Newsletter
The Owner of the Asserted Trade Secret Shall Take Reasonable Measures to Maintain Its Secrecy
The term "trade secret" as stipulated in Article 2 of the Trade Secrets Act shall mean any method, technique, process, formula, program, design, or other information that may be used in the course of production, sales, or operations, and also meet the following three requirements: (1) it is not known to persons generally involved in the information of this type; (2) it has economic value, actual or potential, due to its secretive nature; and (3) its owner has taken reasonable measures to maintain its secrecy. And the so-called "reasonable measures to maintain its secrecy" herein indicates that the owner of the asserted trade secret has the subjective willingness to protect, and objectively has the active action to maintain its secrecy, allowing others to understand that he/she has the intention to protect the said information as a secret.
In litigation, it is commonly seen that disputes arise between the parties concerned as to whether the owner has taken reasonable measures to maintain the secrecy of the trade secret. The measures taken by the owners to maintain the secrets must be “effective” so that the secrecy of the information can be maintained. Although the said measures are not required to be practically "watertight," it is still necessary for the owner to control his/her intelligence information not known to the professional field in a way that is not easily accessible through the possible methods or techniques found in society, so as to meet the requirements of “reasonable measures to maintain its secrecy." Namely, the owner shall objectively have the active action to maintain the secrecy of the trade secret. The civil judgment of 2019 Min Ying Su Zi No. 12 rendered by the Taiwan Intellectual Property Court (IP Court) on June 23, 2020 also stated similar view that, if the owner of the asserted trade secret did not enter into any confidentiality agreement with the other party, but solely inferred that his/her counter party should naturally bear the obligation of confidentiality in good faith on the basis of past cooperation between both parties, such actions are inconsistent with the "reasonable measures to maintain its secrecy" required by the Trade Secrets Act.
Given that the so-called “reasonable measures to maintain its secrecy” must restrict or regulate other person’s approach or access to the asserted trade secret, the IP Court further expressed in the foregoing decision that the owner failed to take reasonable measures to maintain its secrecy objectively. For instance, there were simply wordings such as "not to be disclosed to the third party" on the document, or passwords set in the e-mail boxes of the employees, or SSL / TLS encryption used in the transmission of the e-mails, all of which were merely means of avoiding the disclosure of documents or e-mails in transmission, yet unwittingly allowing others to arbitrarily gain approach or access to the said confidential documents.
In practice, in order to prove that the owner has taken reasonable measures to maintain the secrecy of the asserted trade secret, he/she has to provide relevant internal management information about the asserted trade secret, such as the owner’s internal and external control rules. The owners need to address to the security concerns, for instance, whether the documents are kept in a lockable vault (i.e. vault or safe deposit box), whether irreversible measures are used to destroy or discard the trade secrets, whether confidentiality agreements are signed with the parties concerned, and whether passwords are changed for former or retired employees, all of which shall be provided as the facts of the litigation case to be examined and decided by the IP Court. In view of the increasingly stringent requirements on trade secret protection in practice, it is important for the parties concerned to review their internal policies on trade secret management if they intend to use trade secret to protect their technical or business data. They must make sure that those internal polices comply with the relatively more stringent standards nowadays so as to avoid difficulties encountered when asserting their trade secrets in the future.