Competition remains the driving force of technological innovation in 2014. The trio of trade secrets, personal data protection, and fair trade practices continue to evolve in light of increasing competition. Sitting here in North East Asia, amongst Japan, Korea, China and Taiwan, we witness first hand how technology influences legal trends and legal issues impacting on competition in the technology sector. We visit briefly recent changes in these 3 areas of law in Taiwan below. 1. “Criminal Liability is Imposed under Taiwan’s Trade Secret Law” reads one recent legal alert. At the beginning of year 2013, Taiwan’s legislature (known as the Legislative Yuan) amended its Trade Secret Law (the “TSL”) which included the long-awaited criminal liability for specified trade secret infringements, i.e. a maximum of 5 years imprisonment or detention, and a fine ranging from NT$1 million up to NT$10 million. In the case of a fine, if the gain obtained by the offender exceeds the maximum fine, such fine may be increased by threefold. Other salient points include:
- Increased criminal liability for purpose of using trade secret in foreign jurisdictions. New Article 13-2 provides that any person committing a crime set forth in Article 13-1 for the purpose of using the trade secret in foreign countries, including mainland China, Hong Kong, or Macau (“foreign jurisdictions”) will be sentenced to imprisonment ranging from 1 year to 10 years, and a fine ranging from NT$3 million up to NT$50 million may also be imposed. In the case of a fine, if the gain obtained by the offender exceeds the maximum fine, such fine may be increased two to ten times the amount of the gain. Most importantly, prosecution for the crime in Article 13-2 may be instituted without a complaint from the victim. For the crimes set forth in Article 13-1, prosecution may be instituted only upon complaint from the victim.
- The company, the principal or the employer is also punishable by a fine. New Article 13-4 provides that where the representative of a company, its agent, employee or any other staff of a company or person commits any of the above crimes in the course of business, not only the actor, but the company, the principal or the employer will be punishable by fine. However, if the company, the principal or the employer has made their best efforts to prevent such crime from being committed, they will not be punished.
The business community has thus far welcomed the above changes in law, as poaching along with the passing of trade secrets and incidents of economic espionage have increased in recent years. This amendment is believed to be helpful in protecting intellectual property and foster a more transparent competitive business environment. 2. In October 2012, the new Personal Data Protection Law (the “PDPL”) also came into effect. It is considered significant as it now applies to ALL government, non-government sectors, and individuals who engage in the collection, process or use of Personal Data. Statutory requirements and procedures are now put in place to follow when collecting, processing or using Personal Data. Proper safety measures must be taken when retaining Personal Data files. Failure to comply with the PDPL will be subject to civil liabilities (up to NT$200M), administrative penalties (up to NT$500,000) and criminal liabilities (up to 5 years and/or NT$1M). Legal representatives of corporations may also be punishable to the same extent. Given the wide and significant impact of the new PDPA on businesses and individuals alike, precautionary measures to guard against potential violations are clearly highlighted. 3. Around the same time, a number of amendments were also being proposed to the country’s Fair Trade Law (the “FTL”) and they include:
- New “dawn raid” powers which would empower Taiwan’s Fair Trade Commission (FTC) to investigate suspected anti-competitive conduct by launching surprise inspections of business premises;
- Increased fines for anticompetitive conduct;
- Increased fines for mergers that should not have been implemented without prior authorization (under Taiwan merger control rules) and for the provision of false information in merger filings;
Other proposals include:
- A change to the notification threshold contained in Taiwan’s merger control rules; and
- A relaxation in the technical way that vertical price restraints are analyzed under antitrust law (namely the introduction of a “rule of reason” type analysis in place of automatic illegality).
These changes are pending in the legislature and when passed, would overhaul Taiwan’s antitrust regime by providing it with more enforcement strength and other powers. They build on previous changes “Taiwan antitrust: Higher fines and a new leniency regime” and “Taiwan antitrust: New regulations pave the way for larger fines” and signal a desire to further increase antitrust enforcement activities in Taiwan. This trio of laws are evolving throughout the Asia Pacific jurisdictions. They impact the technology companies which operate here in incremental ways. They protect intellectual property and fair trade and shape a more compliant competitive business environment. Minimally, they raise the potential for risks including the imposition of criminal liability that will raise the awareness of all market participants.