Newsletter
Protection of Case Files and Evidence Involving Trade Secrets under the Newly Amended IP Adjudication Act
The newly amended Intellectual Property Case Adjudication Act (hereinafter “IP Adjudication Act”) will be officially implemented on 30 August 2023. The newly amended IP Adjudication Act strengthens its protection of case files and evidence involving trade secrets through the system of legal proceedings. After the newly amended IP Adjudication Act officially comes into force, multiple methods stated as below are available to holders of trade secrets if the case files and evidence presented thereby contain trade secrets.
1. Prohibited or restricted access to and de-identification of trade secrets-containing litigation related files:
Paragraph 2 of Article 14 of the Trade Secret Act sets forth: “If assertions or defenses advanced by parties to a litigation relate to trade secrets, and at the request of the parties, the court may, as it deems appropriate, close the trial to the public or restrict access to the files containing litigation related information.” With reference to the foregoing provision, specific requirements governing prohibited or restricted access are further devised and prescribed in the IP Adjudication Act. These specific requirements include as follows:
1. Paragraph 1 of Article 32 sets forth as follows: in civil cases (applicable mutatis mutandis to administrative matters), “Where litigation related files involve trade secrets, the court may, within the scope not affecting the parties’ exercise of their rights to oral argument, and upon motion by a party involved or by a third party, rule that litigation related files are prohibited or restricted from perusal, transcription, photography or other means of reproduction.” Other Paragraphs of the same Article stipulate that the aforesaid motion shall be filed in written, stating code number(s) or code name(s) of corresponding evidence; the movant shall apprise the opposing party, the parties involved or the third party of such motion; and the court shall provide the opposing party, the parties involved or the third party with an opportunity to state their opinions. Article 33 further stipulates that after the cause disappears, the court may be petitioned to revoke or modify the ruling; both the ruling over the motion for prohibited or restricted access and the ruling over the motion for revocation or modification, either such motions being approved or denied, are subject to appeal. Additionally, it is also prescribed in Article 33 that trade secrets known or possessed under the ruling of restricted access shall not be used for purposes other than the litigation.
2. Paragraph 5 of Article 46 pertains to civil evidence preservation procedures, stating as follows: “Where evidence preservation is likely to damage the trade secrets of the counterparty or a third party, the court may, upon motion by the movant, the counterparty or the third party, impose a restriction or prohibition on the person(s) on site when the preservation is carried out, and order alternative custody of and prohibited or restricted perusal, transcription, photography or other means of reproduction of the evidence materials obtained through preservation.”
3. An inspector system is introduced for the first time in Article 19 of the IP Adjudication Act. Previously, to prove the authenticity of the facts presented in a patent infringement case, the court may, upon motion by a party involved, appoint an inspector to check the document materials or devices/equipment possessed or managed by the opposing party or a third party. Concerning the inspection report generated by the inspector upon completion of the inspection, Paragraph 3 of Article 23 states: “Where the inspection report contains trade secrets, the party subject to the inspection should petition the court to prohibit disclosure of an entirety or portion of the inspection report to the petitioner within 14 days after a scanned copy or an electronic version of the inspection report is served.” Paragraph 6 of Article 23 prescribes that the party subject to prohibited disclosure may petition the court to revoke its ruling after the cause disappears; and Paragraph 7 states that both the rulings over the petition for prohibited perusal and the ruling over the petition for revocation, either such rulings being approved or denied, are subject to appeal.
4. Paragraph 2 of Article 55 pertains to criminal cases, stating: “Where case files and evidence contain trade secrets, the court may, upon motion by the parties or stakeholder(s), or by ex officio, restrict such case files and evidence from being reproduced by perusal, transcription, photography or other means.”
5. Article 61 pertains to trade secret-related criminal cases and their incidental civil proceedings. A party involved or a stakeholder may, when case files and evidence contain trade secrets thereof, petition the court prior to the first trial date to de-identify those trade secrets by designating corresponding code name(s) or code number(s). The court shall give the persons related to the litigation an opportunity to state their opinions. The ruling over the petition for de-identification, either being approved or denied, shall not be appealed.
6. Additionally, the IP Adjudication Act authorizes, in Paragraph 6 of Article 32 and Paragraph 33 of Article 55 thereof, the Judicial Yuan in conjunction with the Executive Yuan to formulate other relevant details.
Attention should be paid to the different provision from Paragraph 3 of Article 242 of the Code of Civil Procedure, which states “Where the documents in the dossier involve the privacy or business secrets of a party involved or a third person and a grant of the application provided in the two preceding paragraphs will likely result in material harm to such party or person, the court may, on motion or by ex officio, render a ruling to deny the application or to restrict the acts provided in the two preceding paragraphs.” While this provision of the Code of Civil Procedure has a similar purport to the above-listed provisions of the IP Adjudication Act, they are different in the scope of application. That is, Paragraph 3 of Article 242 of the Code of Civil Procedure is applicable to “non-intellectual property cases” or “intellectual property cases where contents of the materials petitioned to be prohibited or restricted, though agreeing with the definition of privacy or business secrets, do not meet the definition of trade secrets.”
2. Closed trial:
As mentioned above, Paragraph 2 of Article 14 of the Trade Secret Act relates also to closing trial to the public. In the IP Adjudication Act, closed trial is further implemented as follows:
1. Article 31 pertains to civil matters (applicable mutatis mutandis to administrative matters), stating: “Where assertions or defenses advanced by a party contain trade secrets of the party or of a third person, upon motion by the party, the court may, as it deems appropriate, close the trial to the public. Closed trial is also applicable on mutual consent of the two parties.”
2. Paragraph 5 of Article 46 pertains to civil evidence preservation procedures, stating: “Where evidence preservation is likely to damage the trade secrets of the counterparty or a third party, the court may, upon motion by the movant, the counterparty or the third party, impose a restriction or prohibition on the person(s) on site when the preservation is carried out.”
3. Paragraph 4 of Article 23 pertains to the disclosure of the inspection report. Where the party subject to inspection petitions a prohibition on the disclosure of the inspection report, in order to determine whether such petition is justifiable, the court may, when it deems necessary, disclose an entirety or portion of the inspection report to the counsel or person(s) related to the litigation that is/are agreed by the party subject to inspection, and collect their opinions in a non-public manner.
4. Paragraph 1 of Article 55 pertains to criminal cases, stating “Where the case files and evidence contain trade secrets, the court may, upon motion by the parties or stakeholder(s), close the trial to the public.”
5. Additionally, the IP Adjudication Act authorizes, in Paragraph 6 of Article 32 and Paragraph 3 of Article 55 thereof, the Judicial Yuan in conjunction with the Executive Yuan to formulate other relevant details.
Besides, Article 195-1 and Paragraph 2 of Article 344 of the Code of Civil Procedure state respectively as follows: “Where a party’s assertions or defenses involve privacy or business secrets of the party or a third person, the court may, upon motion by the party, order the hearing not be held in public when it deems appropriate. Closed trial is also applicable on mutual consent of the two parties.” “Where the content of a document provided in the fifth subparagraph of the preceding paragraph involves the privacy or business secrets of a party or a third person and its disclosure may result in material harm to such party or third person, the party may refuse to produce such document. Notwithstanding, in order to determine whether the party has a justifiable reason to refuse the production of the document, the court, if necessary, may order the party to produce the document and examine it in private.” However, as explained above, Article 195-1 and Paragraph 2 of Article 344 of the Code of Civil Procedure is applicable to “non-intellectual property cases” or “intellectual property cases where contents of the related materials, though agreeing with the definition of privacy or business secrets, do not meet the definition of trade secrets.”
3. Expanded coverage of petitioners for a confidentiality preservation order:
The system of confidentiality preservation order was introduced when the IP Adjudication Act was formulated in 2007. Specifically, where litigation-related materials such as evidence contained trade secrets, the court may, on petition by the party holding such trade secrets, issue a confidentiality preservation order upon the opposing party, counsel, assistant ad litem, or other parties related to the litigation, to ensure that such trade secrets were disclosed only to the persons subject to the confidentiality preservation order, and prohibited from use or being disclosed to other persons. Nevertheless, the old IP Adjudication Act seems to limit the petitioner to holder(s) of trade secrets, and the opposing party could not initiate the same petition. In other words, where the holder(s) of trade secrets disagreed with the opposing party on the list of candidates subject to a confidentiality preservation order, the opposing party would be hindered from exercising its rights to gain knowledge of the case in an appropriate and timely manner, and smooth progress of the litigation would also be hindered, thereby interfering with the speed and accuracy of the ruling rendered. The provisions of Articles 11 through 15 of the old IP Adjudication Act is maintained in Articles 36 through 40 of the newly amended Act, specifying the handling of petition for a confidentiality preservation order, revocation of such order, and request for perusal, transcription, photography or other means of reproduction of a document in the dossier of a litigation upon which a confidentiality order was once issued. In addition to that, Paragraph 3 of Article 36 of the newly amended Act specifically sets forth as follows: “Where the court deems it necessary to issue a confidentiality preservation order and thus notifies a party or a third person to file a petition in accordance with Paragraph 1, and yet such party or third person fails to do so, the court may, upon motion by the opposing party or a party involved, issue a confidentiality preservation order upon persons not listed in Paragraph 1 after collecting the opinions of the party and a third person.”
Regarding the revocation of confidentiality preservation order, it is newly added in Paragraph 4 of Article 39 that the court may revoke by ex officio an inappropriate confidentiality preservation order. However, it is stated in Paragraph 3 that revocation shall not be petitioned or made by ex officio on the ground that the movant or petitioner for the confidentiality preservation order is ineligible. That is, if the petition for a confidentiality preservation order was filed by a person/party that is not the possessor of trade secrets, and yet the court mistakenly issued an order despite ineligibility of the petition, the granted confidentiality preservation order shall neither be appealed nor revoked in case that the trade secrets obtained under such order are leaked and left unregulated.
Regarding the inspection report, Paragraph 3 of Article 23 stipulates that the party subject to the inspection should petition the court to prohibit disclosure of an entirety or portion of the inspection report to the petitioner within 14 days after a scanned copy or an electronic version of the inspection report is served. In addition to this provision, Paragraph 5 provides the party subject to the inspection with an opportunity to petition for a confidentiality preservation order. That is, the court shall notify the party subject to the inspection before disclosure of the inspection report in accordance with Paragraph 4, and where the party subject to the inspection petitions for a confidentiality preservation order within 14 days after the notification, the inspection report shall not be disclosed before the court renders a ruling.
The above provisions pertinent to confidentiality preservation order are also applicable mutatis mutandis to the procedures of both intellectual property criminal cases and administrative matters. Also, the IP Adjudication Act aggravates in Article 72 the penalties for violation of a confidentiality preservation order by re-defining such violation as a crime that would be prosecuted even without a complaint by the victim. Besides, the violation of a confidentiality preservation order issued upon general trade secrets shall be subject to imprisonment for a term of not more than 3 years, short-term imprisonment, or in lieu thereof or in addition thereto, a fine of not more than NT$1 million. The violation of a confidentiality preservation order issued upon trade secrets that are listed among national core key technologies shall be subject to imprisonment for a term of not more than 5 years, short-term detention, or in lieu thereof or in addition thereto, a fine of not more than NT$3 million. Where the aforesaid violations occur in a foreign country, Mainland China, Hong Kong or Macau, the above criminal liabilities are all applicable and may be prosecuted regardless of whether the offenses are punishable under the law of the place where the offenses are committed. Article 73 further stipulates that where violation of confidentiality preservation order is committed due to conduction of business, in addition to penalizing the violator, the legal person, unincorporated association or natural person shall also be subject to the aforesaid fines. This provision, however, does not apply if the statutory responsible person of a legal person, manager or representative of an unincorporated association or a natural person has tried his/her best to prevent the occurrence of the offenses.
4. Denial of right to statement or testimony/refusal to produce a document or object:
As set forth respectively in Subparagraphs 4 and 5 of Paragraph 1 of Article 307 of the Code of Civil Procedure, a witness may refuse to testify if the witness is interrogated on a matter he/she is obliged to keep confidential in the course of performing his/her official duties or conducting business, or if the witness cannot testify without divulging his/her technical or profession secrets. It is expressly prescribed in Article 367-3 of the same Code that the above provisions shall apply mutatis mutandis to the interrogation of parties or their statutory agents. Additionally, in accordance with Paragraph 2 of Article 344 and Article 348 of the Code, where the document a party requests the opposing party or a third person to produce involves privacy or business secrets of the party or a third person, the party may refuse to produce such document. Notwithstanding, in order to determine whether the party has a justifiable reason to refuse the production of the document, the court may, if necessary, order the party to produce the document and examine it in private. Article 367 stipulates that the above referenced Paragraph 2 of Article 344 and Article 348 of the Code shall apply mutatis mutandis when the opposing party or a third person is requested or ordered to produce an object to be inspected.
Similar provisions can also be found in the Code of Criminal Procedure. As set forth in Paragraph 1 of Article 179, Article 181 and Article 182, a witness may refuse to testify if the witness is or was a public official and is interrogated on a matter he/she should keep confidential for official reasons; or if the testimony may subject himself/herself or a person having a certain relationship therewith to criminal prosecution or penalty; or if the witness is or was a medical doctor, pharmacist, obstetrician, clergy, lawyer, defense attorney, notary public, accountant, or one who is or was an assistant of one of such persons, and is interrogated on a confidential matter related to another person which was learnt thereby because of his/her occupation.
The IP Adjudication Act also refers to similar legal doctrines and prescribes in Article 25 that, where a witness was once an inspector, the witness may refuse to testify on trade secret related matters learnt thereby in the course of an inspection. However, denial of testimony is not allowed if the witness has been exempt from the confidentiality responsibility.