When an employee is suspected of misappropriating a former employer's trade secrets during his/her employment and later joins a new employer that competes with the former employer, whether the new employer should be held liable for the employee's actions has long been a significant issue in practice.

 

This dispute concerns the criminal liability of a corporation in cases of trade secret infringement, with relevant provisions found in Article 13-4 of the Trade Secrets Act. This article stipulates that if an employee of a corporation, in the course of performing his/her business duties, commits the offense of infringing trade secrets under Article 13-1 or the aggravated offense under Article 13-2 of the same Act, then, in addition to punishing the individual, the corporation shall also be subject to a fine. However, if the corporation's representative or other responsible persons have made every effort to prevent the crime, this provision does not apply.

 

On May 21, 2026, the Supreme Court rendered 115(2026)-Tai-Shang No. 2386 Criminal Judgment, providing a clear interpretation of this provision and offering important practical guidance.

 

The facts of the case are as follows: Employee A, while employed at Company X, forwarded electronic files containing the company's trade secrets (hereinafter referred to as the "disputed trade secrets") to his personal email account and stored them on his personal Gmail cloud drive. Subsequently, A resigned from Company X and joined Company Y. Company X sent a lawyer letter requesting that A delete or destroy the disputed trade secrets in his possession, but A did not comply.

 

During the court's evidence preservation proceedings (conducted at both Company Y and A's residence), Company X seized the disputed trade secret files from A's Gmail cloud drive, discovering that A had not deleted the files. Company X then filed a complaint against both A and Company Y. Regarding Company Y, after investigation and indictment by the Hsinchu District Prosecutors Office, the Hsinchu District Court rendered a not-guilty verdict for Company Y in Judgment 109(2020)-Chih-Su No. 10. However, the Intellectual Property and Commercial Court (hereinafter "IPC Court"), in Judgment 111(2022)-Hsing Chih-Shang Su No. 36, found Company Y guilty. The Supreme Court later overturned this judgment and remanded the case to the IPC Court for retrial.

 

The IPC Court's judgment found that A's conduct constituted a violation of Article 13-1(1)(3) of the Trade Secrets Act—namely, failing to delete or destroy trade secrets after being notified by the trade secret owner to do so. The reasons for finding Company Y guilty included: (1) A was employed by Company Y at the time of the illegal act; (2) when Company X's lawyer requested A to delete or destroy the trade secrets, a copy of the letter was also sent to Company Y, and the letter clearly stated that Company Y was a competitor of Company X, so Company Y should have supervised A to fulfill the relevant obligations, but A did not comply, and thus it should be deemed that the offense was committed in the course of performing business duties; and (3) Company Y did not meet the exemption conditions stipulated in the proviso of Article 13-4 of the Trade Secrets Act, and therefore should be fined according to law.

 

However, the Supreme Court held that the IPC Court's judgment did not specifically state any concrete facts showing that A, during his employment at Company Y, used the disputed trade secrets in the course of performing Company Y's business; nor did the judgment mention whether A stored the trade secrets using Company Y's computers, email accounts, or USB drives. Based on this, does Company Y have the duty and right to supervise and urge A to delete or destroy the disputed trade secrets that A stored and possessed on his personal cloud drive during his previous employment? Was A's violation of the Trade Secrets Act committed "in the course of performing business duties"? The Supreme Court found that the IPC Court's judgment failed to thoroughly investigate and discuss these important facts relevant to the elements of the crime, and therefore overturned that part of the judgment and remanded the case for retrial.

 

This shows that, when determining whether an employer has committed the crime of infringing trade secrets, before discussing whether the employer has made every effort to prevent the crime, it is necessary to first confirm whether the employee violated the Trade Secrets Act "in the course of performing business duties." In the aforementioned case, it is necessary to clarify whether the employee used the trade secrets within the company or used company resources to commit the illegal act, in order to determine the connection between the conduct and the "performance of business duties."