When a former employee leaks their former company's trade secrets to a competitor, or when the competitor applies for a patent based on the leaked information, how do the courts handle and reach a judgment on this dispute? The Intellectual Property and Commercial Court 110(2023)-Min-Chuan-Su No. 27 judgment rendered on December 12, 2023, provides clear guidance on this issue.

 

In this case, plaintiff X Company filed a lawsuit claiming that it merged with Y Company on August 1, 2014, and assumed all rights, obligations, and assets of Y Company (including the disputed documents), so the technical content shown in the disputed documents (A, C, E, F, G, totaling five documents) constitutes its trade secrets. The defendants A and B were respectively the general manager and deputy general manager of Y Company, and they resigned from Y Company in 2013 and took the disputed documents with them before leaving. They were then hired by the defendant Z Company, which operates the same type of business. From late 2013 to early 2014, they recruited the department managers of Y Company, defendants C, D, and E, to work for Z Company. These department managers each have access to some of the disputed documents.

 

Defendants C, D, and E, by using the technology of the disputed documents, applied for and obtained the disputed patents (a total of eight patents) under the name of defendant Z Company (with defendant J as the responsible person). Defendants C, D, and E were listed as the inventors or creators of the patents. Plaintiff X Company thus claimed that defendants J, A, and B, in their capacities as chairman, general manager, and deputy general manager of defendant Z Company, agreed to and instructed defendant C and others to engage in the above-mentioned acts, jointly infringing on plaintiff X Company's trade secrets and patent application rights. Plaintiff X Company requested confirmation of its status as a joint applicant for the disputed patents and requested defendants A, B, C, D, E, J, and defendant Z Company to be jointly liable for damages to plaintiff X Company.

 

In this case, the court determined the issues to be clarified and their sequence as follows:

 

Issue 1: Are the technical features between the disputed patent claims and the disputed documents substantially the same and able to be recognized as having substantial contributions?

Issue 2: Are the disputed documents the trade secrets of plaintiff X Company?

Issue 3: Did the defendants intentionally or negligently infringe the trade secrets or patent application rights of plaintiff X Company? Is there any reason for plaintiff X Company to claim joint liability for damages from the defendants?

 

The court's rulings are as follows: 

 

Regarding Issue 1: The court first compared the features of each disputed patent claim and the relevant text or graphics in the disputed documents one by one to confirm whether they are substantially the same, in order to determine whether plaintiff X Company is the entity that has made a substantial contribution and can be recognized as the inventor or creator. Ultimately, the court determined that some of the disputed patent claims are substantially the same as the disputed documents C, E, F, and G.

 

Regarding Issue 2: The court first investigated the ownership of the disputed documents, confirming that they belong to plaintiff X Company; and in accordance with Article 2 of the Trade Secrets Act, the court examined the three elements of economic value, secrecy, and whether reasonable confidentiality measures were taken. Ultimately, it was determined that only the disputed document C belonged to plaintiff X Company's trade secrets.

 

Regarding Issue 3: The court determined that the disputed document A is not a trade secret, and is not substantially identical to the disputed patent, so there is no infringement of plaintiff X Company's trade secrets or patent application rights in this regard. For those documents that are not trade secrets but are substantially identical (disputed documents E, F, G), it only needs to be discussed whether there is infringement of plaintiff X Company's patent application rights. Therefore, only the disputed document C, which belongs to plaintiff X Company's trade secrets, needs to be judged for trade secret infringement.

 

In this case, it is confirmed that the hard drive seized from the office of defendant B at defendant Z Company contains disputed document C (i.e., part of which contains trade secrets), which can be reasonably inferred to have been reproduced from disputed document C of Company Y. Defendants A, B, C, and D all have the authority to access disputed document C and should be aware that it contains trade secrets of Company Y. Therefore, defendants A, B, C, and D are all deemed to have acted intentionally and should be held jointly liable for infringement. As for defendant E, the court has determined that plaintiff X Company has not provided evidence to prove that defendant E was clearly aware of the fact that defendants A, B, C, and D had infringed its trade secrets, and therefore cannot establish the intentional or negligent infringement of plaintiff X Company's trade secrets. As defendant A is the general manager of defendant Z Company, defendant Z Company should, in accordance with Article 28 of the Civil Code, be jointly liable for the compensation amount owed by defendant A.

 

Regarding the part of the disputed documents which is essentially the same as the disputed patent, this part should belong to the invention completed by the employee in the course of employment. According to Article 7, Paragraph 1 of the Patent Act, the patent application rights for this part belong to plaintiff Company X. As plaintiff Company X is one of the patent application rights holders for the disputed patent, and has also requested confirmation as a joint applicant, it has already restored the situation to its original state before the damages occurred, and therefore has no grounds to claim further damages. Therefore, plaintiff Company X's claim for the defendants to be held responsible for damages related to the infringement of patent application rights should be rejected.