem, defense attorneys, expert witnesses, witnesses or other relevant persons) under the "Protective Order in Criminal Investigation."  It does not grant prosecutors the right that they may issue the "Protective Order in Criminal Investigation"upon the application of relevant persons.  As a result, the 2019 Trade Secrets Act Amendment does not provide relevant mechanism to initiate the issuance the "Protective Order in Criminal Investigation"even if relevant persons need to review investigation materials for assisting in prosecutorial investigation or defense.  While the amendment seeks to improve the efficiency and correctness of investigation, it takes further observations whether such a goal can be achieved.

 

2. The implementation of the system of "Protective Order in Criminal Investigation" in the 2019 Trade Secrets Act Amendment grants prosecutors the right that they may disclose investigation materials to relevant persons under the "Protective Order in Criminal Investigation."  The "Protective Order in Criminal Investigation" is an exception clause which breaks through the principle of secret investigation stipulated in Article 245 of the Code of Criminal Procedure, and has a far-reaching impact on the rights and interests of trade secret owners.  It is true that the 2019 Trade Secrets Act Amendmentempowers the trade secrets owners to have the opportunity to express their opinions on the issuance of the "Protective Order in Criminal Investigation" by the prosecutor under specific circumstances. However, even if the trade secrets owners do not agree with the scope of the "Protective Order in Criminal Investigation" (regardless of whether it relates to the persons subject to the said protective order, or the investigation content that should be kept confidential, or the prohibited or restricted acts), the prosecutors may still refuse to adopt the opinions of the trade secrets owners, directly issue the "Protective Order in Criminal Investigation," and disclose the investigation materials of trade secrets to the persons subject to the "Protective Order in Criminal Investigation" if necessary during the investigation proceeding.  As the 2019 Trade Secrets Act Amendmentdoes not provide a mechanism for a trade secrets owner to challenge against the ruling of the "Protective Order in Criminal Investigation" issued by the prosecutor, it is worth noting whether the protection of the rights and interests of the trade secrets owners is comprehensive.

 

3.  Although the newly-added "Protective Order in Criminal Investigation" in the 2019 Trade Secrets Act Amendment and the "Confidentiality Preservation Order" stipulated in the Intellectual Property Case Adjudication Act are both for those who have access to the trade secrets to fulfill their obligation of confidentiality over the trade secrets content, and those who violate them shall be held criminally liable, the following differences still exist between them:

 

3.1.The newly-added "Protective Order in Criminal Investigation" in the 2019 Trade Secrets Act Amendment is applicable to criminal investigation for trade secrets cases, which is ex officio issued by a prosecutor.  However, the "Confidentiality Preservation Order"stipulated in the Intellectual Property Case Adjudication Act is applicable to trial stages of a court, and is not limited to trade secrets cases.  As long as litigation materials involve trade secrets held by the parties or the third party, the trade secrets holders may motion for "Confidentiality Preservation Order" to the court upon meeting certain legal requirements.

 

3.2 During the trial stage of the court, both parties may in principle review the evidence materials in the court files, with the exception of restricting their reviewing authority upon trade secrets holder's motion for a "Confidentiality Preservation Order," and approval of the court.  However, during the criminal investigation, the related parties are not allowed to review the evidence materials in the investigation files based on the principle of secret investigation.  Exceptions may be made upon the issuance of the "Protective Order in Criminal Investigation" by a prosecutor.

 

According to Paragraph 2, Article 11 of the Intellectual Property Case Adjudication Act, if the person subject to the "Confidentiality Preservation Order" has obtained or possessed such trade secrets before trade secrets holder's motion for a "Confidentiality Preservation Order," the motion filed by the trade secrets holder is therefore not in compliance with the requirements of motioning a "Confidentiality Preservation Order."  It is true that the "Protective Order in Criminal Investigation"in the 2019 Trade Secrets Act Amendmentmay be linked up with the "Confidentiality Preservation Order" issued by the court after the action of the case has been initiated (Article 14-3).  However, it is very likely that the person subject to the "Protective Order in Criminal Investigation" is also the person subject to the "Confidentiality Preservation Order."  If the person subject to the"Protective Order in Criminal Investigation" has obtained or held the trade secrets during the criminal investigation, the trade secrets holder may not legally obtain a "Confidentiality Preservation Order" in accordance with the aforesaid provision of the Intellectual Property Case Adjudication Act.  At this time, doubts may arise about how the "Protective Order in Criminal Investigation"in the 2019 Trade Secrets Act Amendment should be legally linked up with the "Confidentiality Preservation Order"under the Intellectual Property Case Adjudication Act.

 

The newly-added "Protective Order in Criminal Investigation"in the 2019 Trade Secrets Act Amendment has an impact on criminal investigation practice, the rights and interests of trade secret owners/holders, and the trial practice of trade secrets litigation court.  In the future, the Judicial Yuan and the Executive Yuan should consider whether to formulate relevant operational measures for the issuance of "Protective Order in Criminal Investigation" by prosecutors in order to refine the relevant provisions of "Protective Order in Criminal Investigation."  Further amendments of the "Confidentiality Preservation Order"under the Intellectual Property Case Adjudication Act should also be taken into consideration.  By doing so, doubts about the applicability of both the Trade Secrets Act and the Intellectual Property Case Adjudication Act can then be avoided.