Newsletter
The Scope of the Movant of a Confidentiality Preservation Order Extended in the Draft Amendment to the Intellectual Property Case Adjudication Act
In order to establish an intellectual property litigation system that is more professional, effective, and in line with international trends, the Judicial Yuan formally passed the Draft Amendment to the Intellectual Property Case Adjudication Act (hereinafter referred to as the "Draft Amendment") on June 24, 2022 after extensively soliciting opinions, referring to foreign legal systems and practices, and matching the draft amendments with some provisions of the "Patent Act" and the "Trademark Act" submitted in writing by the Ministry of Economic Affairs to the Executive Yuan on April 19, 2021. The Draft Amendment covers a wide range of issues, including the change of the administrative remedy proceedings for patent and trademark cases to the "Inter Partes Proceedings" applicable mutatis mutandis to civil proceedings, the strengthening of protection of the litigation documents involving trade secrets and the like. Among the issues covered, the confidentiality preservation order is the most relevant to the trade secret protection in the litigation proceedings.
Introduced with reference to the systems of the United States, Japan and other countries in the course of formulating the Intellectual Property Case Adjudication Act in 2007, the confidentiality preservation order system offers a mechanism allowing the trade secret owner(s) to file a request with the court for the issuance of a confidentiality preservation order to the other party, advocates, assistants, or other persons concerned in the litigation. This system aims to restrict the disclosure of the trade secrets only to the persons subject to the confidentiality preservation order, and to prohibit the use or disclosure of the trade secrets to other persons, while balancing the litigation rights of the litigation parties and protecting the trade secret owner(s). However, some issues may arise because the current law seems to restrict the movant requesting the issuance of a confidentiality preservation order to the trade secret owner(s) while the other party is not allowed to file such request.
Specifically, a dispute between the trade secret owner(s) and the other party may occur as to who should be listed as the persons subject to the confidentiality preservation order. On the ground of the need to protect trade secrets, the trade secret owner(s) may believe that the number of the persons subject to the confidentiality preservation order should be as small as possible while the other party, for the sake of quantity, complexity or high degree of expertise of the trade secrets involved, may consider that other advocates, assistants, or persons concerned in the litigation should be included. If the two parties do not agree with each other, problems may arise because, as Article 11 of the Intellectual Property Case Adjudication Act stipulates, “Where any one of the following situations occurs with respect to trade secrets held by a party or a third party, the court may, upon motion along with preliminary proof by such party or third party, issue a confidentiality preservation order upon the other party, agent, assistant ad litem, or other related party to the action.” Namely, if a trade secret owner refuses the motion for including additional persons subject to the confidentiality preservation order, such refusal may prevent the other party from being informed of the contents of their case in a timely manner, and impede the smooth progress of the proceedings, which in turn may affect the speed and accuracy of the decision.
In this regard, if the case is a criminal case of trade secrets, the preceding request for the court’s issuance of a confidentiality preservation order may be alternatively filed by the prosecutor because, as Article 14-3, Paragraph 4 states, “The trade secret owner(s) or the prosecutor may, pursuant to the provisions of the Intellectual Property Case Adjudication Act, file a request with the court for the issuance of a confidentiality preservation order.” With respect to other intellectual property cases, one may notice that the Intellectual Property and Commercial Court's 2019 Min Mi Sheng Zi No. 42 ruling and 2019 Min Mi Sheng Zi No. 54 ruling once affirmed that the other party (the party without owning the trade secrets) may also motion for the issuance of a confidentiality preservation order, so as to increase the number of persons subject to the confidentiality preservation order; however, but such a practice is not without controversy.
Let’s take the Intellectual Property and Commercial Court's 2019 Min Mi Sheng Zi No. 42 ruling (hereinafter referred to as the “Approved Ruling”) mentioned above as an example. The Approved Ruling was first revoked by its superior court in the 2019 Min Ying Kang Zi No. 483 ruling (hereinafter referred to as the “Appealed Ruling”) on the ground that "the movant entitled to request the issuance of a confidentiality preservation order shall be the trade secret owner(s),” but later became final and binding after the Appealed Ruling was revoked by the Supreme Court in the 2020 Tai Kang Zi No. 483 ruling on the ground that a movant whose request for the issuance of a confidentiality preservation order was approved shall not be allowed to file an appeal against the approved ruling. Nevertheless, the trade secret owner in the case again initiated a rehearing action against the Approved Ruling, and the Intellectual Property and Commercial Court once again revoked the Approved Rulings (the 2020 Min Sheng Zai Zi No. 1 ruling and the 2020 Min Ying Kang Zi No. 8 ruling) on the ground that "the movant entitled to request the issuance of a confidentiality preservation order shall be the trade secret owner(s)." Ultimately, the Superior Supreme Court ruled in the 2020 Tai Kang Zi No. 1282 ruling that the rehearing action was revoked and no rehearing action shall be initiated on the ground that the trade secret owner in the case was not a party subject to the original final and binding Approved Ruling. Accordingly, it can be seen that the above opinions are indeed controversial under the existing law.
As a result, the Draft Amendment adds a new Paragraph 3 to Article 37 (corresponding to Article 11 of the current law): "Where the court deems it necessary to issue a confidentiality preservation order, and the party or the third party fails to file a request for such order despite being informed by the court per the provision in Paragraph 1, the court may issue a confidentiality preservation order to the persons not subject to the confidentiality preservation order specified in Paragraph 1 at the request of the other party or the party after hearing the opinions of the party or the third party.”