Author: Zhou Yanpeng, Zhang Shuzhen Time: 14.03.2018
The mainland implemented the 12th Five Year Plan from 2011 to 2015, focusing on the development of emerging industries such as energy conservation and environmental protection, new energy, new materials, electric vehicles, new medicine, biological breeding, and information. With the formulation of seven strategic emerging industries by the mainland government and the issuance of many rewards, preferential treatment, and subsidy measures from the central to local levels, mainland enterprises have recently attracted a large number of excellent technical and management talents from overseas with their abundant financial, material, and market attractiveness. Among them, there have even been mainland enterprises offering favorable conditions for recruiting Taiwanese talents by directly exchanging “New Taiwan Dollars” for “Chinese Yuan” in terms of salary, which has made Taiwanese manufacturers feel uneasy; Talent loss is like a ticking time bomb, the fuse will be activated and detonated anytime and anywhere.
Therefore, at the end of 2010, the President of Academia Sinica in Taiwan, Weng Chi hui, Academician Zhu Jingyi, and President of National Taiwan University, Li Si chen, proposed to the Executive Yuan a “breakthrough solution to the talent recruitment dilemma.” In addition, the Ministry of Education also launched the “salary suspension plan” in October of the same year in an attempt to reverse the wave of talent loss. Government departments even raised the issue of talent loss to the level of national security and established a project team to discuss countermeasures.
No matter how industry, government, academia, or research work, and whether a panacea can be found to solve the problem, if the flow of industrial talents is difficult to resist, enterprises should turn to thinking about how to prevent important trade secrets from being instantly and gratuitously transferred to competitors due to talent mobility. In fact, if a company lacks the DNA for protecting and managing trade secrets for a long time, the corresponding operational mechanisms are also very scarce, and employees are easily targeted by competitors.
Therefore, companies lack the mindset and operational mechanisms for protecting and managing trade secrets, and engage in talent poaching with competitors to copy competitive shortcuts. There is a causal relationship between the two.
Diversified forms of trade secrets spread throughout the meridians and bloodlines of enterprises
Trade secret is one of the types of intellectual property. Any proprietary information and data with substantial or potential property interests or economic value (i.e. commercial value) that is not well-known to the general public (i.e. confidentiality), and for which the enterprise has taken reasonable protection measures (reasonable protection measures), regardless of the form in which such information and data are presented, can often become the object of legal protection for trade secrets in various countries; As long as the enterprise continues to maintain the confidentiality of such information and data without breaking through, the enterprise can enjoy all economic and commercial benefits brought by trade secrets indefinitely.
There is a vast amount of proprietary information and data within an enterprise that has property interests or economic value. This information and data are continuously generated, updated, and multiplied, and are distributed throughout the meridians and veins of the enterprise. The forms of such information and data include new product development plans, product or technology development paths, designs, concepts, creations, processes, materials, formulas, structures, parameters, drawings, prototypes, programs, molds, passwords, source codes, operation manuals, management methods, quality control data, customer data, quotation data, order information, return information, procurement data, cost data, production scheduling (layout), testing data, factory construction data, production capacity planning, environmental protection data, communication network data, investment data, salary data, personnel layout, litigation and authorization data. Financial data Personnel data and various business data are often the core and competitive advantages of enterprises.
Enterprises lack protection and management mechanisms, and NDA is just a paper tiger
For the data and information that contain many core and competitive advantages of enterprises mentioned above, most business owners on both sides of the Taiwan Strait have not fully grasped their projects and contents, and have not taken effective protection measures. Such high-value information and data, due to the failure of enterprises to take corresponding protection measures, have never been able to be promoted from the secondary status of “general information” to the main status of “trade secrets”.
Until the company discovers that a departing employee, supplier, or partner has engaged in improper, illegal, or breach of contract behavior, or changed their position and switched to a competing industry, causing commercial secrets to be instantly transferred to others without compensation, they can only silently complain and be helpless. Furthermore, as long as employees, suppliers, and partners raise the defense that the company has no confidential labeling or protective measures for such data and information, the company will be speechless and lose its position. Even for the most important trade secrets, if the company does not take reasonable protective measures to make the confidential information and data lose their confidentiality, the trade secrets will become public property and cannot be recovered.
Although companies may sign Non Disclosure Agreements (NDAs) with employees, suppliers, and partners, when operating such NDAs, they often fall into the trap of applying examples without careful consideration. The terms of the NDA do not take into account litigation perspectives, nor do they design contracts that are easy to prove, convenient to claim rights, and can be specifically claimed. Therefore, NDAs are often just paper tigers that are difficult to wield, and cannot be used as a basis for litigation claims by companies, nor can they form a defense against the leakage of trade secrets.
The trial of trade secret cases in Taiwanese courts is filled with many bizarre and absurd phenomena
The Taiwanese judicial system has tried cases of trade secret infringement, and through empirical evidence in recent years, it has been found that there are many unprofessional and urgent improvement projects that need to be corrected. For example:
1. From the prosecution system to the trial of criminal cases involving infringement of trade secrets by the court, the plaintiff and the informant are not required to first define the items and content of the trade secrets they claim to have been infringed upon. They are even allowed to arbitrarily change the items and content of the trade secrets they claim to have been infringed upon, which leads to the divergent direction of judicial personnel’s case handling and the inability to deal with them. They conduct various unrelated interrogations and investigations of the defendant’s evidence, which also causes the defendant to bear a great unreasonable litigation burden. In some cases, the plaintiff and the informant may use this deficiency to shoot arrows and then target, and search for evidence while striking, giving the informant the opportunity to tailor the facts of the infringement crime and “artificial” evidence for the defendant;
2. Judicial personnel are not familiar with the industries, products and technologies involved in trade secret infringement cases, as well as the “eyebrows and corners” of enterprise operations. They lack professional recognition and reasonable judgment ability when claiming whether trade secrets have “economic value” and “secrecy” by plaintiffs and informants, and even avoid discussing these elements in disciplinary or judgment documents;
3. Judicial personnel have no standard for determining whether the plaintiff and the informant have taken “reasonable protection measures” for trade secrets, with varying degrees of leniency. The widest standard is to recognize that the enterprise has taken reasonable protection measures for all forms of trade secrets as long as the employee signs a confidentiality agreement with the company, without comprehensively assessing whether the enterprise has implemented substantive control over factory buildings, machinery and equipment, document archives, information and communication equipment, file access permissions, internal and external meetings, and whether corresponding management measures have been formulated and implemented. The determination of “reasonable protection measures” is too simplified and superficial, which is very unfavorable to the defendant;
4. The plaintiff claims that if the trade secrets involve specific products and technologies, the judicial personnel improperly apply the All Element Rules to determine whether the defendant has infringed on the plaintiff’s trade secrets, in order to judge whether the products and technologies of the plaintiff and defendant are the same or similar. However, they do not know that the principles and principles of patent infringement determination are completely different from the essence and purpose of determining the infringement of trade secrets, and therefore cannot be “analogized”.
In addition, judicial personnel lack the industry, business experience, and expertise required to determine infringement of trade secrets. Therefore, the Standing Committee requested external appraisal agencies to assist, but this not only did not solve the problem, but also became more and more helpful. Firstly, if external appraisal agencies and teams of appraisers are composed of individuals without practical experience in the industry, they will not only fail to make accurate judgments on the case, but also consume more judicial and party resources without professional appraisal reports; Secondly, external appraisal agencies and appraisers who are not familiar with the requirements and professional recognition of trade secrets, and rashly entrust them to conduct trade secret infringement or non infringement appraisal, are like playing dice games; Thirdly, whether there is a conflict of interest between external appraisal institutions and appraisers and the parties to the lawsuit, often without detailed investigation and confirmation beforehand, and ignoring the protection of the rights and interests of the parties to the lawsuit; Fourthly, before entrusting appraisal institutions, judicial units often do not require appraisal institutions and appraisers to provide information in advance on whether they have relevant expertise and experience in appraisal, their appraisal methods and processes, and the instruments and equipment used. This leads to appraisers making shocking analyses based on their limited industry and commercial experience, which further increases the credibility and flaws of appraisal reports, causing greater disputes and doubts between the parties to the lawsuit and the court; Five, how to control, protect, and require the appraisal agency and appraiser to return or follow certain procedures for destruction after obtaining confidential information delivered by the parties to the lawsuit, as there are no strict regulations and operations in the United States courts. When the parties involved in the lawsuit bring commercial confidential information to the court or appraisal agency, no one can guarantee that they will not be harmed again; In determining whether the defendant has infringed on the plaintiff’s or the informant’s trade secrets, judicial units often require the plaintiff and the informant to provide direct evidence to prove when, where, and in what way the defendant leaked or infringed on certain trade secrets, without considering the difficulty of the plaintiff and the informant in providing evidence in certain situations. Instead, they should refer to indirect evidence for comprehensive judgment. It is obviously extremely difficult for the plaintiff and the informant to seek relief through litigation.
Enterprises should work tirelessly to protect and manage trade secrets
Establishing a system for protecting and managing trade secrets in enterprises has many benefits, including: 1 Maintain the core competitiveness of the enterprise and sustainably utilize exclusive trade secrets to create unlimited revenue and profits for the enterprise; 2. Ensure that trade secrets comply with the legal requirements for trade secret protection, in order to facilitate subsequent remedies and claims; 3. It helps establish and maintain ethical relationships between enterprises and employees, cultivate employees’ DNA for protecting and managing trade secrets, and continuously take protective measures; 4. Reduce or exempt employees or suppliers from improperly disclosing or improperly using company trade secrets, resulting in irreparable losses; 5. Helps to resolve trade secret disputes and reduce the burden of proof for enterprises, avoiding costly litigation and expenses.
As for the protection and management methods and measures of trade secrets, the first step should be to inventory the core information, data items, and content that are distributed throughout various operational functions and departments. Based on the nature of such information and data, as well as the characteristics of the judicial systems of the civil law and common law systems, it should be determined whether it is suitable to protect trade secrets or other forms of intellectual property.
For those who are suitable as protectors of trade secrets, continue to master such information and data, establish effective and low-cost control measures and management methods at every stage from production, storage, use, dissemination, to elimination, and regularly review and improve them.
Specific control measures can be implemented, including control of information and communication equipment, control of servers and databases, control of important R&D project documents and output results, control of excessive disclosure of trade secrets in patent applications, control of business premises and production areas, control of confidentiality and exclusive labeling of document archives, control of the use of machinery and molds, control of process segmentation and parameter editing and copying permissions, control of supplier and customer information provision, etc.
As for employee management, it includes signing confidentiality agreements and requiring employees to promise not to engage in unfair competition, inquiring about the integrity of the former employer of the prospective employee, informing employees of the scope of trade secrets and their management measures, providing regular training and reminding employees of confidentiality obligations, encouraging employees to provide suggestions on trade secret management measures, negotiating with departing employees and requiring them to sign termination documents, etc.
The protection and management of trade secrets involve whether a company’s core competitiveness can be maintained and sustained indefinitely. If a company can take appropriate measures to protect and manage trade secrets to maintain their confidentiality, trade secrets can become an “assistant” for the company’s revenue growth, profitability, and market share, rather than becoming a “executioner” for the company’s revenue and profitability due to leakage to competitors.
