Jenny Chen
On January 15, 2020, the President promulgated the Amendments[1] to the Trade Secret Law, of which the most important element should be the new investigation confidentiality order system.
In the current practice of trade secret investigation, prosecutors and investigators are often inclined to be conservative and avoid disclosure of investigation details involving trade secrets as much as possible to avoid improper leakage of trade secrets and reflect the principle of the secrecy of investigation. However, since trade secrets often involve a high degree of professionalism, if the prosecutors and investigators simply have to investigate on their own or analyze data on their own or retain a third-party professional institution to do so through forensic technologies such as keyword search, data recovery, cracking of passwords and file time, issues such as the establishment of trade secrets and their ownership oftentimes cannot be clarified, resulting in mired cases. If people familiar with trade secrets (particularly the complainant) can help the prosecutors and investigators at this juncture to examine the contents of investigation and timely provide technical explanation, or to provide more trade secret materials, this will facilitate the prosecutors’ and investigators’ determination if the defendant has infringed the complainant’s trade secrets and accelerate the speed of investigation. In addition, to take effective defensive measures, the defendant also needs to ascertain the evidence in the possession of the prosecutors and investigators and the contents of trade secret investigation and to disclose its own trade secrets in its own defense, if necessary. The above disclosure process may result in the leakage of more trade secrets. As a result, prosecutors and investigators often investigate such cases with their hands tied and suffer from low investigation efficiency. Although there is a protective order system under the current Law for Adjudicating Intellectual Property Cases, still this order is issued after an indictment is issued and cannot resolve the above issues that arise in the course of investigation as mentioned above.
To enhance the investigation efficiency of trade secret cases, encourage enterprises to actively produce evidence and avoid improper leakage of trade secrets, an investigation confidentiality order system is added to the Trade Secret Law (see Article 14-1 through Article 14-4). The system is highlighted below:
I. Issuance of the investigation confidentiality order (see Article 14-1 of the Trade Secret Law)
1. Issuing agencies and targets:
Out of the need to investigate a trade secret case, a prosecutor may ex officio issue an investigation confidentiality order to people exposed to the contents of the investigation, including the crime suspects, defendants, victims, complainants, agents, defenders, authenticators, witnesses or other relevant people, who are all possible targets and cover a wide spectrum of people.
2. Prohibited or restricted behavior of the people subject to an investigation confidentiality order:
They shall not use the contents of the investigation for purposes other than the investigation procedure or disclose the same to people not subject to the investigation confidentiality order.
3. Manners of issuance:
An investigation confidentiality order may be issued orally or in writing. A written order should be served upon all people subject to the investigation confidentiality order. Before the written service or notification, the trade secret owner should be given an opportunity to state its opinions. If the order is issued orally, the order shall be communicated in the face of all relevant people and noted in the transcript, the trade secret owner shall be given an opportunity to state its opinions, and a written order shall be prepared in seven days and served or communicated in the above-mentioned manner.
An investigation confidentiality order shall specify: (1) people subject to the investigation confidentiality order; (2) the investigation contents that shall be held in confidence; (3) the prohibited or restricted behavior of the people subject to the investigation confidentiality order; and (4) the consequences of any violation.
II. Cancellation and amendment to an investigation confidentiality order:
1. It should be handled by the prosecutor during the investigation stage:
If the reasons for confidentiality during the investigation are eliminated or if it is necessary to amend the contents of an investigation confidentiality order, the prosecutor may ex officio cancel or amend the investigation confidentiality order.
If a case is disposed of with deferred indictment or no indictment, or if an investigation confidentiality order is not covered by the effect of an indictment, the prosecutor shall be responsible for the subsequent handling of the investigation confidentiality order. A prosecutor may, ex officio or upon application from a person subject to an investigation confidentiality order, cancel or amend the investigation confidentiality order.
Before canceling or amending such order as mentioned above, the prosecutor may provide an opportunity for the people subject to the investigation confidentiality order or the trade secret owners to state their opinions.
People subject to an investigation confidentiality order or trade secret owners may state their objection to the ruling of the prosecutor.
2. This matter shall be handled by the court during the stage of court trial:
If the prosecutor or trade secret owner fails to apply to the court for a protective order within 30 days after the case is pending with the court, the people subject to the investigation confidentiality order or the prosecutor may apply to the court to set aside the portions of the investigation confidentiality order covered by the effect of the indictment. Before the court renders a ruling, the opinions of the trade secret owner and the prosecutor should be solicited first.
Trade secret owners, prosecutors and people subject to an investigation confidentiality order may appeal against a court’s ruling.
III. Term of an investigation confidentiality order:
1. Effective date:
If the order is issued in writing, it shall go into force on the day of service; and if it is issued orally, it shall become effective when it is communicated.
2. Lapse:
After a case is prosecuted, the prosecutor or the trade secret owner may apply to the court for a protective order. The portions of the investigation confidentiality order which are covered by the effect of the indictment shall become void within the scope of the application on the day the court ruling becomes final.
If the court overturns an investigation confidentiality order upon application, the portions of the investigation confidentiality order which are covered by the effect of the indictment shall become void within the scope of the overturn on the day the court ruling becomes final.
IV. Effect of violation
If an investigation confidentiality order is violated, the offender will be subject to imprisonment of up to three years or detention and, in lieu thereof or in addition thereto, a fine of up to NT$1 million. It was particularly pointed out in the legislative reasons that a violation of an investigation confidentiality order is deemed a contempt of justice and a violation of the legal interest of the state and is not an offense actionable only upon complaint. In addition, the above penalties also apply to violations of an investigation confidentiality order in foreign countries, mainland China, Hong Kong or Macau.
The Trade Secret Law as amended contains a new investigation confidentiality order system and authorizes the prosecutors to make use of an investigation confidentiality order ex officio based on case development needs when they investigate trade secret cases. This system is subject to less restrictions relative to a protective order issued by the court upon application from a party. In addition, the Trade Secret Law only contains principle-based regulations on the implementation of this system. How a prosecutor will actually use this system in practice or how to address applicability issues that arise remains to be seen. For example, the legal provisions stipulate the confidential contents of investigation that should be specified in an investigation confidentiality order. Since the scope of the confidentiality obligation of a person subject to the investigation confidentiality order is involved, the contents so specified should be theoretically as concrete as possible. If a specific portion of Document A is specified, but it is subsequently deemed necessary later by the prosecutor to disclose Document B due to the development of the investigation, this will call into question whether the prosecutor should amend the previous investigation confidentiality order to expand the scope of confidentiality or issue another investigation confidentiality order for Document B. Pursuant to the legal provisions, if the prosecutor amends an investigation confidentiality order, the people subject to the investigation confidentiality order may state their objection. However, there is no remedy provision concerning the issuance of an investigation confidentiality order. Therefore, it is possible that the prosecutor may issue a separate investigation confidentiality order for Document B out of expediency. This will affect the legal rights and interests of the people subject to the investigation confidentiality order. To give another example, when the prosecutor gives an oral investigation confidentiality order, the scope of confidentiality should be noted in the hearing transcript. However, if the scope of confidentiality specified in an investigation confidentiality order subsequently supplemented is different from the transcript, this calls into question which scope of confidentiality should apply to the people subject to the investigation confidentiality order. If the people subject to the investigation confidentiality order urge the prosecutor to amend the order but the prosecutor has any delay in doing so, the people subject to the investigation confidentiality order cannot state their objection, either.
[1] The President-Hua-Zhong-One-Jing-10900004051 Directive of January 15, 2020